Legal basis under RA 9520
- Article 75 of Republic Act No. 9520 requires that the by-laws of every cooperative provide for a reasonable and realistic member capital build-up program.
- Article 75 of Republic Act No. 9520 requires the capital build-up program to support continuing growth of members’ investment in their cooperative as their economic conditions improve.
- Article 77 of Republic Act No. 9520 permits cooperative by-laws to prescribe a fine on unpaid subscribed share capital.
- Article 77 of Republic Act No. 9520 limits such fines by requiring they be fair and reasonable under the circumstances.
Cooperative capital subscription policy
- All cooperatives are enjoined to adopt a policy of continuing subscription on share capital.
- The continuing subscription policy must include requiring members to subscribe additional capital upon full payment of the initial subscription.
- Cooperatives must require a subscription agreement to be executed upon member admission.
- Cooperatives must require a subscription agreement to be executed whenever additional subscription is made by members upon full payment of their initial subscription.
- Cooperatives must implement share certificate issuance consistent with the timing rule in the Circular.
Subscription agreements and admission
- Cooperatives must execute a subscription agreement when a member is admitted.
- Cooperatives must execute a subscription agreement whenever a member makes additional subscription after full payment of the initial subscription.
- Subscription agreements must align with the continuing subscription policy requiring additional capital upon full payment.
Share certificates and timing
- Unless otherwise provided in their by-laws, cooperatives shall issue Share Certificates at least every end of the calendar year.
- Share certificates issued at least every end of the calendar year must be based on the number of shares fully paid for the said period.
- Cooperatives must follow their by-laws only to the extent that the by-laws provide an alternative rule to the share certificate timing.
Restrictions on share classes and par value
- Cooperatives are prohibited from issuing multiple types of Common Shares.
- Cooperatives are prohibited from issuing Common Shares with different par value per share.
- Cooperatives are prohibited from increasing or decreasing the par value of the share capital by amending their Articles of Cooperation and By-laws.
Effectivity
- CDA Memorandum Circular No. 2013-04 takes effect immediately.