Koop Balitaan via Tulong Balita Online Webinar on Governance & Management Part II Focus on the Operation & Management of Co-ops

1. “
ART. 86. Order of Distribution. The net surplus of
every cooperative shall be distributed as follows:
"(1) An amount for the reserve fund which shall
be at least ten per centum (10%) of net surplus.
Allocation and Distribution of Net Surplus
Filipina H. Porio
Chief – Registration Unit
CDA Regional Office 1

2. Allocation and Distribution of Net Surplus
Reserve Fund:
Provided, That in the first five (5) years of operation after registration, this
amount shall not be less than fifty per centum (50%) of the net surplus
Date of Registration – January 2020
application – Year 2020 to 2024 (50%)
 if the net surplus is 100,000.00, the reserve fund – 50,000.00 (50%)

3. Allocation and Distribution of Net Surplus
Reserve Fund:
1) The reserve fund shall be used for the stability of the cooperative and to meet net
losses in its operations.
 presentation in the Statement of Operation: CY 2020
Net Loss - (50,000.00)
Statutory Funds:
Reserve Fund- (50,000.00)
Cooperative Education and Training Fund (00.00)
Optional Fund (00.00)
Community Development Fund (00.00)

4. Allocation and Distribution of Net Surplus
Reserve Fund:
 The general assembly may decrease the amount allocated to the reserve fund when
the reserve fund already exceeds the share capital. (authorized)
e.g. Reserve Fund - 1,000,000.00
Authorized Share Capital 900,000.00
Excess RF-ASC 100,000.00
(may be used at anytime for any project that would expand the operations of the cooperative.)

5. Allocation and Distribution of Net Surplus
Reserve Fund:
"(c) Upon the dissolution of the cooperative, the reserve fund shall not be distributed
among the members. The general assembly may resolves:
(i) To establish a usufructuary trust fund for the benefit of any federation or union
to which the cooperative is affiliated;
(Article 562 of the New Civil Code clearly provides that “usufruct gives a right to enjoy the
property of another with the obligation of preserving its form and substance, unless the
title constituting it or the law otherwise provides.”)

6. Allocation and Distribution of Net Surplus
• Reserve Fund:
"(ii) To donate, contribute, or otherwise dispose of the amount for the benefit of
the community where the cooperative operates.
If the members cannot decide upon the disposal of the reserve fund, the same
shall go to the federation or union to which the cooperative is affiliated.

7. Allocation and Distribution of Net Surplus
• (2) Education and training fund, shall not be more than ten per centum
(10%) of the net surplus.
(e.g. 1%-10%)
"(a) Half of the amounts transferred to the education and training fund
annually under this subsection shall be spent by the cooperative for education
and training purposes; (50% of 10%)

8. Allocation and Distribution of Net Surplus
• Education and training fund:
while the other half may be remitted to a union or federation chosen by the cooperative or
of which it is a member. (50%-union or federation )
 MC No. 2020-01
All registered cooperatives with accumulated CETF as of December 31, 2018
intended for Secondary or Tertiary Federation or Unions shall comply with the
provisions of this Guidelines, particularly on the remittance of the CETF. Following
this schedule:
Remaining balance of CETF Period of Remittance
Below 3,000,000.00 Within 3 years (2021-2023)
Above 3,000,000.00 to 10,000,000.00 Within 5 years (2021-2025)
Above 10,0000,000.00 Within 10 years (2021-2030)

9. Allocation and Distribution of Net Surplus
• Education and training fund:
"(b) Upon the dissolution of the cooperative, the unexpended balance of the
education and training fund appertaining to the cooperative shall be credited to
the cooperative education and training fund of the chosen union or federation.

10. Allocation and Distribution of Net Surplus
• Community development fund, which shall not be less than three per
centum (3%) of the net surplus. (3%-up)
• The community development fund shall be used for projects or activities
that will benefit the community where the cooperative operates.

11. Allocation and Distribution of Net Surplus
• Community development fund: (CDF)
MC No. 2021-01
Utilization of CDF:
 The cooperative may ‘adopt a community program. (more 1 community
within the area of operation.)
 For medium and large cooperative. The CDF shall be used for
infrastructure projects, at least 50% but not to exceed 60%;
 For small and micro cooperative, they shall use their CDF for infrastructure
projects or social services at their desired percentage of allocation.

12. Allocation and Distribution of Net Surplus
• Community development fund:
Unexpended amount of CDF:
Remaining balance of CDF Period of utilization
Below 3,000,000.00 Within 3 years
Above 3,000,000.00 to 10,000,000.00 Within 5 years
Above 10,000,000.00 Within 10 years

13. Allocation and Distribution of Net Surplus
• Optional fund, a land and building, and any other necessary fund the total of
which shall not exceed seven per centum (7%). (Members benefit)
• Provided, however, that the total amount allocated for the CDF and optional
fund shall not exceed ten per centum (10%) of the net surplus. (memo circular
no. 2021-01)

14. Allocation and Distribution of Net Surplus
Interest on Share Capital and Patronage Refund.
• The remaining net surplus shall be made available to the members
in the form of interest on share capital and patronage
refunds.
• In the case of a member patron with paid-up share capital
contribution,
• the patronage refund shall be paid to him.
• In the case of a member patron with unpaid share capital
contribution, the patronage refund shall be credited to his/her
account until the share capital contribution has been fully paid

15. Allocation and Distribution of Net Surplus
Interest on Share Capital and Patronage Refund.
• In the case of non-member patron, his/her proportionate amount of
patronage refunds shall be set aside in a general fund for such patron.
• Failed to comply with the requirements for membership of the non-
member patron. The amount for such patron shall be credited to the
Reserve Fund or to the Education and Training Fund.