Share Capital Limitations for Cooperatives

Article 14 of Republic Act No. 9520 governs the minimum subscription and paid-up requirements for registration.
Article 73 of Republic Act No. 9520 governs limits on member shareholdings in a primary cooperative.
The circular applies Article 14 and Article 73 through the “Twenty-Five percent (25%) Rule” and member shareholding caps.

The CDA issues the circular to provide guidance and information on how to apply the share capital limitations for cooperatives.
The circular operationalizes registration subscription and paid-up thresholds and member ownership limits under Republic Act No. 9520.

The “Twenty-Five percent (25%) Rule” requires that at least Twenty Five percent (25%) of Authorized Share Capital is subscribed.
The “Twenty-Five percent (25%) Rule” requires that at least Twenty Five percent (25%) of Subscribed Share Capital is paid up.
The Twenty-Five percent (25%) Rule applies to common share capital only.
The circular defines the shareholding limitation for members of a primary cooperative through a cap linked to the cooperative’s total subscribed share capital.

Article 14 of Republic Act No. 9520 provides that no cooperatives, other than a cooperative union, shall be registered unless the registration documents include the required share subscription and payment sworn statement.
The required sworn statement is from the treasurer elected by the subscribers.
The statement must show that at least twenty-five per centum (25%) of the authorized share capital has been subscribed.
The statement must also show that at least twenty-five per centum (25%) of the total subscription has been paid.
The Twenty-Five percent (25%) Rule therefore functions as a registration gatekeeping requirement tied to subscription and paid-up thresholds.

Article 73 of Republic Act No. 9520 limits members of a primary cooperative, other than the cooperative itself, from owning or holding more than ten percent (10%) of the cooperative’s share capital.
The circular clarifies that no member in a primary cooperative may own more than ten percent (10%) of the total subscribed share capital of the cooperative.
The circular ties the member cap specifically to total subscribed share capital, not to authorized share capital.

When preferred share capital is provided in the cooperative’s by-laws, the preferred share capital shall not exceed twenty-five percent (25%) of the total authorized share capital of the cooperative.
The circular’s preferred share limitation applies only when preferred share capital is adopted in the by-laws.

The circular requires that no fractional shares shall be issued.
This restriction applies to both common and preferred share capital for purposes of the cooperative’s share issuance.

The circular is approved by the Board of Administrators through BOA Resolution No. 31-2011.
The circular is signed by Emmanuel M. Santiaguẹl, Ph. D, in his capacity as Chairman.
The circular is issued by authority of the CDA Board of Administrators.