Governance & Management Webinar PFCCO NCR February 24, 2023

1. ALLOCATION AND DISTRIBUTION OF
NET SURPLUS
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.
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%)

2. 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.)

3. (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%)

4. 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)

5. 3. 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.

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

7. • 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

8. • 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)

9. • 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
Interest on Share Capital and Patronage Refund.
8.7%
ISC should be higher than
inflation Rate

10. 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.

11. Rate of Net Surplus