Capital Credits
WHAT ARE CAPITAL CREDITS?
Capital credits are the retained margins left over at the end of the year after all operational expenses. Capital credits reflect each member’s ownership in the cooperative. It is also called patronage.
HOW DOES A MEMBER GET CAPITAL CREDITS?
When an individual or entity begins purchasing phone or internet services from Kingdom Telephone, they get two accounts – a billing account and a capital credit account. To become a member owner you must purchase $10.00 in stock, which is refundable when you disconnect. At the end of each year whatever margins KTC has are allocated back to the members. Your share is allocated to your capital credit account for that year.
HOW ARE YEAR-END MARGINS ALLOCATED?
KTC takes your total services revenues and divides your number into the total revenues collected by all members during the year. This is the “allocation factor”. The allocation factor is then multiplied by the amount of net margins for the year. This is your share of the margins – or your capital credit allocation – for that year.
WHEN DO I GET MY CAPITAL CREDITS?
Even though the cooperative allocates capital credits to members each year, the money is not paid out right away. The money is used for a number of years for the following purposes:
to allow the cooperative to maintain and upgrade facilities;
to increase equity giving the cooperative more borrowing power, or;
to avoid borrowing money as much as possible;
to have reserves in case of an emergency
The board of directors looks at KTC’s financial condition annually and then decides whether to retire capital credits. Generally, the board pays out part of the oldest year remaining on the books and part of a recent year. This allows current members to receive the benefit as well.
HOW DO I GET MY CAPITAL CREDITS?
If you are still purchasing services from KTC, any retirement less than $65 will appear as a credit on your bill. If the retirement is over $65, a check will be mailed to the address on file.
If you no longer have service with KTC, any retirement over $5 will be sent to the last valid address we have on file. The capital credit distribution is posted as a bill credit on your September bill or a check will be mailed in September based on board approval.
WHAT IF I NO LONGER HAVE SERVICE WITH KTC?
If you move or no longer have service with Kingdom Telephone, it is important that you keep your address current so that future disbursements can be properly mailed to you. Capital credits are reserved for members even if they move out of the Kingdom Telephone service area. KTC will make a diligent effort to send a check by mail.
WHAT ARE UNCLAIMED CAPITAL CREDITS AND WHAT HAPPENS TO THEM?
KTC will publish a list of any unclaimed checks that have been outstanding for two years in the newspaper central to our territory. This allows anyone who may have lost or not received a check 60 days to contact KTC to have the check re-issued. After the 60 days, all remaining unclaimed amounts are re-claimed as income and then re-allocated in that year’s allocation process.
WHAT IS A MEMBER?
Any individual or entity that purchases telephone or internet services from Kingdom Telephone Company. Members are entitled to participate in cooperative elections and to share in patronage capital allocations.
ARE CAPITAL CREDITS PAID OUT IN ANY WAY BESIDES A NORMAL RETIREMENT?
When a single member passes away, an estate payout to the spouse or heir can be made. If the memberships was a joint membership, then both parties must be deceased and the estate payout would go to their heirs.
The beneficiary of the estate has a choice to make:
-If they want to receive full face value, they would choose to receive the monies based on the annual general retirements approved by the Board of Directors.
-If they want the present value of the capital credit account, after Board approval, they will receive a reduced amount using a present value calculation to determine the payout. Discounted value shall be calculated by applying an accumulative 3% per year beginning with oldest year and increasing each year after by another 3%. (Example: oldest year discount 3%, next oldest discount 6%, next 9%, etc.)
For questions regarding Capital Credits, please contact Kingdom Telephone at customerservice@kingdomtelco.com or call 573-386-2241.