Proposed Bylaw Amendment
Your vote is needed to keep your cooperative in compliance with tax laws.
Note: Proposed changes appear in blue. Language to be removed is printed in red.
SECTION 2. PATRONAGE CAPITAL IN CONNECTION WITH FURNISHING ELECTRIC ENERGY. In the furnishing of electric energy, the Cooperative’s operation is being conducted so that all patrons will through their patronage, furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis, the Cooperative is obligated to account on a patronage basis to all of its patrons
for all amounts received and receivable in excess of operating costs and expenses, and other expenses properly chargeable against and to declare a patronage dividend in an amount equal to the Cooperative’s Federal taxable income with respect to the furnishing of electric energy with or for its patrons. All such amounts in excess of operating costs and expenses, at the moment of receipt by the Cooperative, are received with the understanding that they are furnished by the patrons as capital. The Cooperative is obligated to pay by credit to a capital credit account for each patron, all such amounts in excess of operating costs and other expenses properly chargeable against the furnishing of electric energy.
The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital account of each patron, and the Cooperative shall, within a reasonable time after the close of the fiscal year, notify each patron of the amount of capital so credited to his account. All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash, in pursuance of a legal obligation to do so, and the patron had then furnished the Cooperative corresponding amounts of capital.
In the event of dissolution or liquidation of the Cooperative, after an outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired without priority on a pro-rata basis before any payments are made on account of property rights of members. If, at any time prior to dissolution or liquidation, the Board of Trustees shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons’ accounts may be retired in full or in part. After August 14, 1975, and thereafter, the Board of Trustees shall determine the method, basis priority and order of retirement, if any, for all amount furnished as capital. In no event, however, may any such capital be retired unless the security provisions of the Deeds of Trust given by the Cooperative to the United States of America dated September 5, 1956 are, satisfied.
However, at the discretion of the Board of Trustees, a reasonable cash reserve over and above the minimum requirements of the Government’s Deeds of Trust provisions shall be maintained.
Capital credited to the accounts of each patron shall be assignable only on the books of the Cooperative pursuant to written instructions from the assignor and only to successors in interest or successors in occupancy in all or a part of such patron’s premises served by the Cooperative, unless the Board of Trustees of this Cooperative, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provisions of these Bylaws, the Board of Trustees, at its discretion, shall have the power at any time upon the death of any patron, who was a natural person, if the legal representatives of his estate shall request in writing that the capital credited to any such patron be retired prior to the time such capital would otherwise be retired under the provisions of these Bylaws to retire capital credited to such patron immediately upon such terms and conditions as the Board of Trustees, acting under policies of general application, and the legal representatives of such patron’s estate shall agree upon provided, however, that the financial condition of the Cooperative will not be impaired provided further, however, that the aggregate amounts so retired in any one year shall not exceed five percent (5%) of the Cooperative’s capital; and provided further, however, that, if acting under policies of general application the percentage mentioned above is not sufficient to retire the capital credited to any such patron or patrons, such patron or patrons shall have the capital credited to them retired in the next succeeding year before any other retirements are made in any succeeding year.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Bylaws shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provisions. The provisions of this article of the Bylaws shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative’s office.
The Board of Trustees shall have complete discretion and authority to determine the handling and ultimate disposition of the Cooperative’s patronage sourced losses, as well as the form, priority and manner in which such losses or portions thereof shall be taken into account, retained and ultimately disposed of or recovered. Without limiting the generality of the foregoing, the Board of Trustees may determine to cause any such patronage losses to be retained by the Cooperative and subsequently disposed of by any method of disposition as the Board of Trustees, in its sole discretion, shall determine from time to time to be in the Cooperative’s best interest.