Cooperative Code: Share Capital Fines

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Questions and Answers

Who is entitled to vote and be voted in a cooperative?

Associate members

Preferred members

Regular members only (correct)

Honorary members

Which type of share capital may be issued to both regular and associate members?

Common Share Capital

Preferred Share Capital (correct)

Convertible Share Capital

Equity Share Capital

What is the maximum percentage of share capital that one member can own in a primary cooperative?

10% (correct)

20%

15%

25%

Which of the following represents a source of capital for a cooperative?

Loans and borrowings Signup and view all the answers

What does the term 'revolving capital' refer to in a cooperative context?

Deferred payments of patronage refunds or interest Signup and view all the answers

What is the maximum par value of a share in a primary cooperative?

P 1,000.00 Signup and view all the answers

How is interest on share capital computed?

By net surplus less statutory reserves Signup and view all the answers

Who must approve the allocation of interest on share capital?

The Board of Directors Signup and view all the answers

What happens to donated capital upon dissolution of the cooperative?

It escheats to the government Signup and view all the answers

Which of the following is NOT a source of capital for cooperatives?

Personal savings Signup and view all the answers

What can a cooperative invest its capital in?

Securities issued or guaranteed by the government Signup and view all the answers

What is required for a member to assign their shares in the cooperative?

The board of directors must approve the assignment Signup and view all the answers

Who conducts the financial audit of a cooperative?

An external independent auditor Signup and view all the answers

What is the purpose of a capital build-up program in a cooperative?

To enable members to invest more over time Signup and view all the answers

Under what condition may a member's request to examine records be denied?

If a board resolution supports the denial Signup and view all the answers

What must the financial audit report comply with?

The generally accepted auditing standards for cooperatives Signup and view all the answers

What type of auditor is responsible for conducting the social audit?

An independent social auditor accredited by the Authority Signup and view all the answers

What can trigger a fine on unpaid subscribed share capital?

Bylaws allowing for fair and reasonable fines Signup and view all the answers

What is a revolving capital certificate?

A document issued for deferring payment of patronage refunds Signup and view all the answers

Which of the following is NOT an investment option for a cooperative?

Real estate primarily for personal use Signup and view all the answers

Study Notes

Bylaws may specify fines for unpaid subscribed share capital if they are fair and reasonable.

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).

Conducted by an independent social auditor accredited by the Authority.

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

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).
Loans and borrowings from deposits.
Revolving Capital:
- Deferred patronage refunds or interest on share capital, with certificates issued by the board of directors.
Assistance from public or private institutions (subsidies, donations, etc.) not divided into individual shares, becoming part of donated capital.

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 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.