HARMONIZED UNIFORM LIMITED COOPERATIVE
ASSOCIATION ACT
Introductory Reporters’ Note
The proposed revisions to the text of the act
set forth in this document have been prepared as part of a project that has two
purposes: (i) to harmonize the language of all of the unincorporated entity
laws, and (ii) to revise the language of each of those acts in a manner that
permits their integration into a single code of entity laws.
The Comments to the act have been omitted from
this document to reduce its length.
Following the approval of the changes in this document by the
Conference, the Comments will be restored with appropriate changes.
The harmonization process has involved the
revision of the following acts:
Business Organizations Act
(“HUB”)
Model Entity Transactions
Act (“META”)
Model Registered Agents Act
Uniform Partnership Act
(1997)
Uniform Limited Partnership
Act (2001)
Uniform Limited Liability
Company Act (2006)
Uniform Statutory Trust
Entity Act
Uniform Limited Cooperative
Association Act
Uniform Unincorporated
Nonprofit Association Act (2008)
Changes to the
currently effective text of the act are shown by striking through text to be
deleted and underlining text to be added. Regular type is used to show changes that
adopt language from the HUB or META, or are merely relocations of current
language or corrections to cross references.
Changes that adopt language from
other unincorporated entity laws are shown in italics. Changes
that do not have a source in one of the existing unincorporated entity laws are
shown in small caps.
HARMONIZED UNIFORM LIMITED
COOPERATIVE ASSOCIATION ACT
GENERAL PROVISIONS
SECTION 101. SHORT TITLE. This [act] may be cited as the Uniform Limited Cooperative
Association Act.
SECTION 102. DEFINITIONS. In this [act]:
(1)
“Articles of organization” means the articles of organization of a limited
cooperative association required by Section 302. The term includes the articles
as amended or restated.
(2)
“Board of directors” means the board of directors of a limited cooperative
association.
(3)
“Bylaws” means the bylaws of a limited cooperative association. The term
includes the bylaws as amended or restated.
(4)
“Certificate of authority” means a certificate issued by the [Secretary of
State] for a foreign cooperative to transact business in this state.
(5)
“Contribution,” except as used in Section 1008(c), means a benefit that a
person provides to a limited cooperative association to become or remain a
member or in the person’s capacity as a member.
(6)
“Cooperative” means a limited cooperative association or an entity organized
under any cooperative law of any jurisdiction.
(7)
“Designated office” means the office that a limited cooperative association or
a foreign cooperative is required to designate and maintain under Section
117(a)(1).
(8) (7) “Director” means a
director of a limited cooperative association.
(9)
(8) “Distribution,” except as used in Section 1007(e), means a transfer
of money or other property from a limited cooperative association to a member
because of the member’s financial rights or to a transferee of a member’s
financial rights.
(10)
(9) “Entity” means a person other than an individual.
(11)
(10) “Financial rights” means the right to participate in allocations
and distributions as provided in [Articles] 10 and 12 but does not include
rights or obligations under a marketing contract governed by [Article] 7.
(12)
(11) “Foreign cooperative” means an entity organized in a jurisdiction other
than this state under a law similar to this [act].
(13)
(12) “Governance rights” means the right to participate in governance of
a limited cooperative association.
(14)
(13) “Investor member” means a member that has made a contribution to a
limited cooperative association and
(A)
is not required by the organic rules to conduct patronage with the association
in the member’s capacity as an investor member in order to receive the member’s
interest; or
(B)
is not permitted by the organic rules to conduct patronage with the association
in the member’s capacity as an investor member in order to receive the member’s
interest.
(14) “Jurisdiction”, used to
refer to a political entity, means the United States, a state, a foreign
country, or a political subdivision of a foreign country.
(15) “Jurisdiction of formation”
means the jurisdiction whose law includes the organic law of an entity.
(15)
(16) “Limited cooperative association” means an association organized
formed under this [act] or that becomes subject to this [act] under
[Article] 16.
(16)
(17) “Member” means a person that is admitted as a patron member or
investor member, or both, in a limited cooperative association. The term does
not include a person that has dissociated as a member.
(17)
(18) “Member’s interest” means the interest of a patron member or
investor member under Section 601.
(18)
(19) “Members meeting” means an annual members meeting or special
meeting of members.
(19)
(20) “Organic law” means the statute providing for the creation of an
entity or principally governing its internal affairs.
(20)
(21) “Organic rules” means the articles of organization and bylaws of a
limited cooperative association.
(21)
(22) “Organizer” means an individual who signs the initial articles of
organization.
(22)
(23) “Patron member” means a member that has made a contribution to a
limited cooperative association and:
(A)
is required by the organic rules to conduct patronage with the association in
the member’s capacity as a patron member in order to receive the member’s
interest; or
(B)
is permitted by the organic rules to conduct patronage with the association in
the member’s capacity as a patron member in order to receive the member’s
interest.
(23)
(24) “Patronage” means business transactions between a limited
cooperative association and a person which entitle the person to receive
financial rights based on the value or quantity of business done between the
association and the person.
(24)
(25) “Person” means an individual, business corporation, nonprofit
corporation, partnership, business trust, cooperative, estate,
trust, partnership, limited partnership, limited liability company, [general
cooperative association,] limited cooperative association, unincorporated
nonprofit association, statutory trust, business trust, common-law business
trust, estate, trust, association, joint venture, association,
public corporation, government or governmental subdivision, agency, or
instrumentality, or any other legal or commercial entity.
(25)
(26) “Principal office” means the principal executive office of a
limited cooperative association or foreign cooperative, whether or not the
office is located in this state.
(27) “Property” means all
property, whether real, personal, or mixed or tangible or intangible, or any
right or interest therein.
(26)
(28) “Record”, used as a noun, means information that is inscribed on a
tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(29) “Registered agent” means an
agent of an entity which is authorized to receive service of any process,
notice, or demand required or permitted by law to be served on the entity.
(27)
(30) “Required information” means the information a limited cooperative
association is required to maintain under Section 114 115.
(31)
“Registered foreign cooperative” means a foreign cooperative that is registered
to do business in this state pursuant to a statement of registration filed by
the [Secretary of State].
(28)
(32) “Sign” means, with present intent to authenticate or adopt a
record:
(A)
to execute or adopt a tangible symbol; or
(B)
to attach to or logically associate with the record an electronic symbol,
sound, or process.
(29)
(33) “State” means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or
insular possession subject to the jurisdiction of the United States.
(30)
(34) “Transfer” includes an assignment, conveyance, deed, bill of
sale, lease, mortgage, security interest, encumbrance, gift, and transfer by
operation of law:
(A) an
assignment;
(B)
a conveyance;
(C)
a sale;
(D)
a lease;
(E)
an encumbrance, including a mortgage or security
interest;
(F)
a gift; and
(G)
a transfer by operation of law.
(31)
(35) “Voting group” means any combination of one or more voting members
in one or more districts or classes that under the organic rules or this [act]
are entitled to vote and can be counted together collectively on a matter at a
members meeting.
(32)
(36) “Voting member” means a member that, under the organic law or
organic rules, has a right to vote on matters subject to vote by members under
the organic law or organic rules.
(33)
(37) “Voting power” means the total current power of members to vote on
a particular matter for which a vote may or is to be taken.
SECTION 103. LIMITED COOPERATIVE ASSOCIATION SUBJECT TO
AMENDMENT OR REPEAL OF [ACT]. A
limited cooperative association governed by this [act] is subject to any
amendment or repeal of this [act].
(a)
A limited cooperative association organized under this [act] is an autonomous,
unincorporated association of persons united to meet their mutual interests
through a jointly owned enterprise primarily controlled by those persons, which
permits combining:
(1)
ownership, financing, and receipt of benefits by the members for whose
interests the association is formed; and
(2)
separate investments in the association by members who may receive returns on
their investments and a share of control.
(b)
The fact that a limited cooperative association does not have one or more of
the characteristics described in subsection (a) does not alone prevent the
association from being formed under and governed by this [act] nor does it
alone provide a basis for an action against the association.
(a)
A limited cooperative association is an entity distinct from its members.
(b)
A limited cooperative association may be organized for any lawful purpose,
whether or not for profit [except designated prohibited purposes].
(c)
Unless the articles of organization state a term for a limited cooperative
association’s existence, the association has perpetual duration.
SECTION 106. POWERS. A limited cooperative association may sue and
be sued in its own name and the power to do all things necessary or
convenient to carry on its activities and affairs. An association may
maintain an action against a member for harm caused to the association by the
member’s violation of a duty to the association or of the organic law or
organic rules.
SECTION 107. GOVERNING LAW. The law of this
state governs:
(1)
the internal affairs of a limited cooperative association; and
(2)
the liability of a member as member and a director as director for the debts,
obligations, or other liabilities of a limited cooperative association.
SECTION 108. SUPPLEMENTAL PRINCIPLES OF LAW. Unless displaced by
particular provisions of this [act], the principles of law and equity
supplement this [act].
(a)
This [act] does not alter or amend any law that governs the licensing and
regulation of an individual or entity in carrying on a specific business or
profession even if that law permits the business or profession to be conducted
by a limited cooperative association, a foreign cooperative, or its members.
(b)
A limited cooperative association may not conduct an activity that, under law
of this state other than this [act], may be conducted only by an entity that
meets specific requirements for the internal affairs of that entity unless the
organic rules of the association conform to those requirements.
[(c)
If an activity of a limited cooperative association is within the scope of
[reference to the Uniform Common Interest Ownership Act or to the Model Real
Estate Cooperative Act], the requirements of [reference to the Uniform Common
Interest Ownership Act or to the Model Real Estate Cooperative Act] apply, even
if there is a conflicting provision in this [act].]
[SECTION 110. RELATION TO RESTRAINT OF TRADE AND ANTITRUST
LAWS.
To the extent a limited cooperative association or activities conducted
by the association in this state meet the material requirements for other
cooperatives entitled to an exemption from or immunity under any provision of
[the restraint of trade or antitrust laws of this state], the association and
its activities are entitled to the exemption or immunity. This section does not
create any new exemption or immunity for an association or affect any exemption
or immunity provided to a cooperative organized under any other [law].]
[(a)
Use of the term “cooperative” or its abbreviation under this [act] is not a
violation of the provisions restricting the use of the term under [insert
cross-reference to law of this state].]
[(a)][(b)] The name of a limited
cooperative association must contain the words “limited cooperative
association” or “limited cooperative” or the abbreviation “L.C.A.” or “LCA”.
“Limited” may be abbreviated as “Ltd.”. “Cooperative” may be abbreviated as
“Co-op” or “Coop”. “Association” may be abbreviated as “Assoc.” or “Assn.”. [[A
limited cooperative association or a member may enforce the restrictions on the
use of the term “cooperative” under this [act].] [or] [A limited cooperative
association or a member may enforce the restrictions on the use of the term
“cooperative” [insert cross-reference to other laws of this state].]]
[(b)][(c)] Except as otherwise
provided in subsection (d), the name of a limited cooperative
association may use only a name that is available. A name is available if it
is, and the name under which a foreign cooperative may register to do
business in this state, must be distinguishable in on the
records of the [Secretary of State] from:
(1) the name of any
entity organized or authorized to transact business in this state an
existing person whose formation requires the filing of a record by the
[Secretary of State];
(2) the name of a
limited liability partnership;
(3) the name of a
person registered to do business in this state by the filing of a record by the
[Secretary of State];
(4) a name
reserved under Section 112 or other law of this state providing for the
reservation of a name by the filing of a record by the [Secretary of State];
and
(3) an alternative
name approved for a foreign cooperative authorized to transact business in this
state.
(5) a name registered
under Section 113 or other law of this state providing for the registration of
a name by the filing of a record by the [Secretary of State]; and
(6) an assumed name
registered under [this state’s assumed name statute].
[(c)][(d)] A limited cooperative
association may apply to the [Secretary of State] for authorization to use a
name that is not available. The [Secretary of State] shall authorize use of the
name if:
(1) the person with
ownership rights to use the name consents in a record to the use and applies in
a form satisfactory to the [Secretary of State] to change the name used or
reserved to a name that is distinguishable upon the records of the [Secretary
of State] from the name applied for; or
(2) the applicant
delivers to the [Secretary of State] a certified copy of the final judgment of
a court establishing the applicant’s right to use the name in this state.
If a
person consents in a record to the use of its name and submits an undertaking
in a form satisfactory to the [Secretary of State] to change its name to a name
that is distinguishable on the records of the [Secretary of State] from any
name in any category of names in subsection [(b)][(c)], the name of the
consenting person may be used by the person to which the consent was given.
[(d)][(e)] Except as otherwise
provided in subsection [(e)][(f)], in determining whether a name is the same as
or not distinguishable on the records of the [Secretary of State] from the name
of another entity, words, phrases, or abbreviations indicating the type of
entity, such as “corporation”, “corp.”, “incorporated”, “Inc.”, “professional
corporation”, “PC”, “professional association”, “PA”, “Limited”, “Ltd.”,
“limited partnership”, “LP”, “limited liability partnership”, “LLP”,
“registered limited liability partnership”, “RLLP”, “limited liability limited
partnership”, “LLLP”, “registered limited liability limited partnership”,
“RLLLP”, “limited liability company”, or “LLC”, may not be taken into account.
[(e)][(f)] A person may consent
in a record to the use of a name that is not distinguishable on the records of
the [Secretary of State] from its name except for the addition of a word,
phrase, or abbreviation indicating the type of person as provided in subsection
[(d)][(e)]. In such a case, the person
need not change its name pursuant to subsection [(b)][(c)].
(a)
A person may reserve the exclusive use of the a name of a
limited cooperative association, including a fictitious name for a foreign
cooperative whose name is not available under Section 111, by delivering an
application to the [Secretary of State] for filing. The application must set forth the name and
address of the applicant and the name proposed to be reserved. If the [Secretary of State] finds that the
name applied for is available under Section 111, the [Secretary
of State] shall reserve the name for the applicant’s exclusive use for a nonrenewable
period of 120 days.
(b)
A person that has The owner of a reserved a name for a
limited cooperative association may transfer the reservation to another
person that is not an individual by delivering to the [Secretary of
State] a signed notice in a record of the transfer which states the name,
street address, and, if different, the mailing and address of the
transferee. If the person is an organizer of the association and the name of
the association is the same as the reserved name, the delivery of articles of
organization for filing [by the Secretary of State] is a transfer by the person
to the association.
(a)
A foreign cooperative not registered to do business in this state under
[Article] 14 may register its name, or an alternate name adopted pursuant to
Section 1405, if the name is distinguishable upon on the records of the
[Secretary of State] from the names that are not available under Section 111.
(b) To register its name or an
alternate name adopted pursuant to Section 1405, a foreign cooperative must
deliver to the [Secretary of State] for filing an application stating the cooperative’s
name, the jurisdiction and date of its formation, and any alternate name
adopted pursuant to Section 1405. If the
[Secretary of State] finds that the name applied for is available, the
[Secretary of State] shall register the name for the applicant’s exclusive use.
(c) The registration of a name
under this section is effective for [one year] after the date of registration.
(d) A foreign cooperative whose
name registration is effective may renew the registration for successive
one-year periods by delivering, not earlier than [three months] before the
expiration of the registration, to the [Secretary of State] for filing a
renewal application that complies with this section. When filed, the renewal application renews
the registration for a succeeding one-year period.
(e) A foreign cooperative whose
name registration is effective may register as a foreign cooperative under the
registered name or consent in a signed record to the use of that name by
another person that is not an individual.
(a)
The relations between a limited cooperative association and its members are
consensual. Unless required, limited, or prohibited by this [act], the organic
rules may provide for any matter concerning the relations among the members of
the association and between the members and the association, the activities of
the association, and the conduct of its activities.
(b)
The matters referred to in paragraphs (1) through [(9)] [(11)] may be varied
only in the articles of organization. The articles may:
(1)
state a term of existence for the association under Section 105(c);
(2)
limit or eliminate the acceptance of new or additional members by the initial
board of directors under Section 303(b);
(3)
vary the limitations on the obligations and liability of members for
association obligations under Section 504;
(4)
require a notice of an annual members meeting to state a purpose of the meeting
under Section 508(b);
(5)
vary the board of directors meeting quorum under Section 815(a);
(6)
vary the matters the board of directors may consider in making a decision under
Section 820;
(7)
specify causes of dissolution under Section 1202(1);
(8)
delegate amendment of the bylaws to the board of directors pursuant to Section
405(f);
(9)
provide for member approval of asset dispositions under Section 1501; [and]
[[(10)]
subject to Section 820, provide for the elimination or limitation of liability
of a director to the association or its members for money damages pursuant to
Section 818;
[(11)]
provide for permitting or making obligatory indemnification under Section
901(a); and]
[(10)]
[(12)] provide for any matters that may be contained in the organic rules,
including those under subsection (c).
(c)
The matters referred to in paragraphs (1) through (25) may be varied only in
the organic rules. The organic rules may:
(1)
require more information to be maintained under Section 114 115
or provided to members under Section 505(k);
(2)
provide restrictions on transactions between a member and an association under
Section 115 116;
(3)
provide for the percentage and manner of voting on amendments to the organic
rules by district, class, or voting group under Section 404(a);
(4)
provide for the percentage vote required to amend the bylaws concerning the
admission of new members under Section 405(e)(5);
(5)
provide for terms and conditions to become a member under Section 502;
(6)
restrict the manner of conducting members meetings under Sections 506(c) and
507(e);
(7)
designate the presiding officer of members meetings under Sections 506(e) and
507(g);
(8)
require a statement of purposes in the annual meeting notice under Section
508(b);
(9)
increase quorum requirements for members meetings under Section 510 and board
of directors meetings under Section 815;
(10)
allocate voting power among members, including patron members and investor
members, and provide for the manner of member voting and action as permitted by
Sections 511 through 517;
(11)
authorize investor members and expand or restrict the transferability of
members’ interests to the extent provided in Sections 602 through 604;
(12)
provide for enforcement of a marketing contract under Section 704(a);
(13)
provide for qualification, election, terms, removal, filling vacancies, and
member approval for compensation of directors in accordance with Sections 803
through 805, 807, 809, and 810;
(14)
restrict the manner of conducting board meetings and taking action without a
meeting under Sections 811 and 812;
(15)
provide for frequency, location, notice and waivers of notice for board
meetings under Sections 813 and 814;
(16)
increase the percentage of votes necessary for board action under Section
816(b);
(17)
provide for the creation of committees of the board of directors and matters
related to the committees in accordance with Section 817;
(18)
provide for officers and their appointment, designation, and authority under
Section 822;
(19)
provide for forms and values of contributions under Section 1002;
(20)
provide for remedies for failure to make a contribution under Section 1003(b);
(21)
provide for the allocation of profits and losses of the association,
distributions, and the redemption or repurchase of distributed property other
than money in accordance with Sections 1004 through 1007;
(22)
specify when a member’s dissociation is wrongful and the liability incurred by
the dissociating member for damage to the association under Section 1101(b) and
(c);
(23) provide the personal
representative, or other legal representative of, a deceased member or a member
adjudged incompetent with additional rights under Section 1103;
(24)
increase the percentage of votes required for board of director approval of:
(A) a resolution to
dissolve under Section 1205(a)(1);
(B)
a proposed amendment to the organic rules under Section 402(a)(1);
(C)
a plan of conversion under Section 1603(a);
(D)
a plan of merger under Section 1607(a); and
(E)
a proposed disposition of assets under Section 1503(1); and
(25)
vary the percentage of votes required for members approval of:
(A)
a resolution to dissolve under Section 1205;
(B)
an amendment to the organic rules under Section 405;
(C)
a plan of conversion under Section 1603;
(D)
a plan of merger under Section 1608; and
(E)
a disposition of assets under Section 1504.
