Iowa Code
Chapter 501 - CLOSED COOPERATIVES
Section 501.503 - Distribution of net savings.

501.503 Distribution of net savings.
The board shall annually dispose of the cooperative’s earnings in excess of its operating expenses as follows:
1. If the articles authorize the payment of distributions on a class of interests, then the directors may declare a distribution pursuant to the articles. Distributions shall not exceed eight percent of the value of the interest in each fiscal year. The members may control the amount that is allocated under this subsection.
2. To provide a reasonable reserve for depreciation, obsolescence, bad debts, or contingent losses or expenses. The members may control the amount that is allocated under this subsection.
3. To increase the cooperative’s retained savings to the extent determined by the board to be necessary based on its evaluation of the future needs and the competitive position of the cooperative.
4. The cooperative shall have an unconditional binding obligation to distribute to the members all remaining net savings as determined under the United States Internal Revenue Code. These net savings shall be allocated to each member in proportion to the business the member did with the cooperative during the preceding fiscal year. The net savings may be separately calculated for two or more categories of business, and allocated to the members on the basis of business done within each of these categories. Net savings shall be distributed in the form of cash or interests, or a combination of cash and interests, as determined by the board.
96 Acts, ch 1010, §32; 98 Acts, ch 1152, §33, 69

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