Guam § 171004 - Allocations of Profits and Losses.

§ 171004. Allocations of Profits and Losses.

(a) The organic rules may provide for allocating profits of a limited cooperative association among

members, to an unallocated account, or to any combination thereof. Unless the organic rules otherwise

provide, losses of the association must be allocated in the same proportion as profits.

(b) Unless the organic rules otherwise provide, all profits and losses of a limited cooperative

association must be allocated to patron members.

(c) If a limited cooperative association has investor members, the organic rules may not reduce the

allocation to patron members to less than fifty percent (50%) of profits. For purposes of this Subsection,

the following rules apply:

COL 2025-04-22

(1) Amounts paid or due on contracts for the delivery to the association by patron members of

products, goods, or services are not considered amounts allocated to patron members.

(2) Amounts paid, due, or allocated to investor members as a stated fixed return on equity are not

considered amounts allocated to investor members.

(d) Unless prohibited by the organic rules, in determining the profits for allocation under Subsections

(a), (b), and (c) of this Section, the board of directors may first deduct and set aside a part of the profits to

create or accumulate:

(1) an unallocated capital reserve; and

(2) reasonable unallocated reserves for specific purposes, including expansion and replacement

of capital assets, education, training, cooperative development, creation and distribution of information

concerning principles of cooperation, and community responsibility.

(e) Subject to Subsections (b) and (f) of this Section and the organic rules, the board of directors shall

allocate the amount remaining after any deduction or setting aside of profits for unallocated reserves under

Subsection (d):

(1) to patron members in the ratio of each member’s patronage to the total patronage of all patron

members during the period for which allocations are to be made; and

(2) to investor members, if any, in the ratio of each investor member’s contributions to the total

contributions of all investor members.

(f) For the purposes of allocation of profits and losses or specific items of profits or losses of a limited

cooperative association to members, the organic rules may establish allocation units or methods based on

separate classes of members or, for patron members, on class, function, division, district, department,

allocation units, pooling arrangements, members’ contributions, or other equitable methods.