(d)
The organic rules must address members’ contributions pursuant to Section 1001.
(a)
Subject to subsection (b), a limited cooperative association shall maintain in
a record available at its principal office:
(1)
a list containing the name, last known street address and, if different,
mailing address, and term of office of each director and officer;
(2)
the initial articles of organization and all amendments to and restatements of
the articles, together with a signed copy of any power of attorney under which
any article, amendment, or restatement has been signed;
(3)
the initial bylaws and all amendments to and restatements of the bylaws;
(4)
all filed articles of merger and statements of interest exchange,
conversion, and domestication;
(5)
all financial statements of the association for the six most recent years;
(6)
the six most recent [annual] [biennial] reports delivered
by the association to the [Secretary of State];
(7) the minutes of members meetings
for the six most recent years;
(8)
evidence of all actions taken by members without a meeting for the six most
recent years;
(9)
a list containing:
(A)
the name, in alphabetical order, and last known street address and, if
different, mailing address of each patron member and each investor member; and
(B) if the association has districts
or classes of members, information from which each current member in a district
or class may be identified;
(10)
the federal income tax returns, any state and local income tax returns, and any
tax reports of the association for the six most recent years;
(11)
accounting records maintained by the association in the ordinary course of its
operations for the six most recent years;
(12) the minutes of directors
meetings for the six most recent years;
(13)
evidence of all actions taken by directors without a meeting for the six most recent
years;
(14)
the amount of money contributed and agreed to be contributed by each member;
(15)
a description and statement of the agreed value of contributions or benefits
other than money made and agreed to be made by each member;
(16)
the times at which, or events on the happening of which, any additional
contribution is to be made by each member;
(17)
for each member, a description and statement of the member’s interest or
information from which the description and statement can be derived; and
(18)
all communications concerning the association made in a record to all members,
or to all members in a district or class, for the six most recent years.
(b)
If a limited cooperative association has existed for less than the period for
which records must be maintained under subsection (a), the period records must
be kept is the period of the association’s existence.
(c)
The organic rules may require that more information be maintained.
SECTION 115 116. BUSINESS TRANSACTIONS OF MEMBER WITH LIMITED
COOPERATIVE ASSOCIATION. Subject to Sections 818 and 819 and except as
otherwise provided in the organic rules or a specific contract relating to a
transaction, a member may lend money to and transact other business with a
limited cooperative association in the same manner as a person that is not a
member.
SECTION 116 117. DUAL CAPACITY. A person may have a
patron member’s interest and an investor member’s interest. When such person
acts as a patron member, the person is subject to this [act] and the organic
rules governing patron members. When such person acts as an investor member,
the person is subject to this [act] and the organic rules governing investor
members.
(a)
A Each limited cooperative association, or a foreign
cooperative that has a certificate of authority under Section 1404, and
each registered foreign cooperative shall designate and continuously
maintain a registered agent in this state:.
(1)
an office, as its designated office, which need not be a place of the
association’s or foreign cooperative’s activity in this state; and
(2)
an agent for service of process at the designated office.
The designation of a registered agent pursuant to this
subsection is an affirmation of fact by the association or foreign cooperative that
the agent has consented to serve.
(b)
An agent for service of process of A registered agent for a
limited cooperative association or registered foreign cooperative must be
an individual who is a resident of this state or an entity that is authorized
to do have a place of business in this state.
(c)
The only duties under this [act] of a registered agent that has complied with
this [act] are:
(1)
to forward to the limited cooperative association or registered foreign cooperative
at the address most recently supplied to the agent by the association or
foreign cooperative any process, notice, or demand pertaining to the company
which is served on or received by the agent;
(2)
if the registered agent resigns, to provide the notice required by Section 120
at the address most recently supplied to the agent; and
(3)
to keep current the information with respect to the agent in the articles of
organization.
(a)
Except as otherwise provided in Section 207(e), to change its designated
office, its agent for service of process, or the street address or, if
different, mailing address of its principal office, a limited cooperative
association must deliver A limited cooperative association or registered
foreign cooperative may change its registered agent or the address of its
registered agent by delivering to the [Secretary of State] for filing a
statement of change containing that states:
(1)
the name of the limited cooperative association or registered foreign
cooperative; and
(2)
the street address and, if different, mailing address of its designated
office; the information that is to be in effect as a result of the
filing of the statement of change.
(3)
if the designated office is to be changed, the street address and, if
different, mailing address of the new designated office;
(4)
the name of its agent for service of process; and
(5)
if the agent for service of process is to be changed, the name of the new
agent.
(b)
Except as otherwise provided in Section 207(e), to change its agent for service
of process, the address of its designated office, or the street address or, if
different, mailing address of its principal office, a foreign cooperative shall
deliver to the [Secretary of State] for filing a statement of change
containing:
(1)
the name of the foreign cooperative;
(2)
the name, street address and, if different, mailing address of its designated
office;
(3)
if the current agent for service of process or an address of the designated
office is to be changed, the new information;
(4)
the street address and, if different, mailing address of its principal office;
and
(5)
if the street address or, if different, the mailing address of its principal
office is to be changed, the street address and, if different, the mailing
address of the new principal office.
(c)
Except as otherwise provided in Section 204, a statement of change is effective
when filed by the [Secretary of State].
(b)
The members or directors of a limited cooperative association need not approve
the filing of:
(1)
a statement of change under this section; or
(2)
a similar filing changing the registered agent or registered office, if any, of
the association in any other jurisdiction.
(c)
A statement of change under this section designating a new registered agent is
an affirmation of fact by the limited cooperative association or registered
foreign cooperative that the agent has consented to serve.
(d)
As an alternative to using the procedure in this section, a limited cooperative
association or registered foreign cooperative may amend its articles of
organization.
(a)
To resign as an agent for service of process of A registered agent
may resign as agent for a limited cooperative association or registered
foreign cooperative, the agent must deliver by delivering to the
[Secretary of State] for filing a statement of resignation containing the
name of the agent and the name of the association or foreign cooperative that
states:
(1)
the name of the association or foreign cooperative;
(2)
the name of the agent;
(3) that the agent resigns from
serving as registered agent for the association or foreign cooperative; and
(4)
the address to which the agent will send the notice required by subsection (c).
(b)
A statement of resignation takes effect on the earlier of:
(1)
the 31st day after the day on which it is filed by the [Secretary of State]; or
(2)
the designation of a new registered agent for the limited cooperative
association or registered foreign cooperative.
(c)
A registered agent promptly shall furnish to the limited cooperative
association or registered foreign cooperative notice in a record of the date on
which a statement of resignation was filed.
(d)
When a statement of resignation takes effect, the registered agent ceases to
have responsibility under this [act] for any matter thereafter tendered to it
as agent for the limited cooperative association or registered foreign cooperative. The resignation does not affect any
contractual rights the association or foreign cooperative has against the agent
or that the agent has against the association or foreign cooperative.
(e)
A registered agent may resign with respect to a limited cooperative association
or registered foreign cooperative whether or not the association or foreign
cooperative is in good standing.
(b)
After receiving a statement of resignation under subsection (a), the [Secretary
of State] shall file it and mail or otherwise provide or deliver a copy to the
limited cooperative association or foreign cooperative at its principal office.
(c)
An agency for service of process of a limited cooperative association or
foreign cooperative terminates on the earlier of:
(1)
the 31st day after the [Secretary of State] files a statement of resignation
under subsection (b); or
(2)
when a record designating a new agent for service of process is delivered to
the [Secretary of State] for filing on behalf of the association or foreign
cooperative and becomes effective.
(a) If a registered agent changes
its name or address, the agent may deliver to the [Secretary of State] for
filing a statement of change that states:
(1)
the name of the limited liability company or registered foreign limited
liability company represented by the registered agent;
(2)
the name of the agent as currently shown in the records of the [Secretary of
State] for the company or foreign company;
(3)
if the name of the agent has changed, its new name; and
(4)
if the address of the agent has changed, its new address.
(b) A registered agent promptly shall
furnish notice to the represented limited liability company or registered
foreign limited liability company of the filing by the [Secretary of State] of
the statement of change and the changes made by the statement.
(a)
An agent for service of process appointed by a limited cooperative association
or foreign cooperative is an agent of the association or foreign cooperative
for service of process, notice, or a demand required or permitted by law to be
served upon the association or foreign cooperative.
(b)
If a limited cooperative association or foreign cooperative does not appoint or
maintain an agent for service of process in this state or the agent for service
of process cannot with reasonable diligence be found at the address of the
designated office on file with the [Secretary of State], the [Secretary of
State] is an agent of the association or foreign cooperative upon which
process, notice, or a demand may be served.
(c)
Service of process, notice, or a demand on the [Secretary of State] as agent of
a limited cooperative association or foreign cooperative may be made by
delivering to the [Secretary of State] two copies of the process, notice, or
demand. The [Secretary of State] shall forward one copy by registered or
certified mail, return receipt requested, to the association or foreign
cooperative at its principal office.
(d)
Service is effected under subsection (c) on the earliest of:
(1)
the date the limited cooperative association or foreign cooperative receives
the process, notice, or demand;
(2)
the date shown on the return receipt, if signed on behalf of the association or
foreign cooperative; or
(3)
five days after the process, notice, or demand is deposited by the [Secretary
of State] for delivery by the United States Postal Service, if postage prepaid
to the address of the principal office on file with the [Secretary of State].
(e)
The [Secretary of State] shall keep a record of each process, notice, and
demand served pursuant to this section and record the time of, and the action
taken regarding, the service.
(f)
This section does not affect the right to serve process, notice, or a demand in
any other manner provided by law.
(a)
A limited cooperative association or registered foreign cooperative may be
served with any process, notice, or demand required or permitted by law by
serving its registered agent.
(b)
If a limited cooperative association or registered foreign cooperative ceases
to have a registered agent, or if its registered agent cannot with reasonable
diligence be served, the association or cooperative may be served by registered
or certified mail, return receipt requested, or by similar commercial delivery
service, addressed to the association or cooperative at its principal
office. The address of the principal
office must be as shown on the most recent [annual] [biennial] report filed by
the [Secretary of State]. Service is
effected under this subsection on the earliest of:
(1)
the date the association or cooperative receives the mail or delivery by the
commercial delivery service;
(2)
the date shown on the return receipt, if signed by the association or
cooperative; or
(3)
five days after its deposit with the United States Postal Service or with the
commercial delivery service, if correctly addressed and with sufficient postage
or payment.
(c)
If process, notice, or demand cannot be served on a limited cooperative or
registered foreign cooperative pursuant to subsection (a) or (b), service may
be made by handing a copy to the individual in charge of any regular place of
business or activity of the association or cooperative if the individual served
is not a plaintiff in the action.
(d)
Service of process, notice, or demand on a registered agent must be in a
written record.
(e)
Service of process, notice, or demand may be made by other means under law
other than this [act].
FILING
AND OTHER REPORTS
(a)
A record delivered to the [Secretary of State] for filing pursuant to this
[act] must be signed as follows:
(1)
The initial articles of organization must be signed by at least one organizer.
(2)
A statement of cancellation under Section 302(d) must be signed by at least one
organizer.
(3)
Except as otherwise provided in paragraph (4), a record signed on behalf of an
existing limited cooperative association must be signed by an officer.
(4)
A record filed on behalf of a dissolved association must be signed by a person
winding up activities under Section 1206 or a person appointed under Section
1206 to wind up those activities.
(5)
Any other record must be signed by the
person on whose behalf the record is delivered on behalf of a person to the [Secretary of State] for filing must be signed by that person.
(b) Any
record to be signed under this [act] may be signed by an authorized agent. Whenever
this [act] requires a particular individual to sign a record and the individual
is deceased or incompetent, the record may be signed by a legal representative
of the individual.
(c)
A person that signs a record as an agent or legal representative thereby
affirms as a fact that the person is authorized to sign the record.
(a) If a
person required by this [act] to sign or deliver a record to the [Secretary of
State] for filing under this [act]
does not do so, the any other
person that is aggrieved may petition [the appropriate court], upon petition of an aggrieved person,
may to order:
(1)
the person to sign the record and
deliver it to the [Secretary of State] for filing; or
(2)
delivery of the unsigned record to the [Secretary of State] for filing the person to deliver the record to the
[Secretary of State] for filing; or
(3) the [Secretary of
State] to file the record unsigned.
(b) An aggrieved person under subsection
(a), other than the limited cooperative association or foreign cooperative to
which the record pertains, shall make the association or foreign cooperative a
party to the action brought to obtain the order.
(c) An unsigned record filed
pursuant to this section is effective.
(b) If the petitioner under subsection
(a) is not the limited cooperative association or foreign cooperative to which
the record pertains, the petitioner shall make the association or cooperative a
party to the action.
(c) A record filed under subsection
(a)(3) is effective without being signed.
(a)
A record authorized or required by this [act] to be delivered to the [Secretary
of State] for filing must be captioned to describe the record’s purpose, be in
a medium and format permitted by the [Secretary of State], and be delivered to
the [Secretary of State]. If the filing fees have been paid, and unless the
[Secretary of State] determines that the record does not comply with the filing
requirements of this [act], the [Secretary of State] shall file the record [and
send a copy of the filed record and a receipt for the fees to the person on
whose behalf the record was filed].
(b)
The [Secretary of State], upon request and payment of the required fee, shall
furnish a certified copy of any record filed by the [Secretary of State] under
this [act] to the person making the request.
(c)
Except as otherwise provided in Sections 118 119 and 204, a record
delivered to the [Secretary of State] for filing under this [act] may specify
an effective time and a delayed effective date that may include an effective
time on that date. Except as otherwise provided in Sections 118 119 and
204, a record filed by the [Secretary of State] under this [act] is effective:
(1)
if the record does not specify an effective time and does not specify a delayed
effective date, on the date and at the time the record is filed as evidenced by
the [Secretary of State’s] [endorsement] of the date and time on the record;
(2)
if the record specifies an effective time but not a delayed effective date, on
the date the record is filed at the time specified in the record;
(3)
if the record specifies a delayed effective date but not an effective time, at
12:01 a.m. on the earlier of:
(A)
the specified date; or
(B)
the 90th day after the record is filed; or
(4)
if the record specifies an effective time and a delayed effective date, at the
specified time on the earlier of:
(A)
the specified date; or
(B)
the 90th day after the record is filed.
(a) To be filed by the [Secretary
of State] pursuant to this [act], a record must be received by the [Secretary
of State], comply with this [act], and satisfy the following:
(1) The filing of the
record must be required or permitted by this [act].
(2) The record must
be physically delivered in written form unless and to the extent the [Secretary
of State] permits electronic delivery of records.
(3) The words in the
record must be in English, and numbers must be in Arabic or Roman numerals, but
the name of an entity need not be in English if written in English letters or
Arabic or Roman numerals.
(4) The record must
be signed by a person authorized or required under this [act] to sign the
record.
(5) The record must
state the name and capacity, if any, of each individual who signed it, either
on his or her own behalf or on behalf of a person authorized or required to
sign the record, but need not contain a seal, attestation, acknowledgment, or
verification.
(b) If law other than this [act]
prohibits the disclosure by the [Secretary of State] of information contained
in a record delivered to the [Secretary of State] for filing, the [Secretary of
State] shall accept the record if the record otherwise complies with this [act]
but may redact the information.
(c) When a record is delivered to
the [Secretary of State] for filing, any fee required under this [act] and any
fee, tax, interest, or penalty required to be paid under this [act] or law
other than this [act] must be paid in a manner permitted by the [Secretary of
State] or by that law.
(d) The [Secretary of State] may
require that a record delivered in written form be accompanied by an identical
or conformed copy.
SECTION 204.
EFFECTIVE TIME AND DATE. Except as otherwise
provided in Section 205 and subject to Section 206(c), an entity filing is
effective:
(1) on the date and at the time
of its filing by the [Secretary of State] as provided in Section 208;
(2) on the date of filing and at
the time specified in the record as its effective time, if later than the time
under paragraph (1);
(3) at a specified delayed
effective time and date, which may not be more than 90 days after the date of
filing; or
(4) if a delayed effective date
is specified, but no time is specified, at 12:01 a.m. on the date specified,
which may not be more than 90 days after the date of filing.
(a) Except as provided in
[Article] 16, a record delivered to the [Secretary of State] for filing may be
withdrawn before it takes effect by delivering to the [Secretary of State] for
filing a statement of withdrawal.
(b) A statement of withdrawal
must:
(1) be signed by each
person that signed the record being withdrawn, except as otherwise agreed by
those persons;
(2) identify the
record to be withdrawn; and
(3) if signed by
fewer than all the persons that signed the record being withdrawn, state that
the record is withdrawn in accordance with the agreement of all the persons
that signed the record.
(c) On filing by the [Secretary
of State] of a statement of withdrawal, the action or transaction evidenced by
the original record does not take effect.
(a)
A limited cooperative association or foreign cooperative may deliver to the
[Secretary of State] for filing a statement of correction to correct a record
previously delivered by the association or foreign cooperative to the
[Secretary of State] and filed by the [Secretary of State] if, at the time of
filing, the record contained inaccurate information or was defectively signed.
