SPIRO T. AGNEW, Governor                      1379

tively with the association at a rate not to exceed the rate of patron-
age dividend herein referred to; provided further that any such
bonus to a nonstockholder may be declared in the form of capital
stock, until the amount of such dividends equals the par value of one
share of the association's stock, dividends thereafter to such patron
being paid in the same manner as dividends to all stockholders;
provided further that such a bonus to a nonstockholder, if it is less
than the par value of one share, shall be credited to the nonstock-
holder's capital stock account during the first year and the second
year but shall revert to the reserve fund, if after two years, an amount
less than the par value of one share has accumulated.] The net pro-
ceeds or savings of each association shall be apportioned, distributed
and paid periodically on the basis of patronage to those persons en-
titled to receive them, at such times and in such manner as the by-laws
shall provide. The by-laws may provide that the net proceeds or sav-
ings may be restricted to members or be made at the same or a differ-
ent rate for member and nonmember patrons. The by-laws may contain
any reasonable provisions for the apportionment and charging of net
losses. The by-laws may provide that any distribution to a nonmember
eligible for membership may be credited to such nonmember, until
the amount thereof equals the value of a membership certificate or a
share of the association's common stock.

(b)    [The stockholders at any regular or special meeting, called
legally, may instruct the directors as to what method of apportion-
ment of net profits to follow under the provision of this section, in so
far as these provisions confer discretion upon the directors.] The
apportionment, distribution and payment of net proceeds or savings
required by subsection (a) of this section may be in cash, credits,
capital stock, certificates of interest, certificates of equity, revolving
fund certificates, letters of advice or other securities or certificates
issued by the association or by any affiliated domestic or foreign
cooperative association.

(c)    [The directors of any association organized without capital
stock under this subtitle shall provide annually for the distribution
of the net profits, if any, as follows:] Apportionment and distribu-
tion of its net proceeds or savings or losses may be separately deter-
mined for, and be based upon the patronage of, single or multiple
pools or particular departments of the association, or as to particular
commodities, supplies or services, or such apportionment and dis-
tribution may be based upon classification of patronage according to
the type thereof.

(d)     [After the expenses of the association have been paid and a
proper reserve has been set aside to cover depreciation of the prop-
erty of the association and for contingent expenses, and to establish
a reasonable reserve, the directors subject to the approval of the
members, as provided in subsection (e) of this section, may set aside
such sums as they deem desirable for capital expenditures. The
directors may then set aside not to exceed five per cent of the remain-
ing net profits as an educational fund to be used in teaching coopera-
tion. The directors may then grant a bonus to employees who are in
the employ of the association at the time of the apportionment of
profits, which bonus shall be based in amount upon the amount of
compensation received by said employees during the year at any rate
not to exceed the rate of patronage dividends hereinafter described.