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272A.10-070 Limitations on distributions.
(1)
(2)
(3)
(4)
(5)
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 associations activities;
(b) The associations assets would be less than the sum of its total liabilities;
or
(c) The distribution violates the organic rules.
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.
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.
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.
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.
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