(b)
A statement of correction may not state a delayed effective date and must:
(1)
describe the record to be corrected, including its filing date, or have
attached a copy of the record as filed;
(2)
specify the inaccurate information and the reason it is inaccurate or the
manner in which the signing was defective; and
(3)
correct the inaccurate information or defective signature.
(c)
When filed by the [Secretary of State], a statement of correction is effective:
(1)
when filed as to persons relying on the inaccurate information or defective
signature before its correction and adversely affected by the correction; and
(2)
as to all other persons, retroactively as of the effective date and time of the
record the statement corrects.
(a) A person on whose behalf a
filed record was delivered to the [Secretary of State] for filing may correct
the record if:
(1) the record at the
time of filing was inaccurate;
(2) the record was defectively
signed; or
(3) the electronic
transmission of the record to the [Secretary of State] was defective.
(b) To correct a filed record, a
person on whose behalf the record was delivered to the [Secretary of State]
must deliver to the [Secretary of State] for filing a statement of correction.
(c) A statement of correction:
(1) may not state a
delayed effective date;
(2) must be signed by
the person correcting the filed record;
(3) must identify the
filed record to be corrected;
(4) must specify the
inaccuracy or defect to be corrected; and
(5) must correct the
inaccuracy or defect.
(d) A statement of correction is
effective as of the effective date of the filed record that it corrects except
for purposes of Section 103(d) and as to persons relying on the uncorrected
filed record and adversely affected by the correction. For those purposes and as to those persons,
the statement of correction is effective when filed.
SECTION 205 207. LIABILITY FOR INACCURATE INFORMATION IN FILED
RECORD. If a record delivered to the
[Secretary of State] for filing under this [act] and filed by the [Secretary of
State] contains inaccurate information, a person that suffers a loss by
reliance on the information may recover damages for the loss from a person that
signed the record or caused another to sign it on the person’s behalf and knew
at the time the record was signed that the information was inaccurate.
(a)
The [Secretary of State] shall file a record delivered to the [Secretary of
State] for filing which satisfies this [act].
The duty of the [Secretary of State] under this section is ministerial.
(b)
When the [Secretary of State] files a record, the [Secretary of State] shall
record it as filed on the date and at the time of its delivery. After filing a record, the [Secretary of
State] shall deliver to the person that submitted the record a copy of the
record with an acknowledgment of the date and time of filing and, in the case
of a statement of denial, also to the limited cooperative association to which
the statement pertains.
(c)
If the [Secretary of State] refuses to file a record, the [Secretary of State]
shall, not later than [15] business days after the record is delivered:
(1) return the record or notify the person that
submitted the record of the refusal; and
(2)
provide a brief explanation in a record of the reason for the refusal.
(d)
If the [Secretary of State] refuses to file a record, the person that submitted
the filing may petition the [appropriate court] to compel filing of the record.
The record and the explanation of the [Secretary of State] of the refusal
to file must be attached to the petition. The court may decide the matter
in a summary proceeding.
(e)
The filing of or refusal to file a record does not create a presumption that
the information contained in the record is correct or incorrect.
(f)
Except as provided by Section 122 or by law other than this [act], the
[Secretary of State] may deliver any record to a person by delivering it:
(1) in person to the person that submitted it;
(2)
to the address of the person’s registered agent;
(3)
to the principal office of the person; or
(4)
to another address the person provides to the [Secretary of State] for
delivery.
(a) The [Secretary of State], upon
request and payment of the required fee, shall furnish any person that requests
it a certificate of good standing for a limited cooperative association if the
records filed in the office of the [Secretary of State] show that the
[Secretary of State] has filed the association’s articles of organization, that
the association is in good standing, and that the [Secretary of State] has not
filed a statement of termination.
(b) The [Secretary of State],
upon request and payment of the required fee, shall furnish to any person that
requests it a certificate of authority for a foreign cooperative if the records
filed in the office of the [Secretary of State] show that the [Secretary of
State] has filed the foreign cooperative’s certificate of authority, has not
revoked nor has reason to revoke the certificate of authority, and has not
filed a notice of cancellation.
(a) On request of any person, the
[Secretary of State] shall issue a certificate of good standing for a limited
cooperative association or a certificate of registration for a registered
foreign cooperative.
(b) A certificate under
subsection (a) must state:
(1) the limited
cooperative association’s name or the registered foreign cooperative’s name
used in this state;
(2) in the case of a
limited cooperative association:
(A) that
articles of organization have been filed and have taken effect;
(B) the
date the articles became effective;
(C) the
period of the association’s duration if the records of the [Secretary of State]
reflect that its period of duration is less than perpetual; and
(D) that:
(i)
a statement of dissolution, statement of administrative dissolution, or
statement of termination has not been filed;
(ii)
the records of the [Secretary to State] do not otherwise reflect that the
association has been dissolved or terminated; and
(iii)
a proceeding is not pending under Section 1211;
(3) in the case of a
foreign cooperative, that it is registered to do business in this state;
(4) that all fees,
taxes, interest, and penalties owed to this state by the association or foreign
cooperative and collected through the [Secretary of State] have been paid, if:
(A)
payment is reflected in the records of the [Secretary of State]; and
(B)
nonpayment affects the good standing or registration of the association or
foreign cooperative;
(5) that the most
recent [annual] [biennial] report required by Section 210 has been delivered to
the [Secretary of State] for filing; and
(6) other facts
reflected in the records of the [Secretary of State] pertaining to the
association or foreign cooperative which the person requesting the certificate
reasonably requests.
(c)
Subject to any exceptions qualification
stated in the certificate, a certificate of
good standing or authority issued by the [Secretary of State] establishes conclusively that the limited
cooperative association or foreign cooperative is in good standing or is
authorized to transact business in this state may be relied upon as
conclusive evidence of the facts stated in the certificate.
(a)
A Each limited
cooperative association or registered foreign cooperative authorized
to transact business in this state shall deliver to the [Secretary of
State] for filing [an annual] [a
biennial] report that states:
(1)
the name of the association or foreign cooperative;
(2)
the street address and, if different,
mailing address of the association’s or foreign cooperative’s designated office
and the name and street and
mailing addresses of its registered
agent for service of process at the
designated office in this state;
(3)
the street address and, if different,
mailing address addresses
of the association’s or foreign
cooperative’s its principal office; and
(4)
the name of at least one director; and
(5)
in the case of a foreign cooperative, the
state or other jurisdiction under whose law the foreign cooperative is formed
its jurisdiction of formation and any alternative name adopted under
Section 1405.
(b)
Information in an annual the
[annual] [biennial] report must be current as of the date the report is
delivered to the [Secretary of State]
signed by the limited cooperative association or registered foreign
cooperative.
(c)
The first [annual] [biennial]
report must be delivered to the [Secretary of State] between after [January 1] and before [April 1] of the year following the calendar year in
which the limited cooperative association
is formed association’s articles of organization became effective
or the registered foreign
cooperative is authorized to transact
registered to do business in this state. An annual report Subsequent [annual] [biennial] reports
must be delivered to the [Secretary of State] between after [January 1] and before [April 1] of each subsequent
[second] calendar year thereafter.
(d)
If [an annual] [a biennial]
report does not contain the information required by subsection (a) this section, the [Secretary of State]
shall promptly notify the reporting limited cooperative association or registered foreign cooperative in a record and return the report
for correction. If the report is
corrected to contain the information required by subsection (a) and delivered
to the [Secretary of State] not later than 30 days after the date of the notice
from the [Secretary of State], it is timely delivered.
(e) If a filed annual report
contains an address of the designated office, name of the agent for service of
process, or address of the principal office which differs from the information
shown in the records of the [Secretary of State] immediately before the filing,
the differing information in the annual report is considered a statement of
change. If [an annual] [a
biennial] report under this section contains the name or address of a
registered agent which differs from the information shown in the records of the
[Secretary of State] immediately before the [annual] [biennial] report becomes
effective, the differing information in the [annual] [biennial] report is
considered a statement of change under Section 119.
(f) If a limited cooperative association
fails to deliver an annual report under this section, the [Secretary of State]
may proceed under Section 1211 to dissolve the association administratively.
(g) If a foreign cooperative
fails to deliver an annual report under this section, the [Secretary of State]
may revoke the certificate of authority of the cooperative.
SECTION 208 211. FILING FEES. The filing fee for
records filed under this [article] by the [Secretary of State] is [insert
appropriate fee or citation to fee provision under other state law].
FORMATION AND INITIAL ARTICLES OF
ORGANIZATION OF LIMITED
SECTION 301. ORGANIZERS. A limited cooperative association must be
organized by one or more organizers.
(a)
To form a limited cooperative
association, an organizer of the association must deliver articles of
organization to the [Secretary of State] for filing. One or more persons may act as organizers
to form a limited cooperative association by delivering to the [Secretary of
State] for filing articles of organization.
(b)
The articles of organization must state:
(1)
the name of the association, which
must comply with Section 111;
(2)
the purposes for which the association is formed;
(3)
the street address and, if different,
mailing address of the association’s
initial designated office and the name of the association’s addresses
within this state of the initial registered
agent for service of process at the
designated office;
(4)
the street address and, if different, mailing address of the initial principal
office;
(5)
the name and street address and, if different, mailing address of each
organizer; and
(6)
the term for which the association is to exist if other than perpetual.
(b)(c)
Subject to Section 113(a) 114(a), articles of organization
may contain any other provisions in addition to those required by subsection
(a).
(c)(d)
A limited cooperative association is formed after articles of organization
that substantially comply with subsection (a) are delivered to the [Secretary
of State], are filed, and become effective under Section 203(c).
(d)
If articles of organization filed by the [Secretary of State] state a delayed
effective date, a limited cooperative association is not formed if, before the
articles take effect, an organizer signs and delivers to the [Secretary of
State] for filing a statement of cancellation.
(a)
After a limited cooperative association is formed:
(1)
if initial directors are named in the articles of organization, the initial
directors shall hold an organizational meeting to adopt initial bylaws and
carry on any other business necessary or proper to complete the organization of
the association; or
(2)
if initial directors are not named in the articles of organization, the
organizers shall designate the initial directors and call a meeting of the
initial directors to adopt initial bylaws and carry on any other business
necessary or proper to complete the organization of the association.
(b)
Unless the articles of organization otherwise provide, the initial directors
may cause the limited cooperative association to accept members, including
those necessary for the association to begin business.
(c)
Initial directors need not be members.
(d)
An initial director serves until a successor is elected and qualified at a
members meeting or the director is removed, resigns, is adjudged incompetent,
or dies.
(a) Bylaws
must be in a record and, if not stated in the articles of organization, must
include:
(1)
a statement of the capital structure of the limited cooperative association,
including:
(A)
the classes or other types of members’ interests and relative rights,
preferences, and restrictions granted to or imposed upon each class or other
type of member’s interest; and
(B)
the rights to share in profits or distributions of the association;
(2)
a statement of the method for admission of members;
(3)
a statement designating voting and other governance rights, including which
members have voting power and any restriction on voting power;
(4)
a statement that a member’s interest is transferable if it is to be transferable
and a statement of the conditions upon which it may be transferred;
(5)
a statement concerning the manner in which profits and losses are allocated and
distributions are made among patron members and, if investor members are
authorized, the manner in which profits and losses are allocated and how
distributions are made among investor members and between patron members and
investor members;
(6)
a statement concerning:
(A)
whether persons that are not members but conduct business with the association
may be permitted to share in allocations of profits and losses and receive
distributions; and
(B)
the manner in which profits and losses are allocated and distributions are made
with respect to those persons; and
(7)
a statement of the number and terms of directors or the method by which the
number and terms are determined.
(b)
Subject to Section 113(c) 114(c) and the articles of
organization, bylaws may contain any other provision for managing and
regulating the affairs of the association.
(c)
In addition to amendments permitted under [Article] 4, the initial board of
directors may amend the bylaws by a majority vote of the directors at any time
before the admission of members.
AMENDMENT
OF ORGANIC RULES OF LIMITED COOPERATIVE ASSOCIATION
(a) A
limited cooperative association may amend its organic rules under this
[article] for any lawful purpose. In addition, the initial board of directors
may amend the bylaws of an association under Section 304.
(b)
Unless the organic rules otherwise provide, a member does not have a vested
property right resulting from any provision in the organic rules, including a
provision relating to the management, control, capital structure, distribution,
entitlement, purpose, or duration of the limited cooperative association.
(a)
Except as provided in Sections 401(a) and 405(f), the organic rules of a
limited cooperative association may be amended only at a members meeting. An
amendment may be proposed by either:
(1)
a majority of the board of directors, or a greater percentage if required by
the organic rules; or
(2)
one or more petitions signed by at least 10 percent of the patron members or at
least 10 percent of the investor members.
(b)
The board of directors shall call a members meeting to consider an amendment
proposed pursuant to subsection (a). The meeting must be held not later than 90
days following the proposal of the amendment by the board or receipt of a
petition. The board must mail or otherwise transmit or deliver in a record to
each member:
(1)
the proposed amendment, or a summary of the proposed amendment and a statement
of the manner in which a copy of the amendment in a record may be reasonably
obtained by a member;
(2)
a recommendation that the members approve the amendment, or if the board
determines that because of conflict of interest or other special circumstances
it should not make a favorable recommendation, the basis for that
determination;
(3)
a statement of any condition of the board’s submission of the amendment to the
members; and
(4)
notice of the meeting at which the proposed amendment will be considered, which
must be given in the same manner as notice for a special meeting of members.
(a)
A substantive change to a proposed amendment of the organic rules may not be
made at the members meeting at which a vote on the amendment occurs.
(b)
A nonsubstantive change to a proposed amendment of the organic rules may be
made at the members meeting at which the vote on the amendment occurs and need
not be separately voted upon by the board of directors.
(c)
A vote to adopt a nonsubstantive change to a proposed amendment to the organic
rules must be by the same percentage of votes required to pass a proposed
amendment.
(a)
This Section applies if the organic rules provide for voting by district or
class, or if there is one or more identifiable voting groups that a proposed
amendment to the organic rules would affect differently from other members with
respect to matters identified in Section 405(e)(1) through (5). Approval of the
amendment requires the same percentage of votes of the members of that
district, class, or voting group required in Sections 405 and 514.
(b)
If a proposed amendment to the organic rules would affect members in two or
more districts or classes entitled to vote separately under subsection (a) in
the same or a substantially similar way, the districts or classes affected must
vote as a single voting group unless the organic rules otherwise provide for
separate voting.
(a)
Subject to Section 404 and subsections (c) and (d), an amendment to the
articles of organization must be approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under Section 402; and
(2)
if the limited cooperative association has investor members, at least a
majority of the votes cast by patron members, unless the organic rules require
a greater percentage vote by patron members.
(b)
Subject to Section 404 and subsections (c), (d), (e) and (f), an amendment to
the bylaws must be approved by:
(1)
at least a majority vote of the voting power of all members present at a
members meeting called under Section 402, unless the organic rules require a
greater percentage; and
(2)
if a limited cooperative association has investor members, a majority of the
votes cast by patron members, unless the organic rules require a larger
affirmative vote by patron members.
(c)
The organic rules may require that the percentage of votes under subsection
(a)(1) or (b)(1) be:
(1)
a different percentage that is not less than a majority of members voting at
the meeting;
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs(1) and (2).
(d)
Consent in a record by a member must be delivered to a limited cooperative
association before delivery of an amendment to the articles of organization or
restated articles of organization for filing pursuant to Section 407, if as a
result of the amendment the member will have:
(1)
personal liability for an obligation of the association; or
(2)
an obligation or liability for an additional contribution.
(e)
The vote required to amend bylaws must satisfy the requirements of subsection
(a) if the proposed amendment modifies:
(1)
the equity capital structure of the limited cooperative association, including
the rights of the association’s members to share in profits or distributions,
or the relative rights, preferences, and restrictions granted to or imposed
upon one or more districts, classes, or voting groups of similarly situated
members;
(2)
the transferability of a member’s interest;
(3)
the manner or method of allocation of profits or losses among members;
(4)
the quorum for a meeting and the rights of voting and governance; or
(5)
unless otherwise provided in the organic rules, the terms for admission of new
members.
(f)
Except for the matters described in subsection (e), the articles of
organization may delegate amendment of all or a part of the bylaws to the board
of directors without requiring member approval.
(g)
If the articles of organization delegate amendment of bylaws to the board of
directors, the board shall provide a description of any amendment of the bylaws
made by the board to the members in a record not later than 30 days after the
amendment, but the description may be provided at the next annual members
meeting if the meeting is held within the 30-day period.
SECTION 406. RESTATED ARTICLES OF ORGANIZATION. A limited
cooperative association, by the affirmative vote of a majority of the board of
directors taken at a meeting for which the purpose is stated in the notice of
the meeting, may adopt restated articles of organization that contain the
original articles as previously amended. Restated articles may contain
amendments if the restated articles are adopted in the same manner and with the
same vote as required for amendments to the articles under Section 405(a). Upon
filing, restated articles supersede the existing articles and all amendments.
(a)
To amend its articles of organization, a limited cooperative association must
deliver to the [Secretary of State] for filing an amendment of the articles, or
restated articles of organization or articles of conversion or merger pursuant
to [Article] 16, which contain one or more amendments of the articles of
organization, stating:
(1)
the name of the association;
(2)
the date of filing of the association’s initial articles; and
(3)
the changes the amendment makes to the articles as most recently amended or
restated.
(b)
Before the beginning of the initial meeting of the board of directors, an
organizer who knows that information in the filed articles of organization was
inaccurate when the articles were filed or has become inaccurate due to changed
circumstances shall promptly:
(1)
cause the articles to be amended; or
(2)
if appropriate, deliver an amendment to the [Secretary of State] for filing
pursuant to Section 203.
(c)
If restated articles of organization are adopted, the restated articles may be
delivered to the [Secretary of State] for filing in the same manner as an
amendment.
(d)
Upon filing, an amendment of the articles of organization or other record
containing an amendment of the articles which has been properly adopted by the
members is effective as provided in Section 203(c).
MEMBERS
SECTION 501. MEMBERS. To begin business, a limited cooperative association must
have at least [two] patron members unless the sole member is a cooperative.
SECTION 502. BECOMING A MEMBER. A person becomes a member:
(1)
as provided in the organic rules;
(2)
as the result of a merger or conversion under [Article] 16; or
(3)
with the consent of all the members.
(a) If a limited cooperative association is to have
only one cooperative member upon formation, the cooperative becomes a member as
agreed by that cooperative and the organizer of the limited cooperative
association. That cooperative and the organizer may be, but need not be,
different persons. If different, the organizer acts on behalf of the initial
cooperative member.
