Section 8.01. Nonprofit and Cooperative Operation. The Cooperative: (1) shall operate on a nonprofit and cooperative basis for the mutual benefit of all Members; and (2) may not pay interest or dividends on capital furnished by Patrons.
Section 8.02. Allocation of Capital Credits. The Cooperative shall allocate Capital Credits as provided in this Bylaw. The Cooperative must allocate Capital Credits in a patron's name as shown in the Cooperative's records, regardless of the patron's marital status.
- Patron. The term "patron" means, during a fiscal year, either: (1) a member of the Cooperative, or (2) any other individual or entity purchasing a good or service from the cooperative to whom the Cooperative has a pre-existing legal obligation to allocate capital credits.
- Allocating Earnings. For each good or service provided by the Cooperative on a cooperative basis during a fiscal year, the Cooperative shall equitably allocate to each patron, in proportion to the quantity or value of the good or service purchased by the patron during the fiscal year and timely paid for by the patron, the Cooperative's patronage earnings from providing the good or service during the fiscal year, which is the amount by which the Cooperative's patronage sourced revenues from providing the good or service exceed the Cooperative' s patronage sourced expenses of providing the good or service, all as determined under federal cooperative tax law. If the Cooperative's patronage sourced expenses of providing the good or service during the fiscal year exceed the Cooperative's patronage sourced revenues from providing the good or service during the fiscal year, all as determined under federal cooperative tax law, then the Cooperative shall: (1) allocate this patronage loss to each patron in proportion to the quantity or value of the good or service purchased by the patron during the fiscal year, (2) offset this patronage loss with the Cooperative's patronage earnings from providing the good or service during the most recent past fiscal year(s) or the next succeeding future fiscal year(s); or (3) offset this patronage loss first with the Cooperative's nonpatronage earnings during the current fiscal year, second with the Cooperative's unallocated nonpatronage earnings during any past fiscal year(s), and third with the Cooperative's nonpatronage earnings during any future fiscal year(s).
As determined by the Board, the Cooperative may use, retain, or equitably allocate the Cooperative's nonpatronage earnings, if any, which is the amount by which the Cooperative's nonpatronage sourced revenues during a fiscal year exceed the Cooperative's nonpatronage sourced expenses during the fiscal year, less any amount needed to offset a patronage loss.
For each amount allocated to a patron, the patron shall contribute a corresponding amount to the Cooperative as capital. The Cooperative shall credit all capital contributions from a patron to a capital account for the patron. The Cooperative shall maintain books and records reflecting the capital contributed by each patron. At the time of receipt by the Cooperative, each capital contribution will be treated as though the Cooperative paid the allocated amount to the patron in cash pursuant to a pre-existing legal obligation and the patron contributed the corresponding amount to the Cooperative as capital. The term "capital credit" means the amounts allocated to a patron and contributed by the patron to the Cooperative as capital.
Consistent with this bylaw, the allocation of capital credits is in the discretion of the Board and the Board shall determine the manner, method, and timing of allocating capital credits. As reasonable and fair, the Cooperative may allocate capital credits to classes of similarly situated patrons under different manners, methods, and timing, provided the Cooperative allocates capital credits to similarly situated patrons under the same manner, method, and timing. The Cooperative may use or invest unretired capital credits as determined by the Board.
If the Cooperative is a member, patron, or owner of an entity from which the Cooperative purchases a good or service used by the Cooperative in providing a good or service and from which the Cooperative is allocated a capital credit or similar amount, then, as determined by the Board and consistent with this bylaw, the Cooperative may separately identify and allocate to the Cooperative's patrons this capital credits or similar amount allocated by the entity.
Upon the Cooperative receiving written notice and sufficient proof of the death of a spouse in a joint membership, the Cooperative shall assign and transfer to the surviving spouse the capital credits allocated, or to be allocated, to the joint membership. Upon the Cooperative receiving written notice and sufficient proof of the dissolution of marriage between spouses in a joint membership, and unless otherwise instructed by a court or administrative body of competent jurisdiction, the Cooperative may assign and transfer to each spouse 1/2 of the capital credits allocated to the joint membership.
