CAPITAL STRUCTURE
AND
FUND ALLOCATION
Embedded Files
CAPITAL STRUCTURE
1. Source of Funds
The Cooperative may derive its funds from any or all of the following sources:
a. Member’s share capital contribution;
b. Loans and borrowings including deposits;
c. Revolving capital build-up which consist of the deferred payment of patronage refund or interest on share capital;
d. Subsidies, grants, legacies, aids, donation and such other assistance from any local or foreign institution, public or private;
e. Retentions from the proceeds of services acquired /goods procured by members; and
f. Other sources of funds as may be authorized by law.
2. Continuous Capital Build-Up
Every member shall have invested in any of all of the following:
a. At least Two Hundred Pesos (P200.00)per month;
b. At least fifty percent (50%) of his/her annual interest on capital and patronage refund; and
c. At least three percent (3%) of each good procured/service acquired from the cooperative.
3. Borrowing
The Board of Directors, upon approval of the General Assembly, may borrow funds from any source, local or foreign, under such terms and conditions that best serve the interest of the Cooperative.
4. Revolving Capital
To strengthen the capital structure of the Cooperative, the General Assembly may authorize the Board of Directors to raise a revolving capital by deferring the payment of patronage refunds and interest on share capital, or such other schemes as may be legally adopted. To implement this provision, the Board of Directors shall issue a Revolving Capital Certificate with serial number, name, rate of interest, date of retirement and such other privileges or restrictions as may be deemed just and equitable.
5. Retentions
The General Assembly may authorize the Board of Directors to raise additional capital by deducting a certain percent on a per unit basis from the proceeds of services acquired and/or goods procured by members.
6. Share Capital Contribution
Share Capital Contribution refers to the value of capital subscribed and paid for by a member in accordance with its Articles of Cooperation.
7. Share Capital Certificate.
The Board of Directors shall issue a Share Capital Certificate only to a member who has fully paid his/her subscription. The Certificate shall be serially numbered and contain the share holder’s name, the number of shares owned, the par value, and duly signed by the Chairperson and the Secretary, and bearing the official seal of the cooperative. All certificates issued and/or transferred shall be registered in the cooperative’s Share and Transfer Book.
The number of paid share required for the issuance of Share Capital Certificate shall be determined by the Board of Directors.
The shares may be purchased, owned or held only by persons who are eligible for membership. Subject to existing government rules or laws, interests shall be paid only to paid-up shares which may be in cash; or credited as payment of unpaid subscriptions, outstanding accounts, or additional shares or to the revolving fund of the cooperative.
8. Transfer of Shares
The Cooperative shall have the first option to buy any share offered for sale. The amount to be paid for such shares shall be the par value provided that:
He has held such shares or interests for not less than one (1) year;
The transfer is made to a member of the cooperative or to a person who falls within the field of membership of the cooperative, and that said person is acceptable to the cooperative; and
The Board of Directors has approved such transfer.
The transfer of shares shall not be binding to the cooperative until such transfer has been registered in the share and transfer book. No transfer shall be completed until the old certificate have been endorsed and surrendered to the Cooperative and a new certificate is issued in the name of the member-transferee. The corresponding transfer fee shall be collected from the transferee as prescribed in the cooperative policy.
In case of lost or destroyed share certificate, the Board of Directors may issue a replacement after the owner thereof executes a sworn affidavit, setting forth the following:
Circumstances as to how, when and where said certificate was lost or destroyed;
The serial number of the certificate; and the number of shares it represents;
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
1. Allocation
At the end of its fiscal year, the Cooperative shall allocate and distribute its net surplus as follows:
A. Reserve Fund
Ten percent (10%) shall be set aside for Reserve Fund subject to the following rules, provided, that in the first five (5) years of operation after registration, this amount shall not be less than fifty percent (50%) of the net surplus:
a. The reserve fund shall be used for the stability of the Cooperative and to meet net losses in its operations. The general assembly may decrease the amount allocated to the reserve fund when it has already exceeded the authorized share capital. Any sum recovered on items previously charged to the reserve fund shall be credited to such fund.
b. The reserve fund shall not be utilized for investment, other than those allowed in the Cooperative Code. Such sum of the reserve fund in excess of the authorized share capital may be used at any time for any project that would expand the operations of the cooperative upon the resolution of the general assembly.
c. Upon the dissolution of the cooperative, the reserve fund shall not be distributed among the members. However, the general assembly may resolve:
c.1. To establish usufructuary fund for the benefit of any federation or union to which the cooperative is affiliated; or
c.2. To donate, contribute or otherwise dispose of the amount for the benefit of the community where the cooperative operates. If the member could not decide on the disposition of the reserve fund, the same shall be given to the federation or union to which the cooperative is affiliated.
B. Education and Training Fund
Ten percent (10%) shall be set aside for Education and Training Fund. The fund shall provide for the training, development and similar other cooperative activities geared towards the growth of the cooperative movement
a. Half of the amount allocated to the education and training fund annually under this subsection may be spent by the cooperative for education and training purposes; while the other half may be remitted to a union or federation chosen by the cooperative or of which it is a member.
b. Upon the dissolution of the cooperative, the unexpended balance of the education and training fund pertaining to the cooperative shall be credited to the cooperative education and training fund of the chosen union or federation.
C. Community Development Fund
Three percent (3%) shall be used for projects and activities that will benefit the community where the cooperative operates.
D. Optional Fund
Seven percent (7%) shall be set aside for Optional Fund for land and building, and any other necessary fund.
2. Interest on Share Capital and Patronage Refund
The remaining net surplus shall be made available to the members in the form of interest on share capital not to exceed the normal rate of return on investment and patronage refunds. Provided, that any amount remaining after the allowable interest and the patronage refund have been deducted shall be credited to the reserve fund. The sum allocated for patronage refund shall be made available at the same rate to all patrons of the cooperative in proportion to their individual patronage, provided that:
A. In the case of a member patron with paid-up share capital contribution, his/her proportionate amount of patronage refund shall be paid to him/her unless he/she agrees to credit the amount to his/her account as additional share capital contribution;
B. In the case of member patron with unpaid share capital contribution, his/her proportionate amount of patronage refund shall be credited to his/her account until the share capital has been fully paid;
C. In the case of non-member patron, his/her proportionate amount of patronage refunds shall be set aside in a general fund for such patron and shall be allocated to individual non-member patron and only upon request and presentation of evidence of the amount of his/her patronage. The amount so allocated shall be credited to such patron toward payment of the minimum capital contribution for membership. When a sum equal to this amount has accumulated at any time within two (2) years, such patron shall be deemed and become a member of the cooperative if he/she so agrees or requests and complies with the provisions of the bylaws for admission to membership; and
D. If within the period specified hereof, any subscriber who has not fully paid his/her subscribed share capital or any non-member patron who has accumulated, the sum necessary for membership, but who does not request nor agree to become a member or fails to comply with the provisions of this bylaws for admission to membership, the amount so accumulated or credited to their account together with any part of the general fund for non-member patron shall be credited to the Reserve Fund or to the Education and Training Fund of the cooperative, at the option of the cooperative
Page updated
Report abuse