(1) A limited cooperative association may not make a distribution if, after the distribution:
The association would not be able to pay its debts as they become due in the ordinarycourse of the association's activities; or
The association's assets would be less than the sum of its total liabilities.
A limited cooperative association may base a determination that a distribution is notprohibited under subsection (1) of this section on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
Except as otherwise provided in subsection (4) of this section, the effect of a distribution allowed under subsection (2) of this section is measured:
In the case of distribution by purchase, redemption, or other acquisition of financialrights in the limited cooperative association, as of the date money or other property is transferred or debt is incurred by the association; and
In all other cases, as of the date:
The distribution is authorized, if the payment occurs not later than one hundred twenty days after that date; or
The payment is made, if payment occurs more than one hundred twenty days afterthe distribution is authorized.
If indebtedness is issued as a distribution, each payment of principal or interest onthe indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made.
For purposes of this section, "distribution" does not include reasonable amounts paidto a member in the ordinary course of business as payment or compensation for commodities, goods, past or present services, or reasonable payments made in the ordinary course of business under a bona fide employee retirement or other benefits program.
Source: L. 2011: Entire article added, (SB 11-191), ch. 197, p. 800, § 1, effective April 2, 2012.