Section 8.03. Notification and Assignment of Capital Credits. Within a reasonable time following the end of each fiscal year, the Cooperative may, but is not required to, notify each patron in writing of the stated dollar amount of capital credits allocated to the patron for the preceding fiscal year, PROVIDED, HOWEVER, that individual notices of such amounts furnished by each natural person shall not be required if the Cooperative notifies all patrons of the aggregate amount of such excess and provides a clear explanation of how each patron may compute and determine for himself the specific amount of capital so credited. Unless the Board determines otherwise, and unless these bylaws provide otherwise, the Cooperative may assign or transfer a patron's capital credits only if: (1) the Cooperative receives a written request signed by the patron to assign or transfer the capital credits, (2) the patron and the assignee or transferee comply with all reasonable requirements specified by the Cooperative, and (3) the Board approves the assignment or transfer.
Section 8.04. Retirement of Capital Credits. At any time before the Cooperative's dissolution, liquidation, or other cessation of existence, the Cooperative may generally retire and pay some or all capital credits allocated to patrons and former patrons. Any retirements of capital furnished prior to November 30, 1987, shall be made in order of priority according to the year in which the capital was furnished and credited, the capital first received by the Cooperative being first retired.
If the Cooperative separately identified and allocated capital credits representing capital credits or similar amounts allocated to the Cooperative by an entity in which the Cooperative is or was a member, patron, or owner, then the Cooperative shall retire and pay these capital credits before or after the entity retires and pays the capital credits or similar amounts to the Cooperative.
After retiring capital credits allocated to a patron or former patron, the Cooperative may recoup, offset, or set-off any amount owed to the Cooperative by the patron or former patron, including any compounded interest and late payment fee, by reducing the amount of retired capital credits paid to the patron or former patron by the amount owed.
The Cooperative may retire and pay capital credits only if the Board determines that the retirement and payment will not adversely impact the Cooperative's financial condition. Consistent with this bylaw, the retirement and payment of capital credits are in the discretion of the Board and the Board shall determine the manner, method, and timing of retiring and paying capital credits. As reasonable and fair, the Cooperative may retire and pay capital credits to classes of similarly situated patrons under different manners, methods, and timing, provided the Cooperative retires and pays capital credits to similarly situated patrons under the same manner, method, and timing.
The Cooperative may regularly impose a reasonable dormancy or service charge for each year a patron or former patron fails to claim capital credits retired and paid to the patron or former patron. Through a voluntary written assignment signed by a patron or former patron, which assignment is revocable and is not a condition of the Cooperative providing a good or service to the patron, the patron or former patron may assign or transfer to the Cooperative any past, present, or future capital credits retired and paid to the patron or former patron, but not claimed by the patron or former patron within 2 years of retirement and payment, provided the Cooperative undertook or undertakes reasonable measures to notify the patron or former patron of the retired and paid capital credits.
Section 8.05. Retirement of Discounted Capital Credits to Decedent's Estates. Upon the death of an individual patron or former patron, upon receiving a written request from the deceased individual's legal representative, and under terms and conditions agreed upon by the Cooperative and the deceased individual's legal representative, the Cooperative may specially retire some or all capital credits allocated to the individual, however, same shall be discounted for time value of money. So long as allowed by Indiana law, all such legal representatives who are not officially appointed as the personal representative of the decedent's estate shall be required to execute an affidavit releasing the Cooperative of liability consistent with Indiana Code 29-1-8, as amended. The remaining balance of the discounted capital credit shall be recorded as permanent equity on the books and records of the Cooperative and shall not be retired except in the case of dissolution.
Section 8.06. No Special Retirement of Capital Credits for Entities. Upon the dissolution, liquidation, or other cessation of existence of an entity patron or former patron, the Cooperative may not specially retire and pay capital credits allocated to the former entity. Upon the reorganization, merger, or consolidation of an entity patron or former patron, the Cooperative may not specially retire and pay capital credits allocated to the entity.