(b) If a limited cooperative association is to have
more than one member upon formation, those persons become members as agreed by
the persons before the formation of the limited cooperative association. The
organizer acts on behalf of the persons in forming the limited cooperative
association and may be, but need not be, one of the persons.
(c)
After formation of a limited cooperative association, a person becomes a member:
(1)
as provided in the organic rules;
(2)
as the result of a transaction effective under [Article] 16;
(3)
with the consent of all the members; or
(4)
as provided in Section 1202(3).
SECTION 503. NO AGENCY
POWER AS OF MEMBER TO BIND ASSOCIATION AS MEMBER.
A member, solely by reason of being a
member, may not act for or bind the limited cooperative association.
(a) A member is not an agent of a limited cooperative
association solely by reason of being a member.
(b) A person’s status as a member does not prevent or
restrict law other than this [act] from imposing liability on a limited
cooperative association because of the person’s conduct.
SECTION 504. NO LIABILITY AS OF MEMBER
MEMBERS AND MANAGERS FOR ASSOCIATION’S OBLIGATIONS.
Unless the articles of
organization otherwise provide, a debt, obligation, or other liability of a
limited cooperative association is solely that of the association and is not
the debt, obligation, or liability of a member solely by reason of being a
member.
(a) A debt, obligation, or other
liability of a limited cooperative association is solely the debt, obligation,
or other liability of the limited cooperative association. A member or manager of the limited
cooperative association is not personally liable, directly or indirectly, by
way of contribution or otherwise, for a debt, obligation, or other liability of
the association solely by reason of being or acting as a member or manager of
the association. This subsection applies
regardless of the dissolution of the association.
(b)
The failure of a limited cooperative association to observe formalities
relating to the exercise of its powers or management of its activities and
affairs is not a ground for imposing liability on any member or manager of the
association for any debt, obligation, or other liability of the association.
(a) Not
later than 10 business days after receipt of a demand made in a record, a
limited cooperative association shall permit a member to obtain, inspect, and
copy in the association’s principal office On reasonable notice, a member may inspect and copy during regular
business hours, at the principal office or a reasonable location specified by the
limited cooperative association, required information listed in
Sections 114(a)(1) 115(a)(1) through (8) during regular
business hours. A member need not have any particular purpose for seeking
the information. The association is not required to provide the same
information listed in Section 114(a)(2) 115(a)(2) through (8) to
the same member more than once during a six-month period.
(b) On
demand made in a record received by the limited cooperative association, a
member may obtain, inspect, and copy in the association’s principal office On reasonable notice, a member may
inspect and copy during regular business hours, at the principal office or a
reasonable location specified by the limited cooperative association,
required information listed in Sections 114(a)(9) Section 115(a)(9),
(10), (12), (13), (16), and (18) during regular business hours,
if:
(1)
the member seeks the information in good faith and for a proper purpose
reasonably related to the member’s interest;
(2)
the demand includes a description with reasonable particularity of the
information sought and the purpose for seeking the information;
(3)
the information sought is directly connected to the member’s purpose; and
(4)
the demand is reasonable.
(c) Not later
than 10 business days after receipt of a demand pursuant to subsection (b), a
limited cooperative association shall provide, in a record, the following
information to the member that made the demand:
(1)
if the association agrees to provide the demanded information:
(A)
what information the association will provide in response to the demand; and
(B)
a reasonable time and place at which the association will provide the
information; or
(2)
if the association declines to provide some or all of the demanded information,
the association’s reasons for declining.
(d) A
person dissociated as a member may obtain, inspect, and copy information
available to a member under subsection (a) or (b) by delivering a demand in a
record to the limited cooperative association in the same manner and subject to
the same conditions applicable to a member under subsection (b) if:
(1)
the information pertains to the period during which the person was a member in
the association; and
(2)
the person seeks the information in good faith.
(e) A
limited cooperative association shall respond to a demand made pursuant to
subsection (d) in the manner provided in subsection (c). On 10 days’ demand made in a record
received by a limited cooperative association, a dissociated member may have
access to information to which the person was entitled while a member if the
information pertains to the period during which the person was a member, the
person seeks the information in good faith, and the person satisfies the
requirements imposed on a member by subsection (b)(2). The association shall
respond to a demand made pursuant to this subsection in the manner provided in
subsection (b)(3).
(f)(e)
Not later than 10 business days after receipt by a limited cooperative
association of a demand made by a member in a record, but not more often than
once in a six-month period, the association shall deliver to the member a
record stating the information with respect to the member required by Section 114(a)(17)
115(a)(17).
(g)(f)
A limited cooperative association may impose reasonable restrictions, including
nondisclosure restrictions, on the use of information obtained under this
section. In addition to any
restriction or condition stated in its organic rules, a limited cooperative
association, as a matter within the ordinary course of its activities and
affairs, may impose reasonable restrictions and conditions on access to and use
of information to be furnished under this section, including designating
information confidential and imposing nondisclosure and safeguarding
obligations on the recipient. In a dispute concerning the
reasonableness of a restriction under this subsection, the association has the
burden of proving reasonableness.
(h)(g)
A limited cooperative association may charge a person that makes a demand
under this section reasonable costs of copying, limited to the costs of labor
and material.
(i)(h)
A person that may obtain information under this section may obtain the
information through an attorney or other agent. A restriction imposed on the
person under subsection (g) or by the organic rules applies to the attorney or
other agent. A member or
dissociated member may exercise rights under this section through an agent or,
in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the
organic rules or under subsection (g) applies both to the agent or legal
representative and the member or dissociated member.
(j)(i)
The rights stated in this section do not extend to a person as transferee.
(k)(j)
The organic rules may require a limited cooperative association to provide more
information than required by this section and may establish conditions and
procedures for providing the information.
(a) Members
shall meet annually at a time provided in the organic rules or set by the board
of directors not inconsistent with the organic rules.
(b)
An annual members meeting may be held inside or outside this state at the place
stated in the organic rules or selected by the board of directors not
inconsistent with the organic rules.
(c)
Unless the organic rules otherwise provide, members may attend or conduct an
annual members meeting through any means of communication if all members
attending the meeting can communicate with each other during the meeting.
(d)
The board of directors shall report, or cause to be reported, at the
association’s annual members meeting the association’s business and financial
condition as of the close of the most recent fiscal year.
(e)
Unless the organic rules otherwise provide, the board of directors shall
designate the presiding officer of the association’s annual members meeting.
(f)
Failure to hold an annual members meeting does not affect the validity of any
action by the limited cooperative association.
(a) A
special meeting of members may be called only:
(1)
as provided in the organic rules;
(2)
by a majority vote of the board of directors on a proposal stating the purpose
of the meeting;
(3)
by demand in a record signed by members holding at least 20 percent of the
voting power of the persons in any district or class entitled to vote on the
matter that is the purpose of the meeting stated in the demand; or
(4)
by demand in a record signed by members holding at least 10 percent of the
total voting power of all the persons entitled to vote on the matter that is
the purpose of the meeting stated in the demand.
(b)
A demand under subsection (a)(3) or (4) must be submitted to the officer of the
limited cooperative association charged with keeping its records.
(c)
Any voting member may withdraw its demand under subsection (a)(3) or (4) before
receipt by the limited cooperative association of demands sufficient to require
a special meeting of members.
(d)
A special meeting of members may be held inside or outside this state at the
place stated in the organic rules or selected by the board of directors not
inconsistent with the organic rules.
(e)
Unless the organic rules otherwise provide, members may attend or conduct a
special meeting of members through the use of any means of communication if all
members attending the meeting can communicate with each other during the
meeting.
(f)
Only business within the purpose or purposes stated in the notice of a special
meeting of members may be conducted at the meeting.
(g)
Unless the organic rules otherwise provide, the presiding officer of a special
meeting of members shall be designated by the board of directors.
(a)
A limited cooperative association shall notify each member of the time, date,
and place of a members meeting [at least 15 and not more than 60] days before
the meeting.
(b)
Unless the articles of organization otherwise provide, notice of an annual
members meeting need not include any purpose of the meeting.
(c)
Notice of a special meeting of members must include each purpose of the meeting
as contained in the demand under Section 507(a)(3) or (4) or as voted upon by
the board of directors under Section 507(a)(2).
(d)
Notice of a members meeting must be given in a record unless oral notice is
reasonable under the circumstances.
(a)
A member may waive notice of a members meeting before, during, or after the
meeting.
(b)
A member’s participation in a members meeting is a waiver of notice of that
meeting unless the member objects to the meeting at the beginning of the
meeting or promptly upon the member’s arrival at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
SECTION 510. QUORUM OF MEMBERS. Unless the organic rules otherwise require a
greater number of members or percentage of the voting power, the voting member
or members present at a members meeting constitute a quorum.
SECTION 511. VOTING BY PATRON MEMBERS. Except as provided by Section 512(a), each
patron member has one vote. The organic rules may allocate voting power among
patron members as provided in Section 512(a).
(a)
The organic rules may allocate voting power among patron members on the basis
of one or a combination of the following:
(1)
one member, one vote;
(2)
use or patronage;
(3)
equity; or
(4)
if a patron member is a cooperative, the number of its patron members.
(b)
The organic rules may provide for the allocation of patron member voting power
by districts or class, or any combination thereof.
SECTION 513. VOTING BY INVESTOR MEMBERS. If the organic rules provide for investor members, each
investor member has one vote, unless the organic rules otherwise provide. The
organic rules may provide for the allocation of investor member voting power by
class, classes, or any combination of classes.
SECTION 514. VOTING REQUIREMENTS FOR MEMBERS. If a limited cooperative association has both patron and
investor members, the following rules apply:
(1)
the total voting power of all patron members may not be less than a majority of
the entire voting power entitled to vote.
(2)
action on any matter is approved only upon the affirmative vote of at least a
majority of:
(A)
all members voting at the meeting unless more than a majority is required by
[Articles] 4, 12, 15 through 16 or the organic rules; and
(B)
votes cast by patron members unless the organic rules require a larger
affirmative vote by patron members.
(3)
The organic rules may provide for the percentage of the affirmative votes that
must be cast by investor members to approve the matter.
(a)
Unless the organic rules otherwise provide, voting by a proxy at a members
meeting is prohibited. This subsection does not prohibit delegate voting based
on district or class.
(b)
If voting by a proxy is permitted, a patron member may appoint only another
patron member as a proxy and, if investor members are permitted, an investor
member may appoint only another investor member as a proxy.
(c)
The organic rules may provide for the manner of and provisions governing the
appointment of a proxy.
(d)
The organic rules may provide for voting on any question by ballot delivered by
mail or voting by other means on questions that are subject to vote by members.
(a)
Unless the organic rules require that action be taken only at a members
meeting, any action that may be taken by the members may be taken without a
meeting if each member entitled to vote on the action consents in a record to
the action.
(b)
Consent under subsection (a) may be withdrawn by a member in a record at any
time before the limited cooperative association receives a consent from each
member entitled to vote.
(c)
Consent to any action may specify the effective date or time of the action.
(a)
The organic rules may provide for the formation of geographic districts of
patron members and:
(1)
for the conduct of patron member meetings by districts and the election of
directors at the meetings; or
(2)
that districts may elect district delegates to represent and vote for the
district at members meetings.
(b)
A delegate elected under subsection (a)(2) has one vote unless voting power is
otherwise allocated by the organic rules.
(c)
The organic rules may provide for the establishment of classes of members, for
the preferences, rights, and limitations of the classes, and:
(1)
for the conduct of members meetings by classes and the election of directors at
the meetings; or
(2)
that classes may elect class delegates to represent and vote for the class in
members meetings.
(d)
A delegate elected under subsection (c)(2) has one vote unless voting power is
otherwise allocated by the organic rules.
MEMBER’S INTEREST IN LIMITED COOPERATIVE
ASSOCIATION
SECTION 601. MEMBER’S INTEREST. A member’s
interest:
(1)
is personal property;
(2)
consists of:
(A)
governance rights;
(B)
financial rights; and
(C)
the right or obligation, if any, to do business with the limited cooperative
association; and
(3)
may be in certificated or uncertificated form.
(a)
Unless the organic rules establish investor members’ interests, a member’s
interest is a patron member’s interest.
(b)
Unless the organic rules otherwise provide, if a limited cooperative
association has investor members, while a person is a member of the
association, the person:
(1)
if admitted as a patron member, remains a patron member;
(2)
if admitted as an investor member, remains an investor member; and
(3)
if admitted as a patron member and investor member remains a patron and
investor member if not dissociated in one of the capacities.
(a)
The provisions of this [act] relating to the transferability of a member’s
interest are subject to [reference to Uniform Commercial Code].
(b)
Unless the organic rules otherwise provide, a member’s interest other than
financial rights is not transferable.
(c)
Unless a transfer is restricted or prohibited by the organic rules, a member
may transfer its financial rights in the limited cooperative association.
(d)
The terms of any restriction on transferability of financial rights must be:
(1)
set forth in the organic rules and the member records of the association; and
(2)
conspicuously noted on any certificates evidencing a member’s interest.
(e)
A transferee of a member’s financial rights, to the extent the rights are
transferred, has the right to share in the allocation of profits or losses and
to receive the distributions to the member transferring the interest to the
same extent as the transferring member.
(f)
A transferee of a member’s financial rights does not become a member upon
transfer of the rights unless the transferee is admitted as a member by the
limited cooperative association.
(g)
A limited cooperative association need not give effect to a transfer under this
section until the association has notice of the transfer.
(h)
A transfer of a member’s financial rights in violation of a restriction on
transfer contained in the organic rules is ineffective as to a person having
notice of the restriction at the time of transfer.
(a)
A member or transferee may create an enforceable security interest in its
financial rights in a limited cooperative association.
(b)
Unless the organic rules otherwise provide, a member may not create an
enforceable security interest in the member’s governance rights in a limited
cooperative association.
(c)
The organic rules may provide that a limited cooperative association has a
security interest in the financial rights of a member to secure payment of any
indebtedness or other obligation of the member to the association. A security
interest provided for in the organic rules is enforceable under, and governed
by, [reference to Article 9 of the Uniform Commercial Code].
(d)
Unless the organic rules otherwise provide, a member may not compel the limited
cooperative association to offset financial rights against any indebtedness or
obligation owed to the association.
(a) On
application by a judgment creditor of a member or transferee, a court may enter
a charging order against the financial rights of the judgment debtor for the
unsatisfied amount of the judgment. A
Except as otherwise provided in subsection (b), a charging order issued
under this subsection constitutes a lien on the judgment debtor’s financial
rights and requires the limited cooperative association to pay over to the creditor
or receiver, to the extent necessary to satisfy the judgment, person to which the charging order was
issued any distribution that would
otherwise would be paid to the judgment debtor.
(b)
To the extent necessary to effectuate the collection of distributions pursuant
to a charging order under subsection (a), the court may:
(1)
appoint a receiver of the share of the distributions due or to become
due to the judgment debtor under the judgment debtor’s financial rights subject to the charging order, with the power to make all inquiries the judgment debtor
might have made; and
(2)
make all other orders that the circumstances of the case may require necessary to give effect to the charging order.
(c)
Upon a showing that distributions under a charging order will not pay the
judgment debt within a reasonable time, the court may foreclose the lien and
order the sale of the financial rights. The Except as otherwise provided in subsection (f), the purchaser at
the foreclosure sale obtains only the financial rights that are subject to the
charging order, does not thereby become a member, and is subject to Section
603.
(d)
At any time before a sale pursuant to a foreclosure under subsection (c), a the member
or transferee whose financial rights are subject to a charging order under
subsection (a) may extinguish the charging order by satisfying the judgment and
filing a certified copy of the satisfaction with the court that issued the
charging order.
(e)
At any time before sale pursuant to a foreclosure under subsection (c), the limited cooperative association or one or more
members whose financial rights are not subject to the charging order may pay to
the judgment creditor the full amount due under the judgment and thereby
succeed to the rights of the judgment creditor, including the charging order. Unless
the organic rules otherwise provide, the association may act under this
subsection only with the consent of all members whose financial rights are not
subject to the charging order.
(f)
If a court forecloses a
charging order lien against the sole member of a limited cooperative
association:
(1)
the court shall confirm the sale;
(2)
the purchaser at the sale obtains the member’s entire interest, not
only the member’s financial rights;
(3)
the purchaser thereby becomes a member; and
(4) the person whose interest was subject
to the foreclosed charging order is dissociated as a member.
(g) This [act] does not deprive any member or transferee of the
benefit of any exemption laws applicable to the member’s or transferee’s
financial rights.
(g)
(h) This section provides the exclusive
remedy by which a judgment creditor of a member or transferee
may a person seeking to enforce a
judgment against a member or transferee may, in the capacity of judgment
creditor, satisfy the judgment from the member’s
or transferee’s judgment debtor’s financial rights.
MARKETING
CONTRACTS
SECTION 701. AUTHORITY. In this [article], “marketing contract” means
a contract between a limited cooperative association and another person, that
need not be a patron member:
(1)
requiring the other person to sell, or deliver for sale or marketing on the
person’s behalf, a specified part of the person’s products, commodities, or
goods exclusively to or through the association or any facilities furnished by
the association; or
(2)
authorizing the association to act for the person in any manner with respect to
the products, commodities, or goods.
(a)
If a marketing contract provides for the sale of products, commodities, or
goods to a limited cooperative association, the sale transfers title to the
association upon delivery or at any other specific time expressly provided by
the contract.
(b)
A marketing contract may:
(1)
authorize a limited cooperative association to create an enforceable security
interest in the products, commodities, or goods delivered; and
(2)
allow the association to sell the products, commodities, or goods delivered and
pay the sales price on a pooled or other basis after deducting selling costs,
processing costs, overhead, expenses, and other charges.
(c)
Some or all of the provisions of a marketing contract between a patron member
and a limited cooperative association may be contained in the organic rules.
SECTION 703. DURATION OF MARKETING CONTRACT. The initial
duration of a marketing contract may not exceed 10 years, but the contract may
be self-renewing for additional periods not exceeding five years each. Unless
the contract provides for another manner or time for termination, either party
may terminate the contract by giving notice in a record at least 90 days before
the end of the current term.
(a)
Damages to be paid to a limited cooperative association for breach or
anticipatory repudiation of a marketing contract may be liquidated, but only at
an amount or under a formula that is reasonable in light of the actual or
anticipated harm caused by the breach or repudiation. A provision that so
provides is not a penalty.
