Capital.
Section 68
SEC. 68. Capital.—The capitalization of co-operatives and the accounting therefor shall be governed by the provisions of this Act and the regulations issued here-under.
RA 2023 CHAPTER VII.—Capital, property and funds
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Source of funds.
Section 69
SEC. 69. Source of funds.—Co-operatives registered under this Act may, subject to the regulations, derive funds from: Members' capital contribution in the form of shares, with or without capital stock; Loan capital, including deposits; Retains authorized on a percentage or per unit basis; Revolving capital by deferment of the payment of patronage refunds and/or by authorized retains; and Fees, dues, subsidies, donations, and such other sources as may be authorized in the regulations.
Limitation on individual shareholdings.
Section 70
SEC. 70. Limitation on individual shareholdings.—No member of a co-operative other than a co-operative or the Government of the Philippines or any of its subdivisions shall, unless expressly authorized in writing by the Administrator in special circumstances, own or hold more than five thousand pesos worth of shares or twenty per centum of the subscribed share capital of the cooperative as may be prescribed by the regulations.
Limited return on capital.
Section 71
SEC. 71. Limited return on capital.—Interest on share capital shall not exceed eight per centum per annum upon the fully paid-up shares and such interest shall be non-cumulative.
Restriction on transferability of shares.
Section 72
SEC. 72. Restriction on transferability of shares.—Subject to the provisions of section seventy, a member shall not transfer any share held by him or his interest in the co-operative or any part thereof unless:He has held such share or interest for not less than one year; The transfer is made to the co-operative or to a member of the co-operative or to a person who falls within the field of membership of the cooperative and whose membership is acceptable to the co-operative; and The board of directors has approved such transfer.
Share capital.
Section 73
SEC. 73. Share capital.—The term "share" refers to a unit of capital, the par value of which may be fixed at any figure of not less than one peso. The share capital of a co-operative with capital stock is the money paid or authorized or required to be paid for conducting its operations, whereas the share capital of a co-operative without capital stock is the money paid or required to be paid and is not limited by any authorized amount. The method of issuing and the contents of stock or membership certificates may be prescribed in the regulations.
Interest or fine on unpaid capital contribution.
Section 74
SEC. 74. Interest or fine on unpaid capital contribution.—The by-laws of a co-operative may prescribe interest or fine on unpaid capital contribution.
Recall or purchase of shares.
Section 75
SEC. 75. Recall or purchase of shares.—A co-operative may, by resolution of the members of a general assembly recall the holdings of any member in excess of the amount requisite for membership: Provided, That no purchase shall be made when the debts of the co-operative exceed fifty per centum of the assets thereof. All shares that shall be purchased under sections thirty-one, thirty-two, seventy-two and seventy five shall be reissued or cancelled.
Investment of funds.
Section 76
SEC. 76. Investment of funds.— A co-operative shall invest or deposit its funds: With the sanction of the Administrator, in the shares or debentures or the securities of any other co-operative with limited liability; or In the Postal Savings Bank if no co-operative bank exists in the province where the co-operative is located. In the securities issued or guaranteed by the Government; or In any other manner prescribed in the regulations. When the funds of a co-operative are in excess of operational requirements the Administrator shall instruct such co-operative to invest its funds in accordance with subsection (1) hereof.
Government aid to co-operatives.
Section 77
SEC. 77. Government aid to co-operatives.— Notwithstanding the provisions of any law, the Government of the Philippines and its subdivisions may, subject to such regulations as may be prescribed on this matter, grant loans to, take shares in, or give financial assistance in any other form to any co-operative registered under this Act. With the previous sanction of the Government of the Philippines and subject to limitations to be prescribed by the Government, any federation of co-operatives may issue debentures. The Government of the Philippines may guarantee the principal thereof and the interest thereon, subject to such maximum amount of principal or such rate of interest and to such other conditions as1 may be prescribed by the Government.
Revolving capital.
Section 78
SEC. 78. Revolving capital.—The general assembly of members of any co-operative may by a majority vote decide to raise a revolving capital to strengthen the capital structure of their co-operative by deferring the payment of patronage refunds or by the authorized deduction if a percentage from the proceeds of products sold or per unit of product handled. The board of directors shall issue revolving-fund certificates with serial number, name, and amount and shall distinctly set forth that the time of retirement of such certificates and the amounts to be returned are at the discretion of the directors. The rate of interest to be paid on capital raised by this method shall not exceed five per centum per annum. CHAPER VIII.—Allocation and distribution of savings
Computation of savings.
Section 79
SEC. 79. Computation of savings.—Notwithstanding the provisions of existing laws or other regulations, the computation of savings for co-operatives shall be as may be prescribed in the regulations. Every co-operative shall compute the savings at least once at the close of every business year and at such other time as may be prescribed by the Administrator.
Savings, not profit.
Section 80
SEC. 80. Savings, not profit.—The net savings shall not be construed as profit but shall be construed as excess payments made by patrons which shall be deemed to have been returned to them if the net savings are distributed as prescribed in sections eighty-one, eighty-two, eighty-three, eighty-four and eighty-five.
Reserve fund.
