§421C-25  Allocation and distribution of netsavings.  (a)  At least once a year the members, the directors, or both, asthe articles or bylaws provide, shall apportion the net savings of theassociation to one or more of the following categories; except that not lessthan ten per cent shall be placed in a surplus fund until such time as the fundshall equal at least fifty per cent of the paid-up share or membership capital:

(1)  Interest-dividends, within the limitations ofsection 421C-19 may be paid upon share or membership capital;

(2)  A portion of the net savings as determined by thearticles or bylaws, may be allocated to an educational fund to be used tofurther the understanding of the practices and principles of cooperation;

(3)  The association may also choose to pay apatronage refund from net savings and this shall be allocated at the sameuniform rate to either the members or to all patrons of the association inproportion to their individual patronage, and according to the federal InternalRevenue Code of 1954, as amended; provided that:

(A)  In the case of a member patron, thepatron's proportionate amount of patronage refund shall be distributed to thepatron;

(B)  In the case of nonmember patrons, theirproportionate amount of patronage refund, as the articles or bylaws mayprovide, may be distributed to them or, if requested by them, credited to theiraccount until the amount of share or membership capital subscribed for has beenfully paid.

(4)  The association may also choose to retain some orall its net savings and allocate it in the manner in which it will benefit thegeneral welfare of all the members of the association.

(b)  The surplus fund established in subsection(a) may be expended for capital improvements or emergencies upon a two-thirdsmajority vote of the directors, or may be expended under section 421C-22,421C-23, or 421C-24, by majority vote of the directors. [L 1982, c 97, pt of§2; am L 2001, c 129, §66]