Net Surplus Distribution

The Net Surplus from operation at the end of every fiscal year must be allocated and distributed in accordance with the provision of Section 1, Article VI of the By-Laws.

Calendar Year

The Calendar Year of the AUFCOOP shall commence on the first day of January and shall end on the last day of December.

Allocation and Distribution of Net Surplus

• Reserve Fund – At least ten (10) percent of the net surplus shall be set aside for the Reserve Fund to serve the following purposes:
  
  
  • The reserve fund shall be used for the stability of the AUFCOOP to meet net losses in its operations;
  • The reserve fund shall not be utilized for investment, other than those allowed in the Philippine Cooperative Code of 2008. Any amount from the reserve fund that is in excess of the share capital may be used for any project that would expand the operations of the Cooperative; and
  • Upon the dissolution of the AUFCOOP, the reserve fund shall not be distributed among the members. Instead, the said fund shall be used to:
  • Establish a usufruct fund for the benefit of any federation or union to which the Cooperative is affiliated; and
  • Donate, contribute, or otherwise dispose the amount for the benefit of the community where the Cooperative operates. If the member cannot decide upon the disposal of the reserve fund, the same shall go to the federation or union to which the Cooperative is affiliated.

• Education and Training Fund – At least five (5) percent of the net surplus shall be set aside for the Education and Training Fund to serve the following purposes:

• One half (½) or fifty (50) percent of the total amount transferred annually to the education and training fund may be spent for education and training, and other purposes; while the other half or fifty (50) percent may be remitted to a union or federation chosen by the cooperative or of which the AUFCOOP is a member; and
• Upon the dissolution of the AUFCOOP, 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 above mentioned apex organizations.

• Optional Fund – a fund not exceeding two (2) percent of the net surplus of the AUFCOOP shall be set aside for land and building development and other necessary improvements .

• Community Development Fund – At least three (3) percent of the net surplus shall be set aside for projects or activities that will benefit the community where the AUFCOOP operates.

• Interest on Share Capital and Patronage Refunds – The remaining eighty (80) percent of the net surplus shall be made available to the members in the form of interest on share capital, which should not exceed the normal rate of return on investments prescribed by CDA, and patronage refunds.

Allocation and Distribution of Interest on Share Capital and Patronage Refunds

The Board of Directors, shall determine the allocation and distribution of interest on share capital and patronage refund at the end of every calendar year. Such allocation and distribution shall be based on the results of operation. In the absence of any agreement the following may be applied:

a. Interest on Share Capital ...................... 70% of the Total Allocation
b. Patronage Refunds ............................... 30% of the Total Allocation

The rate of interest shall be computed as:

Formula: Rate of ISC = 70% X (Net Surplus-Statutory Reserves)
Total Average Share Month (TASM)

Rate of PR = 30% X (Net Surplus-Statutory Reserves)
Total Interest on Loans

Limitations in the Distribution of Patronage Refunds

The sum allocated for patronage refunds shall be made available at the same rate to all the members of the AUFCOOP in proportion to their individual patronage, provided that:

• In the case of a member with paid-up share capital contributions, the proportionate amount of patronage refund shall be paid to him/her unless the member agrees to credit the amount to his/her account as additional share capital contributions, if possible, or to the member’s savings deposits, if there is any; or
• In the case of a member who has arrears on motor vehicle loan, business loan, housing loan and bridge financing, a minimum of fifty (50) percent of the patronage refund shall be credited to the member’s account until arrears on the said loans have been fully paid.