BUSINESS ORGANIZATIONS CODE

TITLE 6. ASSOCIATIONS

CHAPTER 251. COOPERATIVE ASSOCIATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 251.001. DEFINITIONS. In this chapter:

(1) "Cooperative basis" means that net savings, after payment of any investment dividends or after provision for separate funds has been made as required or authorized by law, the certificate of formation, or bylaws, are:

(A) allocated or distributed to a member patron or to each patron in proportion to patronage; or

(B) retained by the entity for:

(i) actual or potential expansion of the entity's services;

(ii) the reduction of charges to patrons; or

(iii) any other purpose consistent with the entity's nonprofit character.

(2) "Invested capital" means funds invested in a cooperative association by an investor with the expectation of receiving an investment dividend.

(3) "Investment dividend" means the return on invested capital or on membership capital derived from the net savings of the cooperative association.

(4) "Membership capital" means the funds of a cooperative association derived from members of the cooperative association generally as a requirement of membership or in lieu of patronage dividends. The term does not include deposits or loans from members.

(5) "Net savings" means the total income of a cooperative association less the costs of operation.

(6) "Patronage dividend" means a share of the net savings distributed among members of the cooperative association on the basis of patronage, as provided by the certificate of formation.

(7) "Savings returns" means the amount returned by a cooperative association to patrons of a cooperative association in proportion to patronage or otherwise.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.