Section 7.01 Interest or Dividends on Capital Prohibited
The Cooperative shall at all times be operated on a cooperative non-profit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons.
Section 7.02 Patronage Capital in Connection with Furnishing Electric Distribution Service
In the furnishing of electric distribution service, the Cooperative’s operations shall be so conducted that all patrons, members and non-members alike, 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 its patrons, members and non-members alike, for all amounts received and receivable from the furnishing of electric distribution service in excess of operating costs and expenses properly chargeable against the furnishing of electric distribution service. 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, members and non-members alike, as capital. The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of operating costs and expenses. 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, give a general notice sufficient to enable each patron to compute his own 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 for capital. All other amounts received by the Cooperative from its operation in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, allocated to its patrons on a patronage basis and any amount so allocated shall be included as a part of the capital credited to the accounts of patrons, as herein provided. Notwithstanding any of the foregoing, however, the Cooperative shall retain any nonoperating margins as permanent equity, without allocation.
In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding Capital Credits shall be retired without priority on a prorata 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 Directors 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. The Board of Directors shall determine the method, basis, priority and order of retirement. Effective with refunds made after 1992, if on retirement of capital, any refund is a de minimis amount as determined by the Board of Directors, it will be donated by the patrons to the permanent capital of the Cooperative.
Notwithstanding any other provision of these bylaws, the Board of Directors, at its discretion, shall have the power to retire capital credited to a patron who is no longer a member of the Cooperative immediately upon such terms and conditions as the Board of Directors shall agree upon, provided, however, that the financial condition of the Cooperative will not be impaired thereby.
Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instruction from the assignor and only to successors in interest or successors in occupancy in all or part of such patron’s premises served by the Cooperative unless the Board of Directors, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provision of these bylaws, the Board of Directors, at its discretion, shall have the power at any time upon the death of any patron, who was a natural person or upon the termination or legal dissolution of a patron that was a business, if the legal representative of the patron or the patron’s 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 any such patron immediately upon such terms and conditions as the Board of Directors, acting under the 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 thereby.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Conversion 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. Patrons whose membership has terminated with the Cooperative and who have retained an interest in Capital Credits shall continue to be subject to the provisions regarding retirement as enumerated in this section.
Section 7.03 Capital Credit Recoupment & Offset
Notwithstanding any provisions of these bylaws to the contrary, and unless specifically prohibited by a statute of limitation or other governing law, after allocating Capital Credits to a patron or former patron, the Cooperative may recoup, offset, or setoff an amount the patron or former patron owes to the Cooperative, including any compounded interest and late payment fee, by reducing the allocated or net present value amount of Capital Credits assigned to the patron or former patron by the amount owed to the Cooperative.
Section 7.04 Assignment & Gift by Failure to Claim
- Notwithstanding any other provisions of the bylaws, if any patron or former patron fails to claim any cash retirement of Capital Credits from the Cooperative within 3 years after payment of the same has been made available to said patron or former patron, such failure shall be and constitutes an assignment and gift by such member of such Capital Credits to the Cooperative. Cash retirement of Capital Credits is made available by mailing the Capital Credit check to the last address provided to the Cooperative. If said check is returned as undeliverable then all future refunds are deemed to be made available to said patron or former patron at the time the refund amount is recorded to their Capital Credit account. No additional checks will be mailed until the patron or former patron provides the Cooperative with an updated address.
- Failure to claim any such payment within the meaning of this section shall include the failure of such patron or former patron to cash said Capital Credits check mailed by the Cooperative to the last address provided by said patron or former patron to the Cooperative.
- The assignment and gift provided for under this section shall become effective only upon the expiration of 3 years from the date when such payment of Capital Credits was made available to such patron or former patron without claim therefore and only after further expiration of 60 days following the giving of a Notice by mail or publication that unless such payment is claimed within 60 days, such gift to the Cooperative for the benefit of its members shall become effective and irrevocable.
- The notice by mail herein provided shall be one mailed by the Cooperative to such patron or former patron at the last known address. If notice by publication is given, such publication shall be one insertion in a newspaper circulated in the service area of the Cooperative.
- The 60 day period following the giving of such notice, either by mail or publications, shall be deemed to terminate 60 days after the mailing or publication of such notice.
- Any such funds that revert to the Cooperative shall be credited to the Cooperative’s General Fund and be used to reduce the cost of electricity to the members.