Questions and Answers
Who is entitled to vote and be voted in a cooperative?
Which type of share capital may be issued to both regular and associate members?
What is the maximum percentage of share capital that one member can own in a primary cooperative?
Which of the following represents a source of capital for a cooperative?
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What does the term 'revolving capital' refer to in a cooperative context?
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What is the maximum par value of a share in a primary cooperative?
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How is interest on share capital computed?
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Who must approve the allocation of interest on share capital?
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What happens to donated capital upon dissolution of the cooperative?
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Which of the following is NOT a source of capital for cooperatives?
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What can a cooperative invest its capital in?
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What is required for a member to assign their shares in the cooperative?
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Who conducts the financial audit of a cooperative?
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What is the purpose of a capital build-up program in a cooperative?
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Under what condition may a member's request to examine records be denied?
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What must the financial audit report comply with?
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What type of auditor is responsible for conducting the social audit?
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What can trigger a fine on unpaid subscribed share capital?
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What is a revolving capital certificate?
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Which of the following is NOT an investment option for a cooperative?
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Study Notes
Fines on Unpaid Subscribed Share Capital
- Bylaws may specify fines for unpaid subscribed share capital if they are fair and reasonable.
Assignment of Share Capital Contribution or Interest
- Members can only transfer shares or interests if:
- Held for at least one year.
- Assigned to the cooperative, its members, or individuals within membership.
- Approved by the board of directors.
Capital Build-up
- Bylaws are required to include a realistic capital build-up program for members to increase investment as their financial situation improves.
Revolving Capital
- General assembly can authorize the board of directors to raise revolving capital by:
- Deferring payment of patronage refunds and interest on share capital.
- Deducing a percentage from sales proceeds.
- Certificates issued must include serial number, name, amount, interest rate, retirement time, and return amounts.
Investment of Capital by a Cooperative
- Cooperatives can invest in:
- Shares or securities of other cooperatives.
- Reputable local banks or cooperatives.
- Government-issued or guaranteed securities.
- Real estate for cooperative or member use.
- Any investment method allowed by bylaws.
Annual Audits
- Cooperatives must undergo annual financial, performance, and social audits conducted by accredited auditors.
Financial Audit
- Conducted by an independent auditor certified by the Philippine Institute of Certified Public Accountants (PICPA).
Social Audit
- Conducted by an independent social auditor accredited by the Authority.
Performance and Social Audit Reports
- Auditors must submit reports with findings and recommendations to the board of directors.
Audit Report
- Financial audit report must meet generally accepted auditing standards and be presented to the general assembly.
Member's Right to Examine
- Members can examine cooperative records during business hours and request free excerpts (cost of production may apply).
- Officials refusing requests are liable unless the refusal is based on a board resolution.
- Members must prove their request isn't for improper purposes.
Sources of Capital for Cooperative
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Member's Share Capital:
- Common shares for regular members allow voting and receiving interest (capped at normal investment rates).
- Preferred shares available for regular and associate members (no voting rights for associate members).
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Loans and borrowings from deposits.
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Revolving Capital:
- Deferred patronage refunds or interest on share capital, with certificates issued by the board of directors.
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Assistance from public or private institutions (subsidies, donations, etc.) not divided into individual shares, becoming part of donated capital.
Maximum Limitations on Share Capital Holdings
- No member, except the cooperative itself, may hold more than 10% of the cooperative's share capital.
- Share capital contributions count as equity and cannot be withdrawn or used to offset obligations while membership remains.
Maximum "Par Value" of Shares
- Shares in a primary cooperative must have a par value not exceeding One Thousand Pesos (₱1,000).
Interest on Share Capital
- Interest rates on share capital capped at the Rate of Return on Investment.
- Calculation based on net surplus after statutory reserves divided by total average share month; percentage determined by the board of directors.
- Allocation of interest requires board majority approval present and constituting a quorum.
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Description
This quiz explores the regulations surrounding fines on unpaid subscribed share capital in cooperatives. It covers key aspects like fair and reasonable fines, assignment of share capital contributions, and transfer restrictions for members. Test your understanding of cooperative bylaws and share capital management.
