§ 7-58-1007 — Limitation on distributions

(1) A limited cooperative association
may not make a distribution if, after the distribution:

(a) The association would not be able to pay its debts as they become due in
the ordinary course of the association's activities; or

(b) The association's assets would be less than the sum of its total liabilities.

(2) A limited cooperative association may base a determination that a
distribution is not prohibited 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.

(3) Except as otherwise provided in subsection (4) of this section, the effect
of a distribution allowed under subsection (2) of this section is measured:

(a) In the case of distribution by purchase, redemption, or other acquisition of
financial rights in the limited cooperative association, as of the date money or other
property is transferred or debt is incurred by the association; and

(b) In all other cases, as of the date:

(I) The distribution is authorized, if the payment occurs not later than one
hundred twenty days after that date; or

(II) The payment is made, if payment occurs more than one hundred twenty
days after the distribution is authorized.

(4) If indebtedness is issued as a distribution, each payment of principal or
interest on the indebtedness is treated as a distribution, the effect of which is
measured on the date the payment is made.

(5) For purposes of this section, distribution does not include reasonable
amounts paid to 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.

Legislative History

Source: L. 2011: Entire article added, (SB 11-191), ch. 197, p. 800, � 1, effective April 2, 2012.