(a) At least once each year the members or directors of a cooperative association, as provided by the certificate of formation or bylaws of the cooperative association, shall apportion the net savings of the cooperative association in the following order:
(1) subject to Section 251.301, investment dividends payable from the surplus of the total assets over total liabilities may be paid on invested capital or, if authorized by the bylaws, may be paid on the membership certificates;
(2) a portion of the remainder, as determined by the certificate of formation or bylaws, may be allocated to an educational fund to be used in teaching cooperation;
(3) a portion of the remainder may be allocated to funds for the general welfare of the members of the cooperative association;
(4) a portion of the remainder may be allocated to retained earnings; and
(5) the remainder shall be allocated at the same uniform rate to each patron of the cooperative association in proportion to individual patronage as follows:
(A) for a member patron, the proportionate amount of savings return distributed to the member may be any combination of cash, property, membership certificates, or investment certificates; and
(B) for a subscriber patron, the patron’s proportionate amount of savings returns as provided by the certificate of formation or bylaws may be distributed to the subscriber patron or credited to the subscriber patron’s account until the amount of capital subscribed for has been fully paid.
(b) This section does not prevent a cooperative association engaged in rendering services from disposing of the net savings from the rendering of services in a manner that lowers the fees charged for services or furthers the common benefit of the members.

Terms Used In Texas Business Organizations Code 251.302

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Association: means an entity governed as an association under Title 6 or 7. See Texas Business Organizations Code 1.002
  • Certificate of formation: means :
    (A) the document required to be filed with the filing officer under Chapter 3 to form a filing entity; and
    (B) if appropriate, a restated certificate of formation and all amendments of an original or restated certificate of formation. See Texas Business Organizations Code 1.002
  • cooperative association: means an association governed as a cooperative association under Chapter 251. See Texas Business Organizations Code 1.002
  • Individual: means a natural person. See Texas Business Organizations Code 1.002
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Member: means :
    (A) in the case of a limited liability company, a person who has become, and has not ceased to be, a member in the limited liability company as provided by its governing documents or this code;
    (B) in the case of a nonprofit corporation, a person who has membership rights in the nonprofit corporation under its governing documents;
    (C) in the case of a cooperative association, a member of a nonshare or share association;
    (D) in the case of a nonprofit association, a person who has membership rights in the nonprofit association under its governing documents; or
    (E) in the case of a professional association, a person who has membership rights in the professional association under its governing documents. See Texas Business Organizations Code 1.002
  • Property: includes tangible and intangible property and an interest in that property. See Texas Business Organizations Code 1.002
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • Subscriber: means a person who agrees with or makes an offer to an entity to purchase by subscription an ownership interest in the entity. See Texas Business Organizations Code 1.002
  • Year: means 12 consecutive months. See Texas Government Code 311.005

(c) A cooperative association may adopt a system in which:
(1) the payment of savings returns that would otherwise be distributed are deferred for a fixed period; or
(2) the savings returns distributed are partly in cash or partly in shares, to be retired at a fixed future date, in the order of the shares’ serial numbers or issuance dates.

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