§ 501A.1006 — Allocations and distributions — net income

Iowa § 501A.1006

• Jurisdiction: Iowa
• Title XII: BUSINESS ENTITIES
• Ch. 501A: COOPERATIVE ASSOCIATIONS ACT

Text

1. Distribution of 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.
2. Reserves. In addition to a capital reserve, the board may, for patron membership
interests, do any of the following:
a. Set aside an amount not to exceed five percent of the annual net income of the
cooperative for promoting and encouraging cooperative organization.
b. Establish and accumulate reserves for new buildings, machinery and equipment,
depreciation, losses, and other proper purposes.
3. Patronage distributions. 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.
4. Frequency of distribution. 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.
5. Form of distribution. A cooperative may distribute net income to patron members in
49 COOPERATIVE ASSOCIATIONS ACT, §501A.1008
cash, capital credits, allocated patronage equities, revolving fund certificates, or its own or
other securities.
6. Eligible nonmember patrons. 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.
7. Patronage credits for ineligible 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.