(1) Unless the articles or bylaws otherwise provide, all profits and losses of a limited cooperative association must be allocated to patron members. Unless the articles or bylaws otherwise provide, losses of the association must be allocated in the same proportion as profits.
The articles or bylaws may provide for allocating profits of a limited cooperativeassociation among members, among persons that are not members but conduct business with the association, to an unallocated account, or to any combination thereof.
If a limited cooperative association has investor members, the articles or bylaws maynot reduce the allocation to patron members to less than fifty percent of profits. For purposes of this subsection (3), the following rules apply:
Amounts paid or due on contracts for the delivery to the association by patron members of products, goods, or services are not considered amounts allocated to patron members.
Amounts paid, due, or allocated to investor members as a stated fixed or variable rateof return on investment are not considered amounts allocated to investor members if the determination of the return is not related to or based on profits.
(4) Unless prohibited by the articles or bylaws, in determining the profits for allocation under subsections (1), (2), and (3) of this section, the board of directors may first deduct and set aside a part of the profits to create or accumulate:
Unallocated capital; and
Reasonable unallocated reserves for specific purposes, including expansion and replacement of capital assets; education, training, and cooperative development; creation and distribution of information concerning principles of cooperation; and community responsibility.
(5) Subject to subsections (1) and (6) of this section and the articles and bylaws, the board of directors shall allocate the amount remaining after any deduction or setting aside of amounts under subsection (4) of this section:
To patron members in the ratio of each member's patronage to the total patronage ofall patron members during the period for which allocations are to be made; and
To investor members, if any, in the ratio of each investor member's contributions tothe total contributions of all investor members.
(6) For purposes of allocation of profits and losses or specific items of profits or losses of a limited cooperative association to members, the articles or bylaws may establish allocation units or methods based on separate classes of members or, for patron members, on class, function, division, district, department, allocation units, pooling arrangements, members' contributions, or other equitable methods.
Source: L. 2011: Entire article added, (SB 11-191), ch. 197, p. 798, § 1, effective April 2, 2012.