47-21-72. Requirement that cooperative be nonprofit--Disposition of revenues.

A cooperative shall be operated on a nonprofit basis for the mutual benefit of its members and patrons. The bylaws of a cooperative or its contracts with consumers shall contain provisions relative to the disposition of revenues and receipts necessary and appropriate to establish and maintain its nonprofit and cooperative character. In addition to provisions of the bylaws relative to the disposition of revenues and receipts, the board of directors of the cooperative before allocating and crediting margins to its patrons may, by resolution, provide for the adoption of margin stabilization plans, revenue, or expense deferral plans or other plans that provide for the retention of revenues and receipts in excess of those needed to meet current losses and expenses. Reasonable reserves may be created by the cooperative for payment of the incremental cost of electric power and energy purchased by the cooperative for resale to its patrons.

Source: SL 1947, ch 33, § 23; SDC Supp 1960, § 11.2223; SL 1992, ch 322, § 1.

47-21-72.1. Directors not liable for distribution in good faith reliance on financial statements or accountants' reports.

A director of a rural electric cooperative shall not be liable for any unauthorized dividend or distribution of assets if he relied and acted in good faith upon financial statements of the cooperative represented to him to be correct by the president or the officer of the cooperative having charge of his books of account, or stated in a written report by a certified public accountant failing to reflect the financial condition of the cooperative, nor shall he be so liable if in good faith in determining the amount available for any such dividend or distribution he considered the assets to be of their book value.

Source: SL 1978, ch 338, § 1.