Article X — Establishment of Funds

Section 1. Purpose

The Commons Corporation (the “Corporation”) shall establish and maintain the funds described in this Article for the purposes stated below. Each Fund shall be used only for the purposes expressly authorized in this Article, in accordance with applicable law, the Corporation’s mission, and any policies adopted by the Board of Directors.

Section 2. Definitions

For purposes of this Article:

1. “Net profits” means the net income of a subsidiary determined in accordance with generally accepted accounting principles (GAAP) or other accounting standard adopted by the Corporation and applicable law, after provision for taxes, required reserves, and other customary adjustments as determined by the Corporation’s accountants.
2. “Subsidiary” means any entity in which the Corporation holds, directly or indirectly, a controlling interest.
3. “Board” means the Corporation’s Board of Directors.

Section 3. Funds Established; Funding Allocations

The Corporation shall establish and maintain the following separate funds, each of which shall be maintained on the Corporation’s books and records and in accounts or instruments permitted by law and Corporate policy:

(a) Reserve Fund. A Reserve Fund shall be established to provide financial stability and to enable the Corporation to meet unforeseen expenses, obligations, or strategic opportunities. The Reserve Fund shall be funded by an amount equal to the aggregate of fifteen percent (15%) of the net profits of each subsidiary. Withdrawals from the Reserve Fund shall be permitted only as provided in Section 5.

(b) Education Fund. An Education Fund shall be established to support educational initiatives, training programs, scholarships, and other activities that advance the knowledge, skills, and professional development of employees of each respective contributing subsidiary. The Education Fund shall be funded by an amount equal to the aggregate of ten percent (10%) of the net profits of each subsidiary. The Education Fund shall be administered by the Director of the Pension Fund and used only as provided in Section 5.

(c) Benefits Fund. A Social Benefits Fund (the “Benefits Fund”) shall be established to administer workers’ benefits including, but not limited to, health and wellness programs, family assistance, housing support, and other initiatives designed to enhance quality of life and workforce security, and to provide benefits related to retirement and disability of employees of each respective contributing subsidiary. The Benefits Fund shall be funded by an amount equal to the aggregate of twenty-five percent (25%) of the net profits of each subsidiary. The Benefits Fund shall be administered by the Benefits Director and used only as provided in Section 5.

(d) Acquisition Fund. An Acquisition Fund shall be established to support the Corporation’s growth, expansion, and strategic objectives, including reinvestment in existing operations and the acquisition of new businesses, assets, or technologies. The Acquisition Fund shall be funded by an amount equal to fifty percent (50%) of the net profits of each subsidiary. The Acquisition Fund shall be managed by the Acquisition Director and used only as provided in Section 5.

Section 4. Timing of Funding and Accounting

1. Each subsidiary shall remit its allocated amounts to the Corporation in the form, frequency, and on the timetable established by Corporation policy and consistent with applicable law.
2. (b) All Fund contributions shall be recorded separately in the Corporation’s accounting system and maintained with sufficient detail to permit audit, compliance review, and reporting. Contributions and disbursements shall be reflected in the Corporation’s financial statements in accordance with applicable accounting standards.

Section 5. Use, Disbursement and Authorization

1. No Fund shall be expended, encumbered, or otherwise alienated except upon authorization of the Board of Directors, and then only for purposes consistent with (i) the express purpose of that Fund as set forth in Section 3, (ii) the Corporation’s mission, and (iii) applicable law and fiduciary duties.
2. The Board may adopt specific disbursement procedures, thresholds, delegation authorities, and approval processes for each Fund. Disbursements that do not exceed the limits delegated by the Board may be authorized in accordance with those delegation rules.
3. In the event of any conflict between a Board-adopted policy and the terms of this Article, the terms of this Article shall control unless and until amended in accordance with Section 9.

Section 6. Administration, Management and Investments

1. Each Fund shall be administered by the person or office specified in Section 3 (the “Fund Administrator”), subject to oversight by the Board and any investment, custody or spending policies adopted by the Board.
2. The Board may adopt an investment policy for each Fund that prescribes permitted investments, risk tolerances, and custodial arrangements. All investments shall comply with applicable law and any fiduciary standards applicable to the Corporation.
3. Fund Administrators shall report to the Board at such intervals as the Board reasonably requires regarding Fund balances, recent activity, projected needs, and investment performance.

Section 7. Restrictions and Safeguards

1. Each Fund shall be maintained in a manner that preserves the distinct purpose and integrity of that Fund; Fund assets shall not be commingled except as permitted by Board policy and applicable law and only where such commingling preserves clear and auditable allocation and accounting.
2. No Fund shall be used to satisfy obligations of a subsidiary except where (i) expressly authorized by the Board, and (ii) consistent with the Fund’s purpose and applicable law.

Section 8. Audit and Reporting

1. The Corporation’s independent auditors shall include the Funds in the scope of their annual audit or review as required by law and Board policy.

(b) The Corporation shall include information about Fund balances, contributions, and disbursements in its regular financial reports to the Board and in external reports as required by law or as the Board determines appropriate for transparency and stakeholder information.