/ SECTION ___. The General Assembly determines it is in the best interests of South Carolina, the telephone cooperatives, and their members to assist with educational, charitable, and economic development efforts in the rural areas of South Carolina.
The General Assembly determines it is prudent to update and clarify the procedures for South Carolina's telephone cooperatives to contribute, allocate, and retire patronage capital.
The General Assembly determines it is prudent to clarify that the "business judgment rule" applies to South Carolina's telephone cooperatives.
The General Assembly determines it is in the best interest of South Carolina's telephone cooperatives and their members that unclaimed patronage credits are hereafter exempt from the Uniform Unclaimed Property Act.
SECTION __. Section 33-46-460, of the 1976 Code, as last amended by Act 392 of 1994, is further amended to read:
"Section 33-46-460. (A) The bylaws of a telephone cooperative shall provide for the distribution of excess revenue to its members. Excess revenues do not include amounts:
(1) necessary to defray expenses of the telephone cooperative and for the operation and maintenance of its facilities during such fiscal year;
(2) to pay interest and principal obligations of the telephone cooperative coming due in such fiscal year;
(3) to finance or to provide a reserve for the financing of the construction or acquisition by the telephone cooperative of additional facilities to the extent determined by the board of directors;
(4) to provide a reasonable reserve for working capital; and
(5) to retire shares of the telephone cooperative to the extent determined by the board of directors.
Sums in excess of those specified above must, unless otherwise determined by a vote of the membership, be assigned by the telephone cooperative to its members as patronage capital. Nothing herein shall be construed so as to designate the method, manner, and time of distribution of excess revenue to the members, which must be governed by the cooperative bylaws, so long as the cooperative's distribution policies and procedures comply with acceptable practices under the procedures for corporations exempt from income tax pursuant to Title 26, Section 501(c)(12) of the United States Code or Subchapter T of the United States Internal Revenue Code.
(B) On an annual basis, patronage capital shall be allocated on the books of the cooperative to each member based upon and in proportion to:
(1) the revenue from each member or group of similar members;
(2) the contribution of each member or group of similar members to the cooperative's overall patronage capital; or (3) any combination of items (1) and (2) as determined by the board of directors.
The allocation of patronage capital to a member's account does not vest until such time that the board determines that retirement is proper pursuant to subsection (C).
(C) Retirement of patronage capital is the actual payment, as provided by subsection (D), of patronage capital to the cooperative members to whom it has previously been allocated. The board of directors of a cooperative may, in its discretion, utilize its business judgment to retire patronage capital as allocated on the books of the cooperative when the retirement is consistent with sound business and management practices and the long-term financial stability of the cooperative. If the board of directors, in its discretion, utilizes its business judgment to retire patronage capital to members either upon their death, termination of telephone service, or bankruptcy, then the retirement may be discounted from the board's approved retirement cycle to present-day value when deemed appropriate by the board of directors in the exercise of its business judgment.
(D) When the board of directors of the cooperative has determined, pursuant to subsection (C), that patronage capital shall be retired, the retirement may be accomplished by a bill credit or by the mailing of payment or notice of payment to the person's last known address of record on file with the cooperative. No interest shall be paid or payable by the cooperative on any patronage capital furnished by its members.
(E) Notwithstanding the provisions of the Uniform Unclaimed Property Act, S.C. Code of Laws Section 27-18-10, et seq., or other law, patronage capital that has been retired by a cooperative but remains unclaimed for a period of five years shall become abandoned patronage capital. The cooperative shall, nonetheless, pay any validated claims by members or former members for unclaimed or abandoned patronage capital. With respect to abandoned patronage capital, the cooperative must follow the procedures set out in subsection (F). Each year, the cooperative may impose a reasonable administrative fee for abandoned or unclaimed patronage capital and may offset the fee against such abandoned or unclaimed patronage capital. Abandoned patronage capital shall be designated as equity and, at the board's discretion, can be used only by the cooperative for:
(1) educational purposes;
(2) charitable purposes; or
(3) economic development purposes in the telephone cooperative's service area.
(F) Notwithstanding the provisions of the Uniform Unclaimed Property Act, S.C. Code of Laws Section 27-18-10, et seq., telephone cooperatives must pay any validated claims from members or former members for abandoned patronage capital in accordance with the provisions of this subsection.
(1) Patronage capital, presumed abandoned, which is due to members or former members of telephone cooperatives and whose last known address is in South Carolina, may be retained by the telephone cooperative provided that the telephone cooperative performs the following due diligence duties to locate the rightful owners:
(a) The cooperative shall publish, for two consecutive years, in a newspaper of general circulation in the county of the cooperative's principal place of business, the names and addresses of each person appearing from the cooperative's records to be the owner of the unclaimed patronage capital of fifty dollars or more, together with instructions on how to claim such property. Such publication will commence within one year after the check representing patronage capital was returned to the cooperative as undeliverable or has gone uncashed;
(b) The cooperative shall maintain a searchable website on which will be listed the names and addresses of each person appearing from the cooperative's records to be the owner of unclaimed patronage capital of fifty dollars or more, together with instructions on how to claim the property. The listings will commence within one year after the check representing patronage capital was returned to the cooperative as undeliverable or has gone uncashed and will continue until the patronage capital has been paid to the rightful owner. The State Treasurer's Office shall maintain a link on the State's Unclaimed Property website to the cooperative's searchable website to increase public awareness and access.
(2) A person aggrieved by a decision of the cooperative or whose claim has not been acted upon within ninety days after its filing may bring an action to establish the claim in the court of common pleas of the county of the cooperative's principal place of business. The action must be brought within ninety days after the decision of the cooperative or within one hundred eighty days after the filing of the claim if the cooperative has failed to act on it.
(3) The patronage capital accounts still unpaid that were included on previously filed annual unclaimed property reports for which no property was delivered will be returned to the respective cooperatives and will be treated in the same manner as provided by this section for patronage capital.
(4) The administrator, as defined in Section 27-18-20(1), shall not be responsible or held liable for any unclaimed patronage capital accounts retained by a cooperative pursuant to this section.
(5) The cooperative shall consider each claim filed by a person claiming an interest in patronage capital within ninety days after it is filed and give written notice to the claimant if the claim is denied in whole or in part. If a claim is allowed, the cooperative shall pay over or deliver to the claimant the patronage capital owed to the claimant at the time the patronage capital became abandoned." /
Renumber sections to conform.
Amend title to conform.