(b)
Upon a breach of a marketing contract, whether by anticipatory repudiation or
otherwise, a limited cooperative association may seek:
(1)
an injunction to prevent further breach; and
(2)
specific performance.
(c)
The remedies in this section are in addition to any other remedies available to
an association under law other than this [act].
DIRECTORS AND OFFICERS
(a)
A limited cooperative association must have a board of directors of at least
three individuals, unless the association has fewer than three members. If the
association has fewer than three members, the number of directors may not be
fewer than the number of members.
(b)
The affairs of a limited cooperative association must be managed by, or under
the direction of, the board of directors. The board may adopt policies and
procedures that do not conflict with the organic rules or this [act].
(c)
An individual is not an agent for a limited cooperative association solely by
being a director.
SECTION 802. NO LIABILITY AS DIRECTOR FOR LIMITED
COOPERATIVE ASSOCIATION’S OBLIGATIONS. A debt, obligation, or other liability of a
limited cooperative association is solely that of the association and is not a
debt, obligation, or liability of a director solely by reason of being a
director. An individual is not personally liable, directly or indirectly, for
an obligation of an association solely by reason of being a director.
(a)
Unless the organic rules otherwise provide, and subject to subsection (c), each
director of a limited cooperative association must be an individual who is a
member of the association or an individual who is designated by a member that
is not an individual for purposes of qualifying and serving as a director. Initial
directors need not be members.
(b)
Unless the organic rules otherwise provide, a director may be an officer or
employee of the limited cooperative association.
(c)
If the organic rules provide for nonmember directors, the number of nonmember
directors may not exceed:
(1)
one, if there are two through four directors;
(2)
two, if there are five through eight directors; or
(3)
one-third of the total number of directors if there are at least nine
directors.
(d)
The organic rules may provide qualifications for directors in addition to those
in this Section.
(a)
Unless the organic rules require a greater number:
(1)
the number of directors that must be patron members may not be fewer than:
(A)
one, if there are two or three directors;
(B)
two, if there are four or five directors;
(C)
three, if there are six through eight directors; or
(D)
one-third of the directors if there are at least nine directors; and
(2)
a majority of the board of directors must be elected exclusively by patron
members.
(b)
Unless the organic rules otherwise provide, if a limited cooperative
association has investor members, the directors who are not elected exclusively
by patron members are elected by the investor members.
(c)
Subject to subsection (a), the organic rules may provide for the election of
all or a specified number of directors by one or more districts or classes of
members.
(d)
Subject to subsection (a), the organic rules may provide for the nomination or
election of directors by districts or classes, directly or by district
delegates.
(e)
If a class of members consists of a single member, the organic rules may
provide for the member to appoint a director or directors.
(f)
Unless the organic rules otherwise provide, cumulative voting for directors is
prohibited.
(g)
Except as otherwise provided by the organic rules, subsection (e), or Sections
303, 516, 517, and 809, member directors must be elected at an annual members
meeting.
(a)
Unless the organic rules otherwise provide, and subject to subsections (c) and
(d) and Section 303(c), the term of a director expires at the annual members
meeting following the director’s election or appointment. The term of a
director may not exceed three years.
(b)
Unless the organic rules otherwise provide, a director may be reelected.
(c)
Except as otherwise provided in subsection (d), a director continues to serve
until a successor director is elected or appointed and qualifies or the
director is removed, resigns, is adjudged incompetent, or dies.
(d)
Unless the organic rules otherwise provide, a director does not serve the remainder
of the director’s term if the director ceases to qualify to be a director.
SECTION 806. RESIGNATION OF DIRECTOR. A director may
resign at any time by giving notice in a record to the limited cooperative
association. Unless the notice states a later effective date, a resignation is
effective when the notice is received by the association.
SECTION 807. REMOVAL OF DIRECTOR. Unless the organic
rules otherwise provide, the following rules apply:
(1)
Members may remove a director with or without cause.
(2)
A member or members holding at least 10 percent of the total voting power
entitled to be voted in the election of a director may demand removal of the
director by one or more signed petitions submitted to the officer of the
limited cooperative association charged with keeping its records.
(3)
Upon receipt of a petition for removal of a director, an officer of the
association or the board of directors shall:
(A)
call a special meeting of members to be held not later than 90 days after
receipt of the petition by the association; and
(B)
mail or otherwise transmit or deliver in a record to the members entitled to
vote on the removal, and to the director to be removed, notice of the meeting
which complies with Section 508.
(4)
A director is removed if the votes in favor of removal are equal to or greater
than the votes required to elect the director.
(a)
A board of directors may suspend a director if, considering the director’s
course of conduct and the inadequacy of other available remedies, immediate
suspension is necessary for the best interests of the association and the
director is engaging, or has engaged, in:
(1)
fraudulent conduct with respect to the association or its members;
(2)
gross abuse of the position of director;
(3)
intentional or reckless infliction of harm on the association; or
(4)
any other behavior, act, or omission as provided by the organic rules.
(b)
A suspension under subsection (a) is effective for 30 days unless the board of
directors calls and gives notice of a special meeting of members for removal of
the director before the end of the 30-day period in which case the suspension
is effective until adjournment of the meeting or the director is removed.
(a)
Unless the organic rules otherwise provide, a vacancy on the board of directors
must be filled:
(1)
within a reasonable time by majority vote of the remaining directors until the
next annual members meeting or a special meeting of members called to fill the
vacancy; and
(2)
for the unexpired term by members at the next annual members meeting or a
special meeting of members called to fill the vacancy.
(b)
Unless the organic rules otherwise provide, if a vacating director was elected
or appointed by a class of members or a district:
(1)
the new director must be of that class or district; and
(2)
the selection of the director for the unexpired term must be conducted in the
same manner as would the selection for that position without a vacancy.
(c)
If a member appointed a vacating director, the organic rules may provide for
that member to appoint a director to fill the vacancy.
SECTION 810. REMUNERATION OF DIRECTORS. Unless the organic
rules otherwise provide, the board of directors may set the remuneration of
directors and of nondirector committee members appointed under Section 817(a).
(a)
A board of directors shall meet at least annually and may hold meetings inside
or outside this state.
(b)
Unless the organic rules otherwise provide, a board of directors may permit
directors to attend or conduct board meetings through the use of any means of
communication, if all directors attending the meeting can communicate with each
other during the meeting.
(a)
Unless prohibited by the organic rules, any action that may be taken by a board
of directors may be taken without a meeting if each director consents in a
record to the action.
(b)
Consent under subsection (a) may be withdrawn by a director in a record at any
time before the limited cooperative association receives consent from all
directors.
(c)
A record of consent for any action under subsection (a) may specify the
effective date or time of the action.
(a) Unless
the organic rules otherwise provide, a board of directors may establish a time,
date, and place for regular board meetings, and notice of the time, date,
place, or purpose of those meetings is not required.
(b)
Unless the organic rules otherwise provide, notice of the time, date, and place
of a special meeting of a board of directors must be given to all directors at
least three days before the meeting, the notice must contain a statement of the
purpose of the meeting, and the meeting is limited to the matters contained in
the statement.
(a)
Unless the organic rules otherwise provide, a director may waive any required
notice of a meeting of the board of directors in a record before, during, or
after the meeting.
(b)
Unless the organic rules otherwise provide, a director’s participation in a
meeting is a waiver of notice of that meeting unless:
(1)
the director objects to the meeting at the beginning of the meeting or promptly
upon the director’s arrival at the meeting and does not thereafter vote in
favor of or otherwise assent to the action taken at the meeting; or
(2)
the director promptly objects upon the introduction of any matter for which
notice under Section 813 has not been given and does not thereafter vote in
favor of or otherwise assent to the action taken on the matter.
(a)
Unless the articles of organization provide for a greater number, a majority of
the total number of directors specified by the organic rules constitutes a
quorum for a meeting of the directors.
(b)
If a quorum of the board of directors is present at the beginning of a meeting,
any action taken by the directors present is valid even if withdrawal of
directors originally present results in the number of directors being fewer
than the number required for a quorum.
(c)
A director present at a meeting but objecting to notice under Section 814(b)(1)
or (2) does not count toward a quorum.
(a)
Each director shall have one vote for purposes of decisions made by the board
of directors.
(b)
Unless the organic rules otherwise provide, the affirmative vote of a majority
of directors present at a meeting is required for action by the board of
directors.
(a)
Unless the organic rules otherwise provide, a board of directors may create one
or more committees and appoint one or more individuals to serve on a committee.
(b)
Unless the organic rules otherwise provide, an individual appointed to serve on
a committee of a limited cooperative association need not be a director or
member.
(c)
An individual who is not a director and is serving on a committee has the same
rights, duties, and obligations as a director serving on the committee.
(d)
Unless the organic rules otherwise provide each committee of a limited
cooperative association may exercise the powers delegated to it by the board of
directors, but a committee may not:
(1)
approve allocations or distributions except according to a formula or method
prescribed by the board of directors;
(2)
approve or propose to members action requiring approval of members; or
(3)
fill vacancies on the board of directors or any of its committees.
SECTION 818. STANDARDS OF CONDUCT AND LIABILITY. Except as otherwise provided in Section 820:
(1)
the discharge of the duties of a director or member of a committee of the board
of directors is governed by the law applicable to directors of entities
organized under [reference to this state’s cooperative corporation act or the
general business corporation act]; and
(2)
the liability of a director or member of a committee of the board of directors
is governed by the law applicable to directors of entities organized under
[insert reference to this state’s cooperative corporation act or to the general
business corporation act].
(a)
The law applicable to conflicts of interest between a director of an entity
organized under [reference to this state’s cooperative corporation act or the
general business corporation act] governs conflicts of interest between a
limited cooperative association and a director or member of a committee of the
board of directors.
(b)
A director does not have a conflict of interest under this [act] or the organic
rules solely because the director’s conduct relating to the duties of the
director may further the director’s own interest.
SECTION 820. OTHER CONSIDERATIONS OF DIRECTORS. Unless the articles of organization otherwise provide, in
considering the best interests of a limited cooperative association, a director
of the association in discharging the duties of director, in conjunction with
considering the long and short term interest of the association and its patron
members, may consider:
(1)
the interest of employees, customers, and suppliers of the association;
(2)
the interest of the community in which the association operates; and
(3)
other cooperative principles and values that may be applied in the context of
the decision.
SECTION 821. RIGHT OF DIRECTOR OR COMMITTEE MEMBER TO
INFORMATION. A director or a member of a committee
appointed under Section 817 may obtain, inspect, and copy all information
regarding the state of activities and financial condition of the limited cooperative
association and other information regarding the activities of the association
if the information is reasonably related to the performance of the director’s
duties as director or the committee member’s duties as a member of the
committee. Information obtained in accordance with this section may not be used
in any manner that would violate any duty of or to the association.
(a)
A limited cooperative association has the officers:
(1)
provided in the organic rules; or
(2)
established by the board of directors in a manner not inconsistent with the
organic rules.
(b)
The organic rules may designate or, if the rules do not designate, the board of
directors shall designate, one of the association’s officers for preparing all
records required by Section 114 115 and for the authentication of
records.
(c)
Unless the organic rules otherwise provide, the board of directors shall
appoint the officers of the limited cooperative association.
(d)
Officers of a limited cooperative association shall perform the duties the
organic rules prescribe or as authorized by the board of directors not in a
manner inconsistent with the organic rules.
(e)
The election or appointment of an officer of a limited cooperative association
does not of itself create a contract between the association and the officer.
(f)
Unless the organic rules otherwise provide, an individual may simultaneously
hold more than one office in a limited cooperative association.
(a)
The board of directors may remove an officer at any time with or without cause.
(b)
An officer of a limited cooperative association may resign at any time by
giving notice in a record to the association. Unless the notice specifies a
later time, the resignation is effective when the notice is given.
INDEMNIFICATION
(a)
Indemnification of an individual who has incurred liability or is a party, or
is threatened to be made a party, to litigation because of the performance of a
duty to, or activity on behalf of, a limited cooperative association is
governed by [reference to this state’s cooperative corporation act or this
state’s general business corporation act].
(b)
A limited cooperative association may purchase and maintain insurance on behalf
of any individual against liability asserted against or incurred by the
individual to the same extent and subject to the same conditions as provided by
[reference to this state’s cooperative corporation act or this state’s general
business corporation act].
CONTRIBUTIONS, ALLOCATIONS, AND
DISTRIBUTIONS
SECTION 1001. MEMBERS’ CONTRIBUTIONS. The organic rules must establish the amount,
manner, or method of determining any contribution requirements for members or
must authorize the board of directors to establish the amount, manner, or other
method of determining any contribution requirements for members.
(a)
Unless the organic rules otherwise provide, the contributions of a member to a
limited cooperative association may consist of tangible or intangible
property transferred, services performed, or other benefit provided
to the association, including money, labor or other services performed or to
be performed, promissory notes, other agreements to contribute money or an
agreement to transfer property, and contracts to be performed perform
services, or provide another benefit.
(b)
The receipt and acceptance of contributions and the valuation of contributions
must be reflected in a limited cooperative association’s records.
(c)
Unless the organic rules otherwise provide, the board of directors shall
determine the value of a member’s contributions received or to be received and
the determination by the board of directors of valuation is conclusive for
purposes of determining whether the member’s contribution obligation has been
met.
(a)
Except as otherwise provided in the agreement, the following rules apply to an
agreement made by a person before formation of a limited cooperative
association to make a contribution to the association:
(1)
The agreement is irrevocable for six months after the agreement is signed by
the person unless all parties to the agreement consent to the revocation.
(2)
If a person does not make a required contribution:
(A)
the person is obligated, at the option of the association, once formed, to
contribute money equal to the value of that part of the contribution that has
not been made, and the obligation may be enforced as a debt to the association;
or
(B)
the association, once formed, may rescind the agreement if the debt remains
unpaid more than 20 days after the association demands payment from the person,
and upon rescission the person has no further rights or obligations with
respect to the association.
(b)
Unless the organic rules or an agreement to make a contribution to a limited
cooperative association otherwise provide, if a person does not make a required
contribution to an association, the person or the person’s estate is obligated,
at the option of the association, to contribute money equal to the value of the
part of the contribution which has not been made.
(a)
The organic rules may provide for allocating profits of a limited cooperative
association among members, among persons that are not members but conduct
business with the association, to an unallocated account, or to any combination
thereof. Unless the organic rules otherwise provide, losses of the association
must be allocated in the same proportion as profits.
(b)
Unless the organic rules otherwise provide, all profits and losses of a limited
cooperative association must be allocated to patron members.
(c)
If a limited cooperative association has investor members, the organic rules
may not reduce the allocation to patron members to less than 50 percent of
profits. For purposes of this subsection, the following rules apply:
(1)
amounts paid or due on contracts for the delivery to the association by patron
members of products, goods, or services are not considered amounts allocated to
patron members.
(2)
amounts paid, due, or allocated to investor members as a stated fixed return on
equity are not considered amounts allocated to investor members.
(d)
Unless prohibited by the organic rules, in determining the profits for
allocation under subsections (a), (b), and (c), the board of directors may
first deduct and set aside a part of the profits to create or accumulate:
(1)
an unallocated capital reserve; and
(2)
reasonable unallocated reserves for specific purposes, including expansion and
replacement of capital assets; education, training, cooperative development;
creation and distribution of information concerning principles of cooperation;
and community responsibility.
(e)
Subject to subsections (b) and (f) and the organic rules, the board of
directors shall allocate the amount remaining after any deduction or setting
aside of profits for unallocated reserves under subsection (d):
(1)
to patron members in the ratio of each member’s patronage to the total
patronage of all patron members during the period for which allocations are to
be made; and
(2)
to investor members, if any, in the ratio of each investor member’s contributions
to the total contributions of all investor members.
(f)
For purposes of allocation of profits and losses or specific items of profits
or losses of a limited cooperative association to members, the organic rules
may establish allocation units or methods based on separate classes of members
or, for patron members, on class, function, division, district, department,
allocation units, pooling arrangements, members’ contributions, or other
equitable methods.
(a)
Unless the organic rules otherwise provide and subject to Section 1007, the
board of directors may authorize, and the limited cooperative association may
make, distributions to members.
(b)
Unless the organic rules otherwise provide, distributions to members may be
made in any form, including money, capital credits, allocated patronage
equities, revolving fund certificates, and the limited cooperative
association’s own or other securities.
SECTION 1006. REDEMPTION OR REPURCHASE. Property distributed to a member by a limited
cooperative association, other than money, may be redeemed or repurchased as
provided in the organic rules but a redemption or repurchase may not be made
without authorization by the board of directors. The board may withhold
authorization for any reason in its sole discretion. A redemption or repurchase
is treated as a distribution for purposes of Section 1007.
(a) In this section,
“distribution” does not include reasonable compensation for present or
past services or other payments made in the ordinary
course of business for commodities or goods or under
a bona fide retirement or other bona fide benefits program.
(a)
(b) A limited cooperative association
may not make a distribution, including
a distribution under Section 1208, if, after the distribution:
(1)
the association would not be able to pay its debts as they become due in the
ordinary course of the association’s activities and affairs; or
(2)
the association’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if
the association were to be dissolved and wound up at the time of the
distribution, to satisfy the preferential rights upon dissolution and winding
up of members whose preferential rights are superior to those of persons
receiving the distribution.
(b)
(c) A limited cooperative association
may base a determination that a distribution is not prohibited under subsection
(b) on:
(1)
financial statements prepared on the basis of accounting practices and
principles that are reasonable in under
the circumstances; or
(2)
on a fair valuation or other method that is reasonable in under the
circumstances.
(c)
(d) Except as otherwise provided in subsection (d) (e),
the effect of a distribution allowed under subsection (b) is measured:
(1)
in the case of a distribution by purchase, redemption, or other
acquisition of financial rights in the limited cooperative association, as of
the earlier of:
(A) the date money or other
property is transferred or debt is incurred by the association; and:
or
(B) the date the person entitled to the
distribution ceases to own the financial rights being acquired by the
association in return for the distribution;
(2) in the case of any other distribution of
indebtedness, as of the date the indebtedness is distributed; and
(3) in all other cases, as of the date:
(A)
the distribution is authorized, if the payment occurs not later than 120 days
after that date; or
(B)
the payment is made, if the payment occurs more than 120 days after the
distribution is authorized.
