It is important to have a plan in place for the distribution of proceeds for when a cooperative member decides to leave the cooperative and/or when a cooperative decides to dissolve or sell the business.
Selling/Dissolving the Cooperative
An example of this is the Green Commonwealth cooperative.
According to their bylaws, if Green Commonwealth is ever sold or dissolves, all proceeds (after paying out Member Accounts and debts) will be distributed to everyone that was ever a member of the cooperative, on the basis of the number of hours each put in. This method of distribution is consistent with the requirement that the earnings of cooperatives be distributed to members on the basis of their patronage, and it means that current members will not get an inappropriate bonus. This helps to keep businesses locally owned, because it gives current members a disincentive to vote to sell a business for the purpose of cashing out and getting a lot of money, since proceeds will need to be distributed among past members as well.
This is one way to allocate assets if you decide to sell or dissolve your cooperative.
A member leaving a Cooperative
When a member leaves a co-op, the amount in their capital account becomes a debt that the co-op then pays back to the member over a specified amount of time. The Green Commonwealth created a bylaw that requires the cooperative to repay the debt, plus interest, within five years after a member leaves.
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