16-16-1004 - Allocations of profits and losses. - Utah Statutes

16-16-1004. Allocations of profits and losses.
(1) The organic rules may provide for allocating profits of a limited cooperativeassociation among members, among persons that are not members but conduct business with theassociation, to an unallocated account, or to any combination thereof. Unless the organic rulesotherwise provide, losses of the association shall be allocated in the same proportion as profits.
(2) Unless the organic rules otherwise provide, all profits and losses of a limitedcooperative association shall be allocated to patron members.
(3) If a limited cooperative association has investor members, the organic rules may notreduce the allocation to patron members to less than 50% of profits. For purposes of thisSubsection (3), the following rules apply:
(a) Amounts paid or due on contracts for the delivery to the association by patronmembers of products, goods, or services are not considered amounts allocated to patronmembers.
(b) Amounts paid, due, or allocated to investor members as a stated fixed return onequity are not considered amounts allocated to investor members.
(4) Unless prohibited by the organic rules, in determining the profits for allocation underSubsections (1), (2), and (3), the board of directors may first deduct and set aside a part of theprofits to create or accumulate:
(a) an unallocated capital reserve; and
(b) reasonable unallocated reserves for specific purposes, including expansion andreplacement of capital assets; education, training, cooperative development; creation anddistribution of information concerning principles of cooperation; and community responsibility.
(5) Subject to Subsections (2) and (6) and the organic rules, the board of directors shallallocate the amount remaining after any deduction or setting aside of profits for unallocatedreserves under Subsection (4):
(a) to patron members in the ratio of each member's patronage to the total patronage ofall patron members during the period for which allocations are to be made; and
(b) to investor members, if any, in the ratio of each investor member's contributions tothe total contributions of all investor members.
(6) For purposes of allocation of profits and losses or specific items of profits or losses ofa limited cooperative association to members, the organic rules may establish allocation units ormethods based on separate classes of members or, for patron members, on class, function,division, district, department, allocation units, pooling arrangements, members' contributions, orother equitable methods.

Amended by Chapter 378, 2010 General Session