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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 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.
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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