802 Patronage Capital in Connection With Furnishing Electric Ene
In the furnishing of electric energy, the Cooperative’s operations shall be so conducted 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 nonprofit basis, the Cooperative is obligated to account on a patronage basis to all its patrons for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. 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 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 the 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 one’s account. All such amounts credited to 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 non-operating margins such as interest income, dividend income and margins from marketing operations in excess of costs and expenses may, insofar as permitted by law, be (a) used to offset any losses incurred during the current, any prior or future fiscal year, and (b) to the extent not needed for that purpose, at the authorization of the board of directors, 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.
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 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 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. Notwithstanding any other provision of these Bylaws, the board shall determine the timing, method of allocation, basis, amount, priority, and order of any amounts furnished as patronage capital.
Capital credited to the account 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 directors, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provisions of these Bylaws, the board of directors shall at its discretion have the power at any time upon the death of any patron who was a natural person, if their legal representative or estate shall request in writing that the capital so credited or assigned, as the case may be, be retired prior to the time such capital would otherwise be retired under the provisions of the Bylaws, to retire such capital immediately upon such terms and conditions as the board of directors, acting under policies of general application to the situations of like kind which account for the applicable discount for the value such funds would otherwise be used and enjoyed by the Cooperative under normal rotation, and such legal representatives, shall agree upon: PROVIDED, however, that the financial condition of the Cooperative will not be impaired thereby. The cessation of the existence of a patron which was a non-natural person shall not entitle it to immediate payment of capital credits; rather, such credits shall continue in normal rotation, assigned to such persons or entities who shall be its successor of interest.
The Cooperative, before retiring any capital credited to any patron’s account, shall deduct therefrom any amount owing by such patron to the Cooperative, together with interest thereon at the legal rate. At all times while the Cooperative continues to have possession of patronage equities of its membership, the Cooperative shall have a possessory security interest and a right of set-off in the present value of such equity against any debts owed by a member to the Cooperative before making any distribution thereof to the member, assignee or heirs. Insolvency or bankruptcy, whether individual, partnership, or corporate, shall not be grounds for early or accelerated retirement.