A lot of members have been asking various questions about Share Capital - what's it's for, difference vs Savings, can it be withdrawn, etc. Thus, in this issue of HPP SCOOP, we will discuss All About Share Capital.
Cooperative Share Capital is similar to, but not the same as, stocks in a corporation. In a corporation, voting power is proportional to the number of stocks held. While in a cooperative, every member only has one vote no matter the amount of his or her share capital. This is what is known in coop parlance as "one member, one vote" and is really the starting point for an understanding of how cooperatives operate.
Cooperatives are formed by and for members to serve their common goal. The "one member, one vote" system ensures that coops act only in the best interest of the general membership. In a cooperative, no single person or group can control the votes on important matters and direction the cooperative will take. So whether you have P500.00 or P500,000.00 share capital, in a cooperative, you have the same influence as everybody else, i.e. one vote.
This is what makes cooperatives unique.
Difference between Share Capital and Savings Deposit
Share Capital is your mandatory fixed investment in the cooperative and can only be withdrawn upon cancellation of membership. It earns dividends and has a par value of P100.00 per share. Dividends vary depending on the performance of the cooperative. Previous years' dividend rates were between 3-5%. The minimum Share Capital subscription is 200 shares or P20,000.00 which can be paid through capital build-up of at least P500.00 per month.
Can I stop my monthly Share Capital Build-Up?
Yes. After completing the minimum Share Capital of P20,000.00, the monthly share capital build-up becomes optional. However, please note that the amount of your paid-up share capital affects your maximum loanable amount from the Coop (please refer to the Credit Policy for more info).
Is there a maximum Share Capital?
The current Share Capital Policy sets a maximum of P500,000.00 share capital per member. Once the P500,000.00 cap is reached, contributions automatically stop or can go to Savings Deposit. This is again linked to the objective of giving equal opportunities for all members.
Savings Deposit, on the other hand, is similar to savings account in a bank. However, the HPP Savings Deposit has a lot higher interest rate than most banks (i.e. currently at 1.25% p.a.) and is tax-free. Many members also find the HPP Savings Deposit more flexible vs Share Capital because Savings Deposit is withdrawable anytime even without cancellation of membership.
Know your Share Capital Contributions
You can check the status of your share capital simply by accessing the HPP Mobile App (available from Google Play or the App Store). Please note that data is updated monthly.
Your share capital is your ownership in the cooperative. We use the share capital to run the business of the cooperative. As members, we are also the main customer of the cooperative. Thus, your patronage of our productgs and services determines our net surplus (income) and how much dividend we get at the end of the year.
Your support is very much appreciated and if you have further questions about Share Capital or if you have any topics your want us to cover in the next issue of HPP SCOOP, please feel free to let us know.
