Iowa Code 501A.1006 – Allocations and distributions — net income
A cooperative may set aside a portion of net income allocated to the patron membership interests as the board determines advisable to create or maintain a capital reserve.
Terms Used In Iowa Code 501A.1006
- Board: means the board of directors of a cooperative. See Iowa Code 501A.102
- Cooperative: means a business association organized under this chapter. See Iowa Code 501A.102
- 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.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Member: means a person or entity reflected on the books of a cooperative as the owner of governance rights of a membership interest of the cooperative and includes patron and nonpatron members. See Iowa Code 501A.102
- Patron: means a person or entity who conducts patronage with the cooperative, regardless of whether the person is a member. See Iowa Code 501A.102
- Patronage: means business, transactions, or services done for or with the cooperative as defined by the cooperative. See Iowa Code 501A.102
In addition to a capital reserve, the board may, for patron membership interests, do any of the following:
Net income allocated to patron members in excess of dividends on equity and additions to reserves shall be distributed to patron members on the basis of patronage. A cooperative may establish allocation units, whether the units are functional, divisional, departmental, geographic, or otherwise. The cooperative may provide for pooling arrangements. The cooperative may account for and distribute net income to patrons on the basis of allocation units and pooling arrangements. A cooperative may offset the net loss of an allocation unit or pooling arrangement against the net income of other allocation units or pooling arrangements.
A distribution of net income shall be made at least annually. The board shall present to the members at their annual meeting a report covering the operations of the cooperative during the preceding fiscal year.
A cooperative may distribute net income to patron members in cash, capital credits, allocated patronage equities, revolving fund certificates, or its own or other securities.
A cooperative may provide in the bylaws that nonmember patrons are allowed to participate in the distribution of net income payable to patron members on equal terms with patron members.
If a nonmember patron with patronage credits is not qualified or eligible for membership, a refund due may be credited to the nonmember patron’s individual account. The board may issue a certificate of interest to reflect the credited amount. After the nonmember patron is issued a certificate of interest, the nonmember patron may participate in the distribution of net income on the same basis as a patron member.