Section 81
SEC. 81. Reserve fund.— Every co-operative shall create and maintain in the following manner a reserve fund for the stability of the co-operative and to meet losses in its business: At the close of each business year, twenty per centum of the net savings, as reflected in its audited financial statements and computed as prescribed in the regulations, shall be transferred to the reserve fund. The members may at a general assembly increase, or, if such fund equals the subscribed capital, may decrease the proportion of the net savings to be thus set aside. Whenever the reserve fund does not equal the subscribed capital, it shall be replenished by regular appropriations in such amounts or in such percentages required to equal the subscribed capital; The by-laws may provide that certain given fees or fines, or a portion thereof, shall be set aside for the reserve fund; and Any sums recovered on items previously charged to the reserve fund shall be credited to such fund. The reserve fund shall not be utilized as working capital or for investment other than those mentioned, in section seventy-six except with the written sanction of the Administrator under conditions to be, prescribed. Such sums of the reserve fund set apart in excess of the amount equal to the subscribed capital may, with the written approval of the Administrator, be appropriated at any time by resolution of the members for the purposes specified under subsection (4). Any loss sustained by a co-operative may be charged to its reserve fund with the approval of the general assembly. On the dissolution of the co-operative, the reserve fund shall not be divisible among the members. The members' general assembly may resolve: To contribute the reserve fund to any federation of co-operatives operating in the area of the co-operative for the improvement of the Co-operative Movement, and/or To donate, contribute or otherwise dispose of the amount for any purpose which would improve the economic and social condition of the community in the area of the co-operative. If the members do not meet or cannot decide upon the disposal of the reserve fund, the Administrator shall dispose of it in accordance with the purpose of this subsection.
Educational fund.
Section 82
SEC. 82. Educational fund.— Every co-operative shall create and maintain in the following manner an educational fund for co-operative education and other purposes as may be prescribed: At the close of each business year, ten per centum of the net savings of each year shall be set aside for such fund; The by-laws may provide that certain given fees or fines, or a portion thereof, shall be credited to such fund; and Such amounts as may be transferred under section eighty-five and from other sources shall thus be set aside. Half of the amounts transferred to the educational fund annually under subsection (1) may be spent by the co-operative for educational and other co-operative purposes; while the other half shall be credited to a Central Co-operative Educational Fund which, together with the Central Co-operative Audit Fund provided under Section eighty-six, shall be administered and utilized by a Central Co-operative Educational Board of seven (7) members to be composed of representatives of co-operatives, the Administrator as chairman and such members as may be nominated by him as prescribed in the regulations. The Central Co-operative Educational Fund and the Central Co-operative Audit Fund shall be paid in the manner and at the time prescribed by the regulations to the Central Co-operative Educational Board. On the dissolution of a co-operative, the unexpended balance of the educational fund appertaining to the Co-operative may be utilized for the purposes specified under section eighty-one (4) or contributed to the Central Co-operative Educational Fund provided under subsection (2)
Other funds.
Section 83
SEC. 83. Other funds.—The general assembly of the members of a co-operative may set aside a land and building fund, community development fund and any other necessary fund the total of which may not exceed ten per centum of the net savings of each year.
Interest on capital and patronage refund.
Section 84
SEC. 84. Interest on capital and patronage refund.— The remaining net savings shall be divided into two equal halves: one half of it shall be available for the declaration of interest on capital as provided in section seventy-one and the other half for patronage refunds. Sums that are in excess of the statutory limitation of interest on capital may be declared for patronage refund or may be credited to an interest equalization fund. Co-operatives with unlimited liability shall not declare interest on capital or patronage refund without the written permission of the Administrator.
Patronage refunds.
Section 85
SEC. 85. Patronage refunds.—The sums allocated for patronage refunds shall be distributed at the same rate to all patrons of the co-operative in proportion to their individual patronage: Provided, That: In the case of a member patron, his proportionate amount of patronage refund shall be paid to him unless he agrees that the co-operative should credit the amount to his account toward the purchase of an additional share or shares or other capital; In the case of a subscriber patron, his proportionate amount of patronage refund shall be credited to his account until his capital contribution has been fully paid; In the case of a non-member patron, his proportionate amount of patronage refund shall be set aside in a general fund for such patrons and shall be allocated to individual non-member patrons only upon request and presentation of evidence of the amount of his patronage. The amount so allocated shall be credited to such patron toward payment of the minimum, amount of capital contribution for membership. When a sum equal to this amount has accumulated at any time within a period of time specified in the by-laws, such patron shall be deemed and become a member of the co-operative if he so agrees or requests and complies with the provisions of the by-laws for admission to membership; and If within any period of time specified in the by-laws (a) any subscriber has not accumulated and paid in the amount of capital subscribed for; or (b) any non-member patron has not accumulated in his individual account, the sum necessary for membership; or (c) any non-member patron has accumulated the sum necessary for membership but neither requests nor agrees to become a member or fails to comply with the provisions of the by-laws for .admission to membership, then the amounts so accumulated or paid in and any part of the general fund for non-member patrons which has not been allocated to individual non-member patrons, shall go to the educational fund and thereafter no member or other patron shall have any right in said paid in capital or accumulated patronage refund as such: Provided, further, That nothing in this section shall prevent a co-operative from deferring payment of patronage refund for a fixed period of years as prescribed in their by-laws or create a revolving capital under section seventy-eight, nor from adopting a system whereby the payment of patronage refunds shall be made in cash, in kind or in shares.
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Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).