(e) A
limited cooperative association’s indebtedness incurred by reason of a
distribution made in accordance with this section is at parity with the
association’s indebtedness to its general, unsecured creditors except
to the extent subordinated by agreement.
(d) (f) A limited
cooperative association’s indebtedness, including indebtedness issued as a
distribution, is not a liability for purposes of subsection (b) if the terms of
the indebtedness provide that payment of principal and interest is made only if
and to the extent that payment of a distribution could then be made under this
section. If the
indebtedness is issued as a distribution, each payment of principal or interest
on the indebtedness is treated as a distribution, the effect of which is
measured on the date the payment is made.
(e) For purposes of this section,
“distribution” does not include reasonable amounts paid to a member in the
ordinary course of business as payment or compensation for commodities, goods,
past or present services, or reasonable payments made in the ordinary course of
business under a bona fide retirement or other benefits program.
(g)
In measuring the effect of a distribution under Section 1208, the liabilities
of a dissolved limited cooperative association do not include any claim that
has been disposed of under Sections 1209, 1210, and 1211.
(a)
A director who consents to a
distribution that violates Section 1007 is personally liable to the limited
cooperative association for the amount of the distribution which exceeds the
amount that could have been distributed without the violation if it is
established that in consenting to the distribution the director failed to
comply with Section 818 or 819. Except as otherwise provided in
subsection (b), if a director of a limited cooperative association consents to
a distribution made in violation of Section 1007 and in consenting to the
distribution fails to comply with Section 818, the director is personally
liable to the association for the amount of the distribution that exceeds the
amount which could have been distributed without the violation of Section 1007.
(b) A member
or transferee of financial rights which received person that receives a distribution knowing that the
distribution was made in violation of violated Section 1007 is
personally liable to the limited cooperative association but only to the extent that
the distribution received by the
person exceeded the amount that could have been properly paid under Section 1007.
(c)
A director against whom an action is commenced because the person is liable under
subsection (a) may:
(1)
implead in the action any
other director who is liable
person that is subject to liability under
subsection (a) and compel seek
to enforce a right of contribution from the
person; and
(2)
implead in the action any
person that is liable under
that received a distribution in violation of
subsection (b) and compel seek
to enforce a right of contribution from the
person in the amount the person received as described in violation
of subsection (b).
(d)
An action under this section is barred if
it is unless commenced later
than not later than
two years after the distribution.
[SECTION 1009. RELATION TO STATE SECURITIES LAW. Patron members’
interest in a limited cooperative association has the same exemption as
provided for substantially similar interests in cooperatives under [reference
to appropriate provision of this state’s laws].]
[SECTION 1010. ALTERNATIVE DISTRIBUTION OF UNCLAIMED
PROPERTY, DISTRIBUTIONS, REDEMPTIONS, OR PAYMENTS. A limited cooperative association may distribute unclaimed
property, distributions, redemptions, or payments under [reference to the
appropriate provision in the law governing cooperatives not formed under this
[act] in this state].]
DISSOCIATION
(a)
A person has the power to dissociate as a member at any time. rightfully or
wrongfully, by express will.
(b)
Unless the organic rules
otherwise provide, a A member’s
dissociation from a limited cooperative association is wrongful only if the
dissociation:
(1)
breaches it is in breach
of an express provision of the organic rules;
or
(2)
it occurs before the termination of the
limited cooperative association and:
(A)
the person is expelled as a member under subsection (d)(3) or (4); or
(B)
in the case of a person that is not an individual, trust other than a business
trust, or estate, the person is expelled or otherwise dissociated as a member
because it dissolved or terminated in bad faith.
(c)
Unless the organic rules otherwise provide, a person that wrongfully
dissociates as a member is liable to the limited cooperative association and to the other members for damages caused by the dissociation. The liability is in
addition to any other debt, obligation, or liability of the person to the
association.
(d)
A member is dissociated from the a
limited cooperative association as a member when upon the occurrence of any of the following events:
(1)
the association receives notice in a record of the member’s express will to
dissociate as a member, or if the member specifies in the notice an effective
date later than the date the association received notice, on that later date;
(2)
an event stated in the organic rules as causing the member’s dissociation as a member occurs;
(3)
the member is expelled as a member under the organic rules;
(4)
the member is expelled as a member by the board of directors because if:
(A)
it is unlawful to carry on the association’s activities and affairs with
the member as a member;
(B)
there has been a transfer of all the member’s financial rights in the
association, other than:
(i)
a creation or perfection of a security interest; or
(ii)
a charging order in effect under Section 605 which has not been foreclosed;
(C)
the member is a limited liability company, association, or partnership, which
has been dissolved, and its business is being wound up; or
(D)
the member is a corporation or cooperative and:
(i)
the member filed a certificate of dissolution or the equivalent, or the
jurisdiction of formation revoked the association’s charter or right to conduct
business;
(ii)
the association sends a notice to the member that it will be expelled as a
member for a reason described in clause (i); and
(iii)
not later than 90 days after the notice was sent under clause (ii), the member
did not revoke its certificate of dissolution or the equivalent, or the
jurisdiction of formation did not reinstate the association’s charter or right
to conduct business; or
(E)
the member is an individual and is adjudged incompetent;
(5)
in the case of a member who is an individual, the individual dies;
(6)
in the case of a member that is a trust or is acting as a member by virtue of
being a trustee of a trust, all the trust’s financial rights in the association
are distributed;
(7)
in the case of a member that is an estate, the estate’s entire financial
interest in the association is distributed;
(8)
in the case of a member that is not an individual, partnership, limited
liability company, cooperative, corporation, trust, or estate, the member is
terminated; or
(9)
the association’s participation in a merger if, under the plan of merger as
approved transaction under
[Article] 16 that causes the member to ceases cease to
be a member.
(a) Upon a member’s dissociation When
a person is dissociated as a member of a limited cooperative association:
(1)
subject to Section 1103, the person
has no further rights as a member; and the person’s right to participate
as a member in the management and conduct of the association’s activities and
affairs terminates; and
(2)
subject to Section 1103 and [Article] 16, any financial rights owned by the
person in the person’s capacity as a member immediately
before dissociation are owned by the person as a transferee.
(b) A person’s
dissociation as a member does not of itself discharge the person from any debt,
obligation, or other liability
to the limited cooperative association or
the other members which the person incurred under the organic rules, by contract, or by other means while a member.
SECTION 1103. POWER
OF ESTATE OF LEGAL REPRESENTATIVE
OF DECEASED MEMBER.
Unless the organic rules provide
for greater rights, if a member is dissociated because of death, dies or is
expelled by reason of being adjudged incompetent, the member’s personal
representative or other legal representative may exercise the rights of a
transferee of the member’s financial rights and, for purposes of settling the
estate of a deceased member, may exercise the informational rights of a current
member to obtain information under Section 505. If a member dies, the deceased member’s personal representative or other legal representative may
exercise for the purposes of settling
the estate, the rights the deceased member had under Section 505.
DISSOLUTION
SECTION 1201. DISSOLUTION AND WINDING UP. A
limited cooperative association is dissolved only as provided in [this
article] and upon dissolution winds up in accordance with [this article].
SECTION 1202. NONJUDICIAL DISSOLUTION. Except as otherwise provided in Sections 1203 and 1211
1212, a limited cooperative association is dissolved and its activities
must be wound up:
(1)
upon the occurrence of an event or at a time specified in the articles of
organization;
(2)
upon the action of the association’s organizers, board of directors, or members
under Section 1204 or 1205; or
(3)
90 days after the dissociation of a member, which results in the association
having one patron member and no other members, unless the association:
(A)
has a sole member that is a cooperative; or
(B)
not later than the end of the 90-day period, admits at least one member in
accordance with the organic rules and has at least two members, at least one of
which is a patron member.
SECTION 1203. JUDICIAL DISSOLUTION. The [appropriate court] may dissolve a limited cooperative
association or order any action that under the circumstances is appropriate and
equitable:
(1)
in a proceeding initiated by the [Attorney General], if:
(A)
the association obtained its articles of organization through fraud; or
(B)
the association has continued to exceed or abuse the authority conferred upon
it by law; or
(2)
in a proceeding initiated by a member, if:
(A)
the directors are deadlocked in the management of the association’s affairs,
the members are unable to break the deadlock, and irreparable injury to the
association is occurring or is threatened because of the deadlock;
(B)
the directors or those in control of the association have acted, are acting, or
will act in a manner that is illegal, oppressive, or fraudulent;
(C)
the members are deadlocked in voting power and have failed to elect successors
to directors whose terms have expired for two consecutive periods during which
annual members meetings were held or were to be held; or
(D)
the assets of the association are being misapplied or wasted.
SECTION 1204. VOLUNTARY DISSOLUTION BEFORE COMMENCEMENT OF
ACTIVITY.
A majority of the organizers or initial directors of a
limited cooperative association that has not yet begun business activity
or the conduct of its affairs may dissolve the association.
(a)
Except as otherwise provided in Section 1204, for a limited cooperative
association to voluntarily dissolve:
(1)
a resolution to dissolve must be approved by a majority vote of the board of
directors unless a greater percentage is required by the organic rules;
(2)
the board of directors must call a members meeting to consider the resolution,
to be held not later than 90 days after adoption of the resolution; and
(3)
the board of directors must mail or otherwise transmit or deliver to each
member in a record that complies with Section 508:
(A) the resolution required by
paragraph (1);
(B)
a recommendation that the members vote in favor of the resolution or, if the
board determines that because of conflict of interest or other special
circumstances it should not make a favorable recommendation, the basis of that
determination; and
(C)
notice of the members meeting, which must be given in the same manner as notice
of a special meeting of members.
(b)
Subject to subsection (c), a resolution to dissolve must be approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under subsection (a)(2); and
(2)
if the limited cooperative association has investor members, at least a
majority of the votes cast by patron members, unless the organic rules require
a greater percentage.
(c)
The organic rules may require that the percentage of votes under subsection
(b)(1) is:
(1)
a different percentage that is not less than a majority of members voting at
the meeting; or
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs (1) and (2).
(a) A dissolved limited cooperative
association continues after
dissolution only for purposes of winding shall wind up its
activities and affairs, and except
as provided in Section 1207,
the association continues after
dissolution only for the purpose of winding up.
(b) In winding
up its activities and affairs, a
limited cooperative association’s activities, the board of directors shall
cause the association to:
(1)
shall discharge it’s the association’s debts,
obligations, or other liabilities, settle and close it’s the association’s activities,
and marshal and distribute its the
assets of the association; and
(2)
may:
(A) deliver to the [Secretary of
State] for filing a statement of dissolution stating the name of the limited
cooperative association and that the association is dissolved;
(B) preserve the
association or its property as a going concern for no more than a
reasonable time;
(3) (C) prosecute and
defend actions and proceedings,
whether civil, criminal, or administrative;
(4) (D) transfer the association association’s
property; and
(E) settle disputes by mediation or
arbitration;
(F) deliver to the [Secretary of State]
for filing a statement of termination stating the name of the company and that
the company is terminated; and
(5) (G) perform
other necessary acts necessary or appropriate to the winding
up.
(c)
After dissolution and upon application of a limited cooperative association, a
member, or a holder of financial rights, the [the appropriate
court] may order judicial supervision of the winding up of the association,
including the appointment of a person to wind up the association’s activities,
if:
(1)
after a reasonable time, the association has not wound up its activities; or
(2)
the applicant establishes other good cause.
(d)
If a person is appointed pursuant to subsection (c) to wind up the activities
of a limited cooperative association, the association shall promptly deliver to
the [Secretary of State] for filing an amendment to the articles of
organization to reflect the appointment.
(a)
A limited cooperative association may rescind its dissolution, unless a
statement of termination applicable to the association is effective, [the
appropriate court] has entered an order under Section 1203 dissolving the
association, or the [secretary of state] has dissolved the association under
Section 1212.
(b)
Rescinding dissolution under this section requires:
(1)
the consent of each member;
(2)
if a statement of dissolution applicable to the limited cooperative association
has been filed by the [Secretary of State] but has not become effective, the
delivery to the [Secretary of State] for filing of a statement of withdrawal
applicable to the statement of dissolution; and
(3)
if a statement of dissolution applicable to the limited cooperative association
is effective, the delivery to the [Secretary of State] for filing of a statement
of correction under Section 206 stating that dissolution has been rescinded
under this section.
(c)
If a limited cooperative association rescinds its dissolution:
(1)
the association resumes carrying on its activities and affairs as if dissolution
had never occurred;
(2)
subject to paragraph (3), and any liability incurred by the association after
the dissolution and before the rescission is effective is determined as if
dissolution had never occurred; and
(3)
the rights of a third party arising out of conduct in reliance on the
dissolution before the third party knew or had notice of the rescission may not
be adversely affected.
(a)
In winding up a limited cooperative association’s business activities
and affairs, the association shall apply its assets to discharge its
obligations to creditors, including members that are creditors. The association
shall apply any remaining assets to pay in money the net amount distributable
to members in accordance with their right to distributions under subsection
(b).
(b)
Unless the organic rules otherwise provide, in this subsection “financial
interests” means the amounts recorded in the names of members in the records of
a limited cooperative association at the time a distribution is made, including
amounts paid to become a member, amounts allocated but not distributed to
members, and amounts of distributions authorized but not yet paid to members.
Unless the organic rules otherwise provide, each member is entitled to a
distribution from the association of any remaining assets in the proportion of
the member’s financial interests to the total financial interests of the
members after all other obligations are satisfied.
(a) Subject to Except as otherwise
provided in subsection (d), a dissolved limited cooperative association
may dispose of the known claims
against it by following the procedure in subsections (b) and (c) give
notice of a known claim under subsection (b), which has the effect provided in
subsection (c).
(b) A
dissolved limited cooperative association in
a record may notify its known claimants of the dissolution in a record. The notice must:
(1) specify that a claim be in a record;
(2) (1) specify the
information required to be included in the claim;
(3) (2) state that the claim must
be in writing and provide an
a mailing address to which the claim must is to be sent;
(4) (3) state the deadline
for receipt of the claim, which may not be less than 120 days after the date
the notice is received by the claimant; and
(5) (4) state that the
claim will be barred if not received by the deadline.
(c) A claim
against a dissolved limited cooperative association is barred if the
requirements of subsection (b) are met, and:
(1)
the association is not notified of the
claimant’s claim, in a record, by the deadline specified in the notice under
subsection (b)(4); the claim is not received by the specified deadline;
or
(2)
in the case of a claim that is timely
received but rejected by the association, the claimant does not commence an
action to enforce the claim against the association within 90 days after
receipt of the notice of the rejection; or if the claim is timely
received but rejected by the association:
(A) the association causes the
claimant to receive a notice in a record stating that the claim is rejected and
will be barred unless the claimant commences an action against the association
to enforce the claim not later than 90 days after the claimant receives the
notice; and
(B) the claimant does not
commence the required action not later than the 90 days.
(3) if a claim is timely received but is
neither accepted nor rejected by the association within 120 days after the
deadline for receipt of claims, the claimant does not commence an action to
enforce the claim against the association:
(A) after the 120-day period;
and
(B) within 90 days after the
120-day period.
(d) This
section does not apply to a claim based on an event occurring after the effective date of dissolution or
a liability that on that date is
contingent on that date.
(a) A
dissolved limited cooperative association may publish notice of its dissolution
and request persons having claims against the association to present them in
accordance with the notice.
(b) A The notice authorized under subsection (a)
must:
(1)
be published at least once in a newspaper of general circulation in the
[county] in this state in which
the dissolved limited cooperative association’s principal office is located or,
if the association does not have a
principal office it has none in this state, in the [county] in
which the office of the association’s
designated office registered
agent is or was last located;
(2)
describe the information required to be contained in a claim, state that the claim must be in
writing, and provide an a
mailing address to which the claim is to be sent; and
(3)
state that a claim against the association is barred unless an action to
enforce the claim is commenced not later than three years after publication of
the notice.
(c) If a
dissolved limited cooperative association publishes a notice in accordance with
subsection (b), the claim of each of
the following claimants is barred unless the claimant commences an action to
enforce the claim not later than three years after the first publication date
of the notice the claim of each of the following claimants is barred
unless the claimant commences an action to enforce the claim against the
association not later than three years after the publication date of the notice:
(1)
a claimant that is entitled to but did not receive notice in a record
under Section 1208 1209; and
(2)
a claimant whose claim was timely sent
to the company but not acted on; and
(2) (3) a claimant whose
claim is contingent at, or
based on an event occurring after, the effective date of dissolution.
(d) A claim
not barred under this section or
Section 1209 may be enforced:
(1)
against a dissolved limited cooperative association, to the extent of its
undistributed assets; or and
(2)
except as provided in Section 1211,
if the assets of the association’s
assets association have been distributed after dissolution, in connection with winding up the
association’s activities against a member or holder of financial rights
to the extent of that person’s proportionate share of the claim or the association’s assets distributed
to the person in connection with the
winding up after dissolution, whichever is less, but The a person’s
total liability for all claims under this paragraph shall does not exceed the total amount of assets
distributed to the person as part of
the winding up of the association after dissolution.
(a) Upon application by a A
dissolved limited cooperative association that has published a notice under
Section 1209 the 1210 may file an application with [the
appropriate court] in the [county] where the association’s principal office is
located or, if none the
association does not have a principal office in this state, where its designated the office
in this state is located of its
registered agent, may is located for a to determine determination
of the amount and form of security to be provided for payment of claims
against the association that
are contingent or have not
been made known to the association or that
are based on an event occurring after the effective date of dissolution but
that which, based on
the facts known to the dissolved association,
are reasonably anticipated to arise after the effective date of dissolution. Provision need not be made for any claim
that is or is reasonably anticipated to be barred under Section 1210.
(b) Not later
than 10 days after filing an the
application under subsection (a),
a dissolved limited cooperative association shall give notice of the
proceeding to each known claimant holding a contingent claim. notice of
the proceeding must be given by the dissolved limited cooperative associaiton
to each claimant holding a contingent claim whose contingent claim is shown on
the records of the dissolved association.
(c) The court may appoint a representative in
a proceeding brought under this section to represent all claimants whose
identities are unknown. The dissolved limited cooperative association shall pay
reasonable fees and expenses of the representative, including all reasonable
attorney’s and expert witness fees. The court may appoint a guardian ad
litem to represent all claimants whose identities are unknown in any proceeding
brought under this section. The
reasonable fees and expenses of such guardian, including all reasonable expert witness
fees, must be paid by the dissolved limited cooperative association.
