Module 2: Sources of Capital; Capital Structures & Related Computations Module 2: Sources of Capital; Capital Structures & Related

amp; Related Computations

7. Revolving Fund/Capital - Part or whole of net surplus are retained to be

SOURCES OF CAPITAL used in the operation of the cooperative such
as non-cash declaration of interest on capital
INTERNAL -Sourced within the cooperative and its members
and patronage refund, i.e. converted to share
capital
8. Fund Raising Campaign - Raffles, bingo, dance benefit, beauty contest, etc.
1 Capital Build-Up
.
a) Share Capital Con- - derived from monthly contribution EXTERNAL - Sourced outside the cooperative/ membership
tribution
of 2% of monthly income
b) Retention - 1% of every loan granted
1. Borrowed Capital - derived from banks and other financial institutions
2% of the interest on capital and
patronage refund 2. Donation - cash or material services received by the
cooperative from the community or other
Cash or material services given by the institutions
2. Donation -
members of the cooperative
Grants - local or international agencies
3. Membership Fee - P 100.00

4. General Reserve Fund
(GRF)
5. Depreciation Reserves
(for fixed asset)
10% of net surplus mandated by RA 9520; Subsidies - in the form of internal or counterpart capital, services
-
for the stability of the cooperative
3 Commission - As an agent or exclusive distributor of products
to be used for the capital if services/ . or services (e.g., insurance, appliances, etc.)
-
operations will be expanded and/or to
absorb any loss that may occur 4 Advances may be in the form of services/supplier,
Advances/ Deposits -
. equipment to be amortized/paid at later date
- Reserves are set-up, but no cash from customer or
transaction transpires yearly special depositors

To build-up fund to cover the cost of Raffles, bingo, etc. involving the public
- 5 Fund Raising Cam- -
replacing the fixed asset concerned
(e.g., building, furniture and fixtures, (non-members)
. paign
office equipment, etc.)

part of these are used as capital for

6. Deposits -
operation and/or loaning Capital Structure and Related Computations
a deposit withdrawable any time during
a. Savings de- - SHARE refers to a unit of capital, the par value of which is one hundred pesos
the duration of membership to the (P100.00)
posit
cooperative

deposits for a fixed period of time and for SHARE CERTIFICATE refers to a serially numbered certificate, which shall be issued
b. Time deposit - by the cooperative every time a member acquires fifty (50) shares amounting to five
a fixed rate of interest may be accepted by
the Cooperative. thousand pesos (P5,000.00). It shall contain the shareholder’s name, the number of
shares owned, the par value and duly signed by the chairman and the secretary, and
The time deposit certificate in the form prescribed by the duly constituted
bearing the official seal of the cooperative. All certificates issued and transferred shall
authorities on cooperatives evidencing deposit shall be issued to deposi- be registered in the shares and transfer book of the cooperative.
tors.

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Module 2: Sources of Capital; Capital Structures & Related Computations Module 2: Sources of Capital; Capital Structures & Related Computations

SHARE CAPITAL refers to the money paid or required to be paid by the members for
the conduct of the operation of the cooperative. The share capital of the cooperative
may consist of common share capital and preferred share capital both withdrawable
upon termination of membership
SUBSCRIBED SHARE CAPITAL refers to the portion of the authorized share capital
which the members pledged or agreed to pay as their share capital to the cooperative
and shall be paid within a specified time as prescribed by the BOD
PAID-UP SHARE CAPITAL portion of the authorized capital of the cooperative which
has actually been paid by the members
Net surplus is the excess of payments made by the members for the loans borrowed,
or the goods and services bought by them from the cooperative. It is also defined as
the BALANCE due the members from the payments made to the cooperative.
Interest on Share Capital and Patronage Refund
RA 9520 IRR Rule 10. Capitalization and Accounting Procedures of Coopera-
tive
Sec. 11. Patronage Refund. The principle of Patronage Refund is a principle of equity wherein an
equal right of members to participate in the organization and to equitably share in the benefits
accruing is established.
Under the principle, the Net Surplus shall not be construed as profit, but as excess payments made
by them from the cooperative and which shall be deemed to have been returned to them if the
same is distributed as prescribed by the Code and by this Rule. Provided, however, that the amount
allocated for patronage refund shall not be less than thirty percent (30%) of the net surplus after
deducting the statutory reserves based on the principle of equity. Provided, further, that in no case
shall the rate of the patronage refund be more than twice the rate of interest on share capital.
Interest on Share Capital - the share capital shall earn interest and the rate of which
shall be computed as follows:

Distribution of Net Surplus Rate = A x (Net Surplus after deducting SR)

Total Average Share Month
Reserves Use/Purpose Allocation Where:

General Reserve Fund Stability and to meet losses 10% A is the remaining % of the Net Surplus less
Statutory Reserves (SR)
Cooperative Education & 50% for Cooperative Educa- Not more than Less :
Training Fund (CETF) tion Programs coordinated 10% Patronage Refund allocation
and facilitated by the Edu-
Limitations
cation and Training Com-
mittee (ETC)
The rate of patronage refund shall not be more than twice of the rate of the interest
on share capital
50% to be remitted to Apex
Organization(s) NO allocation shall be made without the approval of the GA
30/70 minimum allocation with reference to
Land and Building and other Patronage Refund
Optional Fund Not more than 7%
necessary fund
(OF) Computations
Net Surplus 1.0M
Community Development Community Projects and Not less than 3% Less: Statutory Reserves
Fund Activities GRF (10%) 100T
CETF (10%) 100T
OF (7%) 70T
Amount available for Patron- Remaining bal-
To be distributed to CDF (3%) 30T
age Refund and Interest on ance from the Net
members
Share Capital Surplus after de-
ducting the Statu-
tory Reserves 700T

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Module 2: Sources of Capital; Capital Structures & Related Computations Module 2: Sources of Capital; Capital Structures & Related Computations

Computations
Average Share
Net Surplus (Less Statutory Reserves) 700T
January 2,000
Patronage Refund Allocation (30%) 210T February 2,200 2,000+200
March 2,400 2,200+200
Interest on Share Capital Allocation (70%) 490T April 2,600 2,400+200
May 2,800 2,600+200
June 3,000 2,800+200
700T July 3,200 3,000+200
August 3,400 3,200+200
September 3,600 3,400+200
October 3,800 3,600+200
November 4,000 3,800+200
Computations for Patronage Refund December 4,200 4,000+200
Total 37,200
Patronage Refund Allocation (30%) 210,000 Average Share Month 37,200/12=3,100

Total Interest + Service Fee (Paid by members) 1,500,000

Interest on Share Capital and Patronage Refund

RATE of Patronage Refund 210,000/1,500,00

RATE 14% Example:

Member A For P100,000.00
Interest Paid Loan (9.75%)
X Rate Patronage Refund P9,750.00
X14%
Computations for Interest on Share Capital
P1,365.00

Ave. Share Month X Rate of 3,117

Interest on Share Capital Allocation (70%) 490,000 Interest on Share Capital x9%

Total Average Share Month 5,000,000 P280.53

TOTAL P1,645.53
RATE of Interest on Share Capital 490,000/5,000,000

RATE 9%

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Module 2: Sources of Capital; Capital Structures & Related Computations

Time Deposit Interest Rates

Time Deposit

BRACKET 30-60 DAYS 61-120 DAYS

5,000-99,999 1.00% 1.25%

100,000 and above 1.25% 1.75%