Iowa Code 501.503 – Distribution of net savings
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The board shall annually dispose of the cooperative‘s earnings in excess of its operating expenses as follows:
1. If the articles authorize the payment of distributions on a class of interests, then the directors may declare a distribution pursuant to the articles. Distributions shall not exceed eight percent of the value of the interest in each fiscal year. The members may control the amount that is allocated under this subsection.
Terms Used In Iowa Code 501.503
- Articles: means the cooperative's articles of association. See Iowa Code 501.101
- Board: means the cooperative's board of directors. See Iowa Code 501.101
- Cooperative: means a cooperative association organized under this chapter or converted to this chapter pursuant to section 501. See Iowa Code 501.101
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Interest: means a voting interest or other interest in a cooperative as described in the cooperative's articles of association. See Iowa Code 501.101
- Member: means a person who owns a voting interest in a cooperative. See Iowa Code 501.101
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- United States: includes all the states. See Iowa Code 4.1
- year: means twelve consecutive months. See Iowa Code 4.1
2. To provide a reasonable reserve for depreciation, obsolescence, bad debts, or contingent losses or expenses. The members may control the amount that is allocated under this subsection.
3. To increase the cooperative’s retained savings to the extent determined by the board to be necessary based on its evaluation of the future needs and the competitive position of the cooperative.
4. The cooperative shall have an unconditional binding obligation to distribute to the members all remaining net savings as determined under the United States Internal Revenue Code. These net savings shall be allocated to each member in proportion to the business the member did with the cooperative during the preceding fiscal year. The net savings may be separately calculated for two or more categories of business, and allocated to the members on the basis of business done within each of these categories. Net savings shall be distributed in the form of cash or interests, or a combination of cash and interests, as determined by the board.