(d) Provision
by the dissolved limited cooperative association for security in the amount and
the form ordered by the court under
subsection (a) satisfies the dissolved
association’s obligations with respect to claims that are contingent, have
not been made known to the dissolved association, or are based on an
event occurring after the effective date of dissolution. and the The claims may not be enforced against a
member or holder of financial rights
that received a distribution assets in liquidation.
(a) The [Secretary of State] may
dissolve a limited cooperative association administratively if the association
does not:
(1) pay, not later
than 60 days after the due date, any fee, tax, or penalty due to the [Secretary
of State] under this [act] [or other law]; or
(2) deliver not later
than 60 days after the due date its annual report to the [Secretary of State].
(b) If the [Secretary of State]
determines that a ground exists for dissolving a limited cooperative
association administratively, the [Secretary of State] shall file a record of
the determination and serve the association with a copy of the record.
(c) If, not later than 60 days
after service of a copy of the [Secretary of State’s] determination under
subsection (b), the association does not correct each ground for dissolution or
demonstrate to the satisfaction of the [Secretary of State] that each
uncorrected ground determined by the [Secretary of State] does not exist, the
[Secretary of State] shall dissolve the association administratively by
preparing and filing a declaration of dissolution which states the grounds for
dissolution. The [Secretary of State] shall serve the association with a copy
of the declaration.
(d) A limited cooperative
association that has been dissolved administratively continues its existence
only for purposes of winding up its activities.
(e) The administrative
dissolution of a limited cooperative association does not terminate the
authority of its agent for service of process.
(a) The [Secretary of State] may
commence a proceeding under subsections (b) and (c) to dissolve administratively
a limited cooperative association if the association does not:
(1) pay any fee, tax,
interest, or penalty required to be paid to the [Secretary of State] not later
than [six months] after it is due;
(2) deliver [an
annual] [a biennial] report to the [Secretary of State] not later than [six
months] after it is due; or
(3) have a registered
agent in this state for [60] consecutive days.
(b) If the [Secretary of State]
determines that one or more grounds exist for administratively dissolving a
limited cooperative association, the [Secretary of State] shall serve the
association with notice in a record of the [Secretary of State’s]
determination.
(c) If a limited cooperative
association , not later than [60] days after service of the notice is effected
under subsection (b), does not cure each ground for dissolution or demonstrate
to the satisfaction of the [Secretary of State] that each ground determined by
the [Secretary of State] does not exist, the [Secretary of State] shall
administratively dissolve the association by signing a statement of administrative
dissolution that recites the grounds for dissolution and the effective date of
dissolution. The [Secretary of State]
shall file the statement and serve a copy on the association pursuant to
Section 122.
(d) A limited cooperative
association that is administratively dissolved continues in existence as an
entity but may not carry on any activities except as necessary to wind up its
activities and affairs and liquidate its assets under Sections 1208, to notify
claimants under Sections 1209 and 1210, or to apply for reinstatement under
Section 1213.
(e) The administrative
dissolution of a limited cooperative association does not terminate the
authority of its registered agent.
(a) A limited cooperative
association that has been dissolved administratively may apply to the
[Secretary of State] for reinstatement not later than two years after the
effective date of dissolution. The application must be delivered to the
[Secretary of State] for filing and state:
(1) the name of the
association and the effective date of its administrative dissolution;
(2) that the grounds
for dissolution either did not exist or have been eliminated; and
(3) that the
association’s name satisfies the requirements of Section 111.
(b) If the [Secretary of State]
determines that an application contains the information required by subsection
(a) and that the information is correct, the [Secretary of State] shall:
(1) prepare a
declaration of reinstatement;
(2) file the original
of the declaration; and
(3) serve a copy of
the declaration on the association.
(c) When reinstatement under this
section becomes effective, it relates back to and takes effect as of the
effective date of the administrative dissolution, and the limited cooperative
association may resume or continue its activities as if the administrative
dissolution had not occurred.
(a)
A limited cooperative association that is administratively dissolved under
Section 1212 may apply to the [Secretary of State] for reinstatement [not later
than two years after the effective date of dissolution]. The application must state:
(1)
the name of the association at the time of its administrative dissolution and,
if needed, a different name that satisfies Section 111;
(2)
the address of the principal office of the association and the name and address
of its registered agent;
(3)
the effective date of the association’s administrative dissolution; and
(4)
that the grounds for dissolution did not exist or have been cured.
(b)
To be reinstated, a limited cooperative association must pay all fees, taxes,
and penalties that were due to the [Secretary of State] at the time of its
administrative dissolution and all fees, taxes, interest, and penalties that
would have been due to the [Secretary of State] while the association was
administratively dissolved.
(c)
If the [Secretary of State] determines that the application contains the
information required by subsection (a), is satisfied that the information is
correct, and determines that all payments required to be made to the [Secretary
of State] by subsection (b) have been made, the [Secretary of State] shall
cancel the statement of administrative dissolution and prepare a statement of
reinstatement that states the [Secretary of State’s] determination and the
effective date of reinstatement, file the statement, and serve a copy on the
limited cooperative association.
(d)
When reinstatement under this section is effective:
(1)
it relates back to and takes effect as of the effective date of the
administrative dissolution; and
(2)
the limited cooperative association resumes carrying on its activities and
affairs as if the administrative dissolution had never occurred, except for the
rights of a person arising out of an act or omission in reliance on the
dissolution before the person knew or had notice of the reinstatement.
[(a)] If the [Secretary of State]
denies a limited cooperative association’s application for reinstatement
following administrative dissolution, the [Secretary of State] shall prepare
and file a notice that explains the reason for denial and serve the association
with a copy of the notice.
[(b) Not later than 30 days after
service of a notice of denial of reinstatement by the [Secretary of State], a
limited cooperative association may appeal the denial by petitioning the
[appropriate court] to set aside the dissolution. The petition must be served
on the [Secretary of State] and contain a copy of the [Secretary of State’s]
declaration of dissolution, the association’s application for reinstatement,
and the [Secretary of State’s] notice of denial.
(c) The court may summarily order
the [Secretary of State] to reinstate the dissolved cooperative association or
may take other action the court considers appropriate.]
(a)
If the [Secretary of State] denies a limited liability cooperative
association’s application for reinstatement following administrative
dissolution, the [Secretary of State] shall serve the association with a notice
in a record that explains the reasons for the denial.
(b)
A limited cooperative association may seek judicial review of denial of
reinstatement in [the appropriate court] not later than [30] days after service
of the notice of denial.
(a)
A limited cooperative association that has dissolved or is about to dissolve
may deliver to the [Secretary of State] for filing a statement of dissolution
that states:
(1)
the name of the association;
(2)
the date the association dissolved or will dissolve; and
(3)
any other information the association considers relevant.
(b)
A person has notice of a limited cooperative association’s dissolution on the
later of:
(1)
90 days after a statement of dissolution is filed; or
(2)
the effective date stated in the statement of dissolution.
(a)
A dissolved limited cooperative association that has completed winding up may
deliver to the [Secretary of State] for filing a statement of termination that
states:
(1)
the name of the association;
(2)
the date of filing of its initial articles of organization; and
(3)
that the association is terminated.
(b)
The filing of a statement of termination does not itself terminate the limited
cooperative association.
ACTION BY MEMBER
SECTION 1301. DERIVATIVE ACTION. A member may maintain a derivative action to
enforce a right of a limited cooperative association if:
(1) the member
demands that first makes a demand
on the directors requesting that they cause the association bring an
action to enforce the right and the
directors do not bring the action within a reasonable time; or
(2) any of the following occur:
(A) the association does not, within 90
days after the member makes the demand, agree to bring the action;
(B) the association notifies the member
that it has rejected the demand;
(C) irreparable harm to the association
would result by waiting 90 days after the member makes the demand; or a
demand under paragraph (1) would be futile.
(D) the association agrees to bring an
action demanded and fails to bring the action within a reasonable time.
(a) A derivative action to enforce a right of a
limited cooperative association may be maintained only by a person that:
(1) is a member or a dissociated member at
the time the action is commenced and:
(A) was a member when the
conduct giving rise to the action occurred; or
(B) whose status as a member
devolved upon the person by operation of law or the organic rules from a person
that was a member at the time of the conduct; and
(2) adequately represents the interests of
the association.
(b) If the sole plaintiff in a derivative action dies
while the action is pending, the court may permit another member who meets the
requirements of subsection (a) to be substituted as plaintiff.
A derivative action to enforce a
right of a limited cooperative association may be maintained only by a person
that is a member at the time the action is commenced and:
(1)
that was a member when the conduct giving rise to the action occurred; or
(2) whose status as a member devolved upon the person
by operation of law or pursuant to the terms of the organic rules from a person
that was a member at the time of the conduct.
SECTION 1303. PLEADING. In a derivative action to enforce a right
of a limited cooperative association, the complaint must state with particularity:
(1) the date
and content of the plaintiff’s demand under Section 1301(1) and the association’s response to
the demand by the association; or
(2) if 90 days have not expired since the
demand, how irreparable harm to the association would result by waiting for the
expiration of 90 days; and why the demand should be excused as futile.
(3) if the association agreed to bring an action
demanded, that the action has not been brought within a reasonable time.
SECTION 1304. APPROVAL FOR DISCONTINUANCE OR SETTLEMENT. A derivative action to enforce a right of a limited
cooperative association may not be discontinued or settled without the court’s
approval.
(a)
Except as otherwise provided in subsection (b):
(1)
any proceeds or other benefits of a derivative action to enforce a right of a
limited cooperative association, whether by judgment, compromise, or
settlement, belong to the limited cooperative association and not to the
plaintiff; and
(2)
if the plaintiff in the derivative action receives any proceeds, the
plaintiff shall immediately remit them immediately to the association.
(b) If a
derivative action to enforce a right of a limited cooperative association is
successful in whole or in part, the court may award the plaintiff reasonable
expenses, including reasonable attorney’s fees and costs, from the recovery of
the limited cooperative association.
SECTION 1306. SPECIAL LITIGATION COMMITTEE.
(a)
If a limited cooperative association is named as or made a party in a
derivative proceeding, the association may appoint a special litigation
committee to investigate the claims asserted in the proceeding and determine
whether pursuing the action is in the best interests of the company. If the association appoints a special
litigation committee, on motion by the committee made in the name of the
association, except for good cause shown, the court shall stay discovery for
the time reasonably necessary to permit the committee to make its
investigation. This subsection does not
prevent the court from enforcing a person’s right to information under Section
505 or, for good cause shown, granting extraordinary relief in the form of a
temporary restraining order or preliminary injunction.
(b)
A special litigation committee may be composed of one or more disinterested and
independent individuals, who may be members.
(c)
A special litigation committee may be appointed:
(1)
by a majority of the directors not named as defendants or plaintiffs in the
proceeding; and
(2)
if all directors are named as defendants or plaintiffs in the proceeding, by a
majority of the directors named as defendants.
(d)
After appropriate investigation, a special litigation committee may determine
that it is in the best interests of the limited cooperative association that
the proceeding:
(1)
continue under the control of the plaintiff;
(2)
continue under the control of the committee;
(3)
be settled on terms approved by the committee; or
(4)
be dismissed.
(e) After making a determination under subsection (d),
a special litigation committee shall file with the court a statement of its
determination and its report supporting its determination and shall serve each
party with a copy of the determination and report. The court shall determine whether the members
of the committee were disinterested and independent and whether the committee
conducted its investigation and made its recommendation in good faith,
independently, and with reasonable care, with the committee having the burden
of proof. If the court finds that the
members of the committee were disinterested and independent and that the
committee acted in good faith, independently, and with reasonable care, the
court shall enforce the determination of the committee. Otherwise, the court shall dissolve the stay of
discovery entered under subsection (a) and allow the action to proceed under
the direction of the plaintiff.
FOREIGN COOPERATIVES
(a)
The law of the state or other jurisdiction under which of
formation of a foreign cooperative is organized governs relations
among the members of the foreign cooperative and between the members and the
foreign cooperative:
(1)
the internal affairs of the cooperative; and
(2)
the liability that a person has as a member or director for a debt, obligation,
or liability of the cooperative.
(b)
A foreign cooperative may not be denied a certificate of authority is
not precluded from registering to do business in this state because of any
difference between the law of the jurisdiction under which the foreign
cooperative is organized jurisdiction of formation and the law of
this state.
(c)
A certificate of authority Registration of a foreign cooperative to
do business in this state does not authorize a the foreign
cooperative to engage in any activity activities and affairs or
exercise any power that a limited cooperative association may not engage in or
exercise in this state.
(a)
A foreign cooperative may apply for a certificate of authority by delivering an
application to the [Secretary of State] for filing. The application must state:
(1)
the name of the foreign cooperative and, if the name does not comply with
Section 111, an alternative name adopted pursuant to Section 1405;
(2)
the name of the state or other jurisdiction under whose law the foreign
cooperative is organized;
(3)
the street address and, if different, mailing address of the principal office
and, if the law of the jurisdiction under which the foreign cooperative is
organized requires the foreign cooperative to maintain another office in that
jurisdiction, the street address and, if different, mailing address of the
required office;
(4)
the street address and, if different, mailing address of the foreign
cooperative’s designated office in this state, and the name of the foreign
cooperative’s agent for service of process at the designated office; and
(5)
the name, street address and, if different, mailing address of each of the
foreign cooperative’s current directors and officers.
(b)
A foreign cooperative shall deliver with a completed application under
subsection (a) a certificate of good standing [or existence] or a similar
record signed by the [Secretary of State] or other official having custody of
the foreign cooperative’s publicly filed records in the state or other
jurisdiction under whose law the foreign cooperative is organized.
(a)
Activities of a foreign cooperative which do not constitute transacting
business in this state under this [article] include:
(1)
maintaining, defending, and settling an action or proceeding;
(2)
holding meetings of the foreign cooperative’s members or directors or carrying
on any other activity concerning the foreign cooperative’s internal affairs;
(3)
maintaining accounts in financial institutions;
(4)
maintaining offices or agencies for the transfer, exchange, and registration of
the foreign cooperative’s own securities or maintaining trustees or
depositories with respect to those securities;
(5)
selling through independent contractors;
(6)
soliciting or obtaining orders, whether by mail or electronic means, through
employees, agents, or otherwise, if the orders require acceptance outside this
state before they become contracts;
(7)
creating or acquiring indebtedness, mortgages, or security interests in real or
personal property;
(8)
securing or collecting debts or enforcing mortgages or other security interests
in property securing the debts, and holding, protecting, and maintaining
property so acquired;
(9)
conducting an isolated transaction that is completed within 30 days and is not
one in the course of similar transactions; and
(10)
transacting business in interstate commerce.
(b)
For purposes of this [article], the ownership in this state of income-producing
real property or tangible personal property, other than property excluded under
subsection (a), constitutes transacting business in this state.
(c)
This section does not apply in determining the contacts or activities that may
subject a foreign cooperative to service of process, taxation, or regulation
under law of this state other than this [act].
SECTION 1404. ISSUANCE OF CERTIFICATE OF AUTHORITY. Unless the [Secretary of State] determines
that an application for a certificate of authority does not comply with the
filing requirements of this [act], the [Secretary of State], upon payment by
the foreign cooperative of all filing fees, shall file the application, issue a
certificate of authority, and send a copy of the filed certificate, together
with a receipt for the fees, to the foreign cooperative or its representative.
(a) A
foreign cooperative may not do business in this state until it registers with
the [Secretary of State] under this [article].
(b) A
foreign cooperative doing business in this state may not maintain an action or
proceeding in this state unless it is registered to do business in this state.
(c) The
failure of a foreign cooperative to register to do business in this state does
not impair the validity of a contract or act of the foreign cooperative or
preclude it from defending an action or proceeding in this state.
(d) A
limitation on the liability of a member or director of a foreign cooperative is
not waived solely because the foreign cooperative does business in this state
without registering.
(e) Section
1401(a) and (b) applies even if a foreign cooperative fails to register under
this [article].
SECTION
1403. FOREIGN REGISTRATION STATEMENT. To register to do business in this state, a
foreign cooperative must deliver a foreign registration statement to the
[Secretary of State] for filing. The statement must state:
(1) the
name of the cooperative and, if the name does not comply with Section 111, an
alternate name adopted pursuant to Section 1406;
(2) that
the cooperative is a foreign cooperative;
(3) the cooperative’s
jurisdiction of formation;
(4) the
street and mailing addresses of the cooperative’s principal office and, if the
law of the jurisdiction of formation requires the cooperative to maintain an
office in that jurisdiction, the street and mailing addresses of the required office;
and
(5) the name
and street and mailing addresses of the cooperative’s registered agent in this
state.
A registered foreign cooperative shall deliver to the
[Secretary of State] for filing an amendment to its foreign registration
statement if there is a change in:
(1) the
name of the cooperative;
(2) the cooperative’s
jurisdiction of formation;
(4) an
address required by Section 1403(4); or
(5) the
information required by Section 1403(5).
(a)
Activities of a foreign cooperative which do not constitute doing business in
this state under this [article] include:
(1)
maintaining, defending, mediating, arbitrating, or settling an action or
proceeding;
(2)
carrying on any activity concerning its internal affairs, including meetings of
its members or directors;
(3)
maintaining accounts in financial institutions;
(4)
maintaining offices or agencies for the transfer, exchange, and registration of
securities of the cooperative or maintaining trustees or depositories with
respect to those securities;
(5)
selling through independent contractors;
(6)
soliciting or obtaining orders by any means, if the orders require acceptance
outside this state before they become contracts;
(7)
creating or acquiring indebtedness, mortgages, or security interests in
property;
(8)
securing or collecting debts or enforcing mortgages or security interests in
property securing the debts, and holding, protecting, or maintaining property
so acquired;
(9)
conducting an isolated transaction that is not in the course of similar
transactions;
(10)
owning, without more, property; and
(11) doing business in interstate commerce.
(b) A
person does not do business in this state solely by being a member or director of
a foreign cooperative that does business in this state.
(c) This
section does not apply in determining the contacts or activities that may
subject a foreign cooperative to service of process, taxation, or regulation
under law of this state other than this [act].
(a)
A foreign cooperative whose name does not comply with Section 111 may not
obtain a certificate of authority until it adopts, for the purpose of
transacting business in this state, an alternative name that complies with
Section 111. A foreign cooperative that adopts an alternative name under this
subsection and then obtains a certificate of authority with that name need not
also comply with [reference this state’s fictitious or assumed name statute].
