Vermont § 1004 - Allocations of profits and losses

§ 1004. Allocations of profits and losses

• (a) The organic rules may provide for allocating profits of a mutual benefit enterprise
  among members, among persons that are not members but conduct business with the enterprise,
  to an unallocated account, or to any combination thereof. Unless the organic rules
  otherwise provide, losses of the enterprise shall be allocated in the same proportion
  as profits. (b) Unless the organic rules otherwise provide, all profits and losses of a mutual benefit
  enterprise shall be allocated to patron members. (c) If a mutual benefit enterprise has investor members, the organic rules may not reduce
  the allocation to patron members to less than 50 percent of profits. For purposes
  of this subsection, the following rules apply: (1) amounts paid or due on contracts for the delivery to the enterprise by patron members
  of products, goods, or services are not considered amounts allocated to patron members;
  and (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) of this section: (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 purposes of allocation of profits and losses or specific items of profits or losses
  of a mutual benefit enterprise 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. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)