308A.705 DISTRIBUTION OF INCOME.
Subdivision 1. Distribution of net income.
Net income in excess of dividends on capital
stock, nonstock units of equity, and additions to reserves shall be distributed on the basis of
patronage. A cooperative may establish allocation units, whether the units are functional,
divisional, departmental, geographic, or otherwise, and pooling arrangements and may account for
and distribute net income 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 to the extent permitted by section 1388(j) of the
Internal Revenue Code of 1986, as amended through December 31, 1996.
Subd. 2. Frequency of income distribution.
(a) Distribution of net income shall be made at
(b) A cooperative with income from trucking operations may only distribute net income
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.
Subd. 3. Dividends.
Dividends may be paid on common stock and nonstock units of equity
only if the net income of the cooperative for the previous fiscal year is sufficient. Unless otherwise
provided in the articles of incorporation, the dividends are not cumulative.
Subd. 4. Form of distribution.
A cooperative may distribute net income in cash, capital stock
credits, allocated patronage equities, revolving fund certificates, or its own or other securities.
Subd. 5. Eligible nonmember patrons.
(a) The members may provide in the bylaws that
nonmember patrons are allowed to participate in the distribution of net income on equal terms
with member patrons.
(b) If a nonmember patron is qualified and eligible for membership, the amount of patronage
refund due shall be credited to the patron's individual account.
(c) If the credits equal the value of a share of common stock that entitles the stockholder to
vote, or a membership, a share of stock or a membership shall be issued to the nonmember patron.
Subd. 6. 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 patron's
individual account. If the credited amount in the individual account of a patron ineligible for
membership equals the value of a share of common stock and does not entitle the holder to vote,
or to preferred stock or a certificate of interest, the board may issue a share of preferred stock or
a certificate of interest. After the patron is issued preferred stock or a certificate of interest, the
patron may participate in the distribution of income on the same basis as a stockholder or member.
History: 1989 c 144 art 1 s 38; art 3 s 25; 1997 c 231 art 16 s 11; 1998 c 401 s 47,48;
2000 c 379 s 2