Kentucky Statutes 272A.10-070 – Limitations on distributions
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(1) A limited cooperative association may not make a distribution if, after the distribution:
(a) The association would not be able to pay its debts as they become due in the ordinary course of the association’s activities;
(b) The association’s assets would be less than the sum of its total liabilities; or
(c) The distribution violates the organic rules.
(2) A limited cooperative association may base a determination that a distribution is not prohibited under subsection (1) of this section on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(3) Except as otherwise provided in subsection (4) of this section, the effect of a distribution allowed under subsection (2) of this section is measured:
(a) In the case of distribution by purchase, redemption, or other acquisition of financial rights in the limited cooperative association, as of the date money or other property is transferred or debt is incurred by the association; and
(b) In all other cases, as of the date:
1. The distribution is authorized, if the payment occurs not later than one hundred twenty (120) days after that date; or
2. The payment is made, if payment occurs more than one hundred twenty
(120) days after the distribution is authorized.
(4) If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made.
(5) For purposes of this section, “distribution” does not include reasonable amounts paid to a member in the ordinary course of business as payment or compensation for commodities, goods, past or present services, or reasonable payments made in the ordinary course of business under a bona fide retirement or other benefits program.
Effective: July 12, 2012
History: Created 2012 Ky. Acts ch. 160, sec. 83, effective July 12, 2012.
(a) The association would not be able to pay its debts as they become due in the ordinary course of the association’s activities;
Terms Used In Kentucky Statutes 272A.10-070
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Cooperative: means a limited cooperative association or an entity organized under any cooperative law of any jurisdiction. See Kentucky Statutes 272A.1-020
- Financial rights: means the right to participate in allocations and distributions as provided in Subchapters 10 and 12 of this chapter, but does not include rights or obligations under a marketing contract governed by Subchapter 7 of this chapter. See Kentucky Statutes 272A.1-020
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Member: means a person that is admitted as a patron member or investor member, or both, in a limited cooperative association. See Kentucky Statutes 272A.1-020
(b) The association’s assets would be less than the sum of its total liabilities; or
(c) The distribution violates the organic rules.
(2) A limited cooperative association may base a determination that a distribution is not prohibited under subsection (1) of this section on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(3) Except as otherwise provided in subsection (4) of this section, the effect of a distribution allowed under subsection (2) of this section is measured:
(a) In the case of distribution by purchase, redemption, or other acquisition of financial rights in the limited cooperative association, as of the date money or other property is transferred or debt is incurred by the association; and
(b) In all other cases, as of the date:
1. The distribution is authorized, if the payment occurs not later than one hundred twenty (120) days after that date; or
2. The payment is made, if payment occurs more than one hundred twenty
(120) days after the distribution is authorized.
(4) If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made.
(5) For purposes of this section, “distribution” does not include reasonable amounts paid to a member in the ordinary course of business as payment or compensation for commodities, goods, past or present services, or reasonable payments made in the ordinary course of business under a bona fide retirement or other benefits program.
Effective: July 12, 2012
History: Created 2012 Ky. Acts ch. 160, sec. 83, effective July 12, 2012.