Chapter VIII RA 9520

The capitalization of cooperatives and the accounting producers shall be governed by the provisions of this Code and the regulations which shall be issued.

Cooperatives registered under this Code may derive their capital from any or all of the ff. sources:

(1) member’s share capital;

(2) loans and borrowings including deposits;

(3) revolving capital which consists of the

deferred payment of patronage refunds, or

interest on share capital; and

Cooperatives registered under this Code may derive their capital from any or all of the following sources:

(4) Subsidies, donations, legacies, grants, aids, and such

other assistance from any local or foreign institution

whether public or private: Provided , That capital

coming from such subsidies, donations, legacies,

grants, aids and other assistance shall not be divided

into individual share capital holdings at any time but

shall instead from part of the donated capital or fund

of the cooperative.

Upon dissolution, such donated capital shall be subject

to escheat.

No member of a primary cooperative other than a cooperative itself shall own or hold more than ten per centum(10%) of the share capital of the cooperative.

Where a member of a cooperative dies, his heir shall be entitled to the shares of the decent: Provided, That the total share holding of the heir does not exceed ten per centum (10%) of the share capital of the cooperative:

Provided further, That the heir quality and is admitted as member of the cooperative: Provided finally, That where the heir fails to qualify as a member or where his total share holding exceeds ten per centum (10%) of the share capital, the share or shares in excess will revert to the cooperative upon payment to the heir of the value of such shares.

Subject to the provisions of this Code, no member shall transfer his shares or interest in the cooperative or any part thereof unless:(1) he has held such share capital contribution or

interest for not less than one (1) year; (2) the assignment is made to the cooperative or to a member of the cooperative or to a person who falls within the field of membership of the cooperative; and (3)the board of directors has approved such assignment.

The by-laws of every cooperative shall provide for a reasonable and realistic member capital build-up program to allow the continuing growth of the member’s investment in their cooperative as their own conditions continue to improve.

The term “share” refers to a unit of capital in a primary cooperative the per value of which may be fixed at any figure not more than One thousand pesos (P 1,000.00). The share capital of a cooperative is the money paid or required to be paid for the operations of the cooperative. The method for the issuance of share certificates shall be prescribed in its by- laws.

The by-laws of a cooperative may prescribe a fine on unpaid subscribed share capital: Provided, That such fine is fair and reasonable under the circumstances.

A cooperative may invest its capital in any of the ff:

(a)in shares or debentures or securities of any other cooperative;

(b)in any reputable bank in the locality, or any cooperative;

A cooperative may invest its capital in any of the ff:

(c) in securities issued or guaranteed by the

Government;

(d) in real state primarily for the use of the

cooperative or its member; or

(e) in any other manner authorized in the by- laws.

The general assembly of any cooperative may authorize the board of directors to raise a revolving capital to strengthen its capital structure by deferring the payment of patronage refunds and interest on share capital or by the authorized deduction of a percentage from the proceeds of products sold or services rendered, or per unit of product or services handled.

The board of directors shall issue revolving capital certificates with serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time of retirement of such certificates and the amounts to be returned.