After obtaining a certificate of authority with an alternative name, a foreign
cooperative’s business in this state must be transacted under that name unless
the foreign cooperative is authorized under [reference this state’s fictitious
or assumed name statute] to transact business in this state under another name.
(b)
If a foreign cooperative authorized to transact business in this state changes
its name to one that does not comply with Section 111, it may not thereafter
transact business in this state until it complies with subsection (a) and
obtains an amended certificate of authority.
(a) A
foreign cooperative whose name does not comply with Section 111 may not
register to do business in this state until it adopts, for the purpose of doing
business in this state, an alternate name that complies with Section 111. A registered foreign cooperative that
registers under an alternate name under this subsection need not comply with [this
state’s assumed or fictitious name statute]. After registering to do business in this
state with an alternate name, a registered foreign cooperative shall do
business in this state under:
(1)
the alternate name;
(2)
its name, with the addition of its jurisdiction of formation; or
(3)
an assumed or fictitious name the entity is authorized to use under [this
state’s assumed or fictitious name statute].
(b) If a
registered foreign cooperative changes its name to one that does not comply
with Section 111, it may not do business in this state until it complies with
subsection (a) by amending its registration to adopt an alternate name that
complies with Section 111.
(a)
A certificate of authority may be revoked by the [Secretary of State] in the
manner provided in subsection (b) if the foreign cooperative does not:
(1)
pay, not later than 60 days after the due date, any fee, tax, or penalty due to
the [Secretary of State] under this [act] [or law of this state other than this
[act]];
(2)
deliver, not later than 60 days after the due date, its annual report;
(3)
appoint and maintain an agent for service of process; or
(4)
deliver for filing a statement of change not later than 30 days after a change
has occurred in the name of the agent or the address of the foreign
cooperative’s designated office.
(b)
To revoke a certificate of authority, the [Secretary of State] must file a
notice of revocation and send a copy to the foreign cooperative’s registered
agent for service of process in this state or, if the foreign cooperative does
not appoint and maintain an agent for service of process in this state, to the
foreign cooperative’s principal office. The notice must state:
(1)
the revocation’s effective date, which must be at least 60 days after the date
the [Secretary of State] sends the copy; and
(2)
the foreign cooperative’s noncompliance that is the reason for the revocation.
(c)
The authority of a foreign cooperative to transact business in this state
ceases on the effective date of the notice of revocation unless before that
date the foreign cooperative cures each failure to comply stated in the notice.
If the foreign cooperative cures the failures, the [Secretary of State] shall
so indicate on the filed notice.
(a)
To cancel its certificate of authority, a foreign cooperative must deliver to
the [Secretary of State] for filing a notice of cancellation. The certificate
is canceled when the notice becomes effective under Section 203.
(b)
A foreign cooperative transacting business in this state may not maintain an
action or proceeding in this state unless it has a certificate of authority.
(c)
The failure of a foreign cooperative to have a certificate of authority does
not impair the validity of a contract or act of the foreign cooperative or
prevent the foreign cooperative from defending an action or proceeding in this
state.
(d)
A member of a foreign cooperative is not liable for the obligations of the
foreign cooperative solely by reason of the foreign cooperative’s having
transacted business in this state without a certificate of authority.
(e)
If a foreign cooperative transacts business in this state without a certificate
of authority or cancels its certificate, it appoints the [Secretary of State]
as its agent for service of process for an action arising out of the
transaction of business in this state.
(a) A
registered foreign cooperative may withdraw its registration by delivering a
statement of withdrawal to the [Secretary of State] for filing. The statement
of withdrawal must state:
(1)
the name of the cooperative and its jurisdiction of formation;
(2)
that the cooperative is not doing business in this state and that it withdraws
its registration to do business in this state;
(3)
that the cooperative revokes the authority of its registered agent to accept
service on its behalf in this state; and
(4)
an address to which service of process may be made under subsection (b).
(b) After
the withdrawal of the registration of a foreign cooperative, service of process
in any action or proceeding based on a cause of action arising during the time the
cooperative was registered to do business in this state may be made pursuant to
Section 122.
SECTION 1408. WITHDRAWAL DEEMED ON CONVERSION TO DOMESTIC
FILING ENTITY OR DOMESTIC LIMITED LIABILITY PARTNERSHIP. A registered foreign cooperative that
converts to a domestic limited liability partnership or to a domestic entity that
is organized, incorporated, or otherwise formed through the delivery of a
record to the [Secretary of State] for filing is deemed to have withdrawn its
registration on the effective date of the conversion.
(a) A
registered foreign cooperative that has dissolved and completed winding up or
has converted to a domestic or foreign entity that is not organized,
incorporated, or otherwise formed through the public filing of a record, other
than a limited liability partnership, shall deliver a statement of withdrawal
to the [Secretary of State] for filing. The statement must be signed by the
dissolved or converted foreign cooperative and state:
(1)
in the
case of a cooperative that has completed winding up:
(A) its name and jurisdiction of formation; and
(B)
that the cooperative surrenders its registration to do business in this state;
and
(2)
in the case of a foreign cooperative that has
converted:
(A)
the name of the converting cooperative and its jurisdiction of formation;
(B)
the type of entity to which the cooperative has converted and its jurisdiction of formation;
(C)
that the converted entity surrenders the converting cooperative’s registration
to do business in this state and revokes the authority of the converting
cooperative’s registered agent to act as registered agent in this state on
behalf of the cooperative or the converted entity; and
(D)
a mailing address to which service of process may be made under subsection (b).
(b) After a
withdrawal under this section of a limited cooperative association that has
converted to another type of entity is effective, service of process in any
action or proceeding based on a cause of action arising during the time the
foreign cooperative was registered to do business in this state may be made
pursuant to Section 122.
(a) When a
registered foreign cooperative has merged into a foreign entity that is not
registered to do business in this state or has converted to a foreign entity
required to register with the [Secretary of State] to do business in this
state, the foreign entity shall deliver to the [Secretary of State] for filing
an application for transfer of registration.
The application must state:
(1)
the name of the registered foreign cooperative before the merger or conversion;
(2)
that before the merger or conversion the registration pertained to a foreign
cooperative;
(3)
the name of the applicant foreign entity into which the foreign cooperative has
been converted and, if the name does not comply with Section 111, an alternate
name adopted pursuant to Section 1406;
(4)
the type of entity of the applicant entity and its jurisdiction of formation;
(5)
the street and mailing addresses of the principal office of the applicant
foreign entity and, if the law of the entity’s jurisdiction of formation requires
the entity to maintain an office in that jurisdiction, the street and mailing
addresses of that office; and
(6)
the name and street and mailing addresses of the foreign entity’s registered
agent in this state.
(b) When an
application for transfer of registration takes effect, the registration of the
foreign cooperative to do business in this state is transferred without
interruption to the foreign entity into which the foreign cooperative has
merged or to which it has been converted.
SECTION 1411. TERMINATION OF REGISTRATION.
(a) The
[Secretary of State] may terminate the registration of a registered foreign cooperative
in the manner provided in subsections (b) and (c) if the foreign cooperative does
not:
(1)
pay, not later than [60 days] after the due date, any fee, tax, interest, or
penalty required to be paid to the [Secretary of State] under this [article] or
law other than this [act];
(2)
deliver to the [Secretary of State] for filing, not later than [60 days] after
the due date, [an annual] [a biennial] report required under Section 210;
(3)
have a registered agent as required by Section 118; or
(4)
deliver to the [Secretary of State] for filing a statement of change under
Section 119 not later than 30 days after a change has occurred in the name or
address of the registered agent.
(b) The
[Secretary of State] may terminate the registration of a registered foreign cooperative
by:
(1)
filing a notice of termination or noting the termination in the records of the
[Secretary of State]; and
(2)
delivering a copy of the notice or the
information in the notation to the cooperative’s registered agent, or if the cooperative
does not have a registered agent, to the foreign cooperative’s principal
office.
(c) A notice
or the information in the notation under subsection (b) must include:
(1)
the effective date of the termination, which must be at least [60 days] after
the date the [Secretary of State] delivers the copy; and
(2)
the grounds for termination under subsection (a).
(d) The
authority of a registered foreign cooperative to do business in this state
ceases on the effective date of the notice of termination or notation under
subsection (b), unless before that date the foreign cooperative cures each
ground for termination stated in the notice or notation. If the foreign cooperative cures each ground,
the [Secretary of State] shall file a record so stating.
SECTION 1408 1412. ACTION BY [ATTORNEY GENERAL]. The [Attorney General] may maintain an action to restrain
enjoin a foreign cooperative from transacting doing business
in this state in violation of this [article].
DISPOSITION OF ASSETS
SECTION 1501. DISPOSITION OF ASSETS NOT REQUIRING MEMBER
APPROVAL. Unless
the articles of organization otherwise provide, member approval under Section
1502 is not required for a limited cooperative association to:
(1)
sell, lease, exchange, license, or otherwise dispose of all or any part of the
assets of the association in the usual and regular course of business; or
(2)
mortgage, pledge, dedicate to the repayment of indebtedness, or encumber in any
way all or any part of the assets of the association whether or not in the
usual and regular course of business.
SECTION 1502.
MEMBER APPROVAL OF OTHER DISPOSITION OF ASSETS. A sale, lease, exchange, license, or other disposition of
assets of a limited cooperative association, other than a disposition described
in Section 1501, requires approval of the association’s members under Sections
1503 and 1504 if the disposition leaves the association without significant
continuing business activity.
SECTION 1503. NOTICE AND ACTION ON DISPOSITION OF ASSETS. For a limited cooperative association to dispose of assets
under Section 1502:
(1)
a majority of the board of directors, or a greater percentage if required by
the organic rules, must approve the proposed disposition; and
(2)
the board of directors must call a members meeting to consider the proposed
disposition, hold the meeting not later than 90 days after approval of the proposed
disposition by the board, and mail or otherwise transmit or deliver in a record
to each member:
(A)
the terms of the proposed disposition;
(B)
a recommendation that the members approve the disposition, or if the board
determines that because of conflict of interest or other special circumstances
it should not make a favorable recommendation, the basis for that
determination;
(C)
a statement of any condition of the board’s submission of the proposed
disposition to the members; and
(D)
notice of the meeting at which the proposed disposition will be considered,
which must be given in the same manner as notice of a special meeting of
members.
(a)
Subject to subsection (b), a disposition of assets under Section 1502 must be
approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under Section 1503(2); and
(2)
if the limited cooperative association has investor members, at least a
majority of the votes cast by patron members, unless the organic rules require
a greater percentage vote by patron members.
(b)
The organic rules may require that the percentage of votes under subsection
(a)(1) is:
(1)
a different percentage that is not less than a majority of members voting at
the meeting;
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs (1) and(2).
(c)
Subject to any contractual obligations, after a disposition of assets is
approved and at any time before the consummation of the disposition, a limited
cooperative association may approve an amendment to the contract for
disposition or the resolution authorizing the disposition or approve
abandonment of the disposition:
(1)
as provided in the contract or the resolution; and
(2)
except as prohibited by the resolution, with the same affirmative vote of the
board of directors and of the members as was required to approve the
disposition.
(d)
The voting requirements for districts, classes, or voting groups under Section
404 apply to approval of a disposition of assets under this [article].
CONVERSION
AND MERGER, INTEREST EXCHANGE, CONVERSION,
SECTION 1601. DEFINITIONS. In this [article]:
(1)
“Constituent entity” means an entity that is a party to a merger.
(2)
“Constituent limited cooperative association” means a limited cooperative
association that is a party to a merger.
(3)
“Converted entity” means the organization into which a converting entity
converts pursuant to Sections 1602 through 1605.
(4)
“Converting entity” means an entity that converts into another entity pursuant
to Sections 1602 through 1605.
(5)
“Converting limited cooperative association” means a converting entity that is
a limited cooperative association.
(6)
“Organizational documents” means articles of incorporation, bylaws, articles of
organization, operating agreements, partnership agreements, or other documents
serving a similar function in the creation and governance of an entity.
(7)
“Personal liability” means personal liability for a debt, liability, or other
obligation of an entity imposed, by operation of law or otherwise, on a person
that co-owns or has an interest in the entity:
(A)
by the entity’s organic law solely because of the person co-owning or having an
interest in the entity; or
(B)
by the entity’s organizational documents under a provision of the entity’s
organic law authorizing those documents to make one or more specified persons
liable for all or specified parts of the entity’s debts, liabilities, and other
obligations solely because the person co-owns or has an interest in the entity.
(8)
“Surviving entity” means an entity into which one or more other entities are
merged, whether the entity existed before the merger or is created by the merger.
(a)
An entity that is not a limited cooperative association may convert to a
limited cooperative association and a limited cooperative association may
convert to an entity that is not a limited cooperative association pursuant to
this section, Sections 1603 through 1605, and a plan of conversion, if:
(1)
the other entity’s organic law authorizes the conversion;
(2)
the conversion is not prohibited by the law of the jurisdiction that enacted
the other entity’s organic law; and
(3)
the other entity complies with its organic law in effecting the conversion.
(b)
A plan of conversion must be in a record and must include:
(1)
the name and form of the entity before conversion;
(2)
the name and form of the entity after conversion;
(3)
the terms and conditions of the conversion, including the manner and basis for
converting interests in the converting entity into any combination of money,
interests in the converted entity, and other consideration; and
(4)
the organizational documents of the proposed converted entity.
(a)
For a limited cooperative association to convert to another entity, a plan of
conversion must be approved by a majority of the board of directors, or a
greater percentage if required by the organic rules, and the board of directors
must call a members meeting to consider the plan of conversion, hold the
meeting not later than 90 days after approval of the plan by the board, and
mail or otherwise transmit or deliver in a record to each member:
(1)
the plan, or a summary of the plan and a statement of the manner in which a
copy of the plan in a record may be reasonably obtained by a member;
(2)
a recommendation that the members approve the plan of conversion, or if the
board determines that because of a conflict of interest or other circumstances
it should not make a favorable recommendation, the basis for that
determination;
(3)
a statement of any condition of the board’s submission of the plan of
conversion to the members; and
(4)
notice of the meeting at which the plan of conversion will be considered, which
must be given in the same manner as notice of a special meeting of members.
(b)
Subject to subsections (c) and (d), a plan of conversion must be approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under subsection (a); and
(2)
if the limited cooperative association has investor members, at least a majority
of the votes cast by patron members, unless the organic rules require a greater
percentage vote by patron members.
(c)
The organic rules may require that the percentage of votes under subsection
(b)(1) is:
(1)
a different percentage that is not less than a majority of members voting at
the meeting;
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs (1) and (2).
(d)
The vote required to approve a plan of conversion may not be less than the vote
required for the members of the limited cooperative association to amend the
articles of organization.
(e)
Consent in a record to a plan of conversion by a member must be delivered to
the limited cooperative association before delivery of articles of conversion for
filing if as a result of the conversion the member will have:
(1)
personal liability for an obligation of the association; or
(2)
an obligation or liability for an additional contribution.
(f)
Subject to subsection (e) and any contractual rights, after a conversion is
approved and at any time before the effective date of the conversion, a
converting limited cooperative association may amend a plan of conversion or
abandon the planned conversion:
(1)
as provided in the plan; and
(2)
except as prohibited by the plan, by the same affirmative vote of the board of
directors and of the members as was required to approve the plan.
(g)
The voting requirements for districts, classes, or voting groups under Section
404 apply to approval of a conversion under this [article].
(a)
After a plan of conversion is approved:
(1)
a converting limited cooperative association shall deliver to the [Secretary of
State] for filing articles of conversion, which must include:
(A)
a statement that the limited cooperative association has been converted into
another entity;
(B)
the name and form of the converted entity and the jurisdiction of its governing
statute;
(C)
the date the conversion is effective under the governing statute of the
converted entity;
(D)
a statement that the conversion was approved as required by this [act];
(E)
a statement that the conversion was approved as required by the governing
statute of the converted entity; and
(F)
if the converted entity is an entity organized in a jurisdiction other than
this state and is not authorized to transact business in this state, the street
address and, if different, mailing address of an office which the [Secretary of
State] may use for purposes of Section 120; and
(2)
if the converting entity is not a converting limited cooperative association,
the converting entity shall deliver to the [Secretary of State] for filing
articles of organization, which must include, in addition to the information
required by Section 302:
(A)
a statement that the association was converted from another entity;
(B)
the name and form of the converting entity and the jurisdiction of its
governing statute; and
(C)
a statement that the conversion was approved in a manner that complied with the
converting entity’s governing statute.
(b)
A conversion becomes effective:
(1)
if the converted entity is a limited cooperative association, when the articles
of conversion take effect pursuant to Section 203(c); or
(2)
if the converted entity is not a limited cooperative association, as provided
by the governing statute of the converted entity.
SECTION 1605. EFFECT OF CONVERSION.
(a)
An entity that has been converted pursuant to this [article] is for all
purposes the same entity that existed before the conversion and is not a new
entity but, after conversion, is organized under the organic law of the
converted entity and is subject to that law and other law as it applies to the
converted entity.
(b)
When a conversion takes effect under this [Article]:
(1)
all property owned by the converting entity remains vested in the converted
entity;
(2)
all debts, liabilities, and other obligations of the converting entity continue
as obligations of the converted entity;
(3)
an action or proceeding pending by or against the converting entity may be
continued as if the conversion had not occurred;
(4)
except as prohibited by other law, all the rights, privileges, immunities,
powers, and purposes of the converting entity remain vested in the converted
entity;
(5)
except as otherwise provided in the plan of conversion, the terms and
conditions of the plan of conversion take effect; and
(6)
except as otherwise provided in the plan of conversion, the conversion does not
dissolve a converting limited cooperative association for purposes of [Article]
12.
(c)
A converted entity that is an entity organized under the laws of a jurisdiction
other than this state consents to the jurisdiction of the courts of this state
to enforce any obligation owed by the converting limited cooperative
association if, before the conversion, the converting limited cooperative
association was subject to suit in this state on the obligation. A converted
entity that is an entity organized under the laws of a jurisdiction other than
this state and not authorized to transact business in this state appoints the
[Secretary of State] as its agent for service of process for purposes of
enforcing an obligation under this subsection. Service on the [Secretary of
State] under this subsection is made in the same manner and with the same
consequences as under Section 120(c) and (d).
(a)
One or more limited cooperative associations may merge with one or more other
entities pursuant to this [article] and a plan of merger if:
(1)
the governing statute of each of the other entities authorizes the merger;
(2)
the merger is not prohibited by the law of a jurisdiction that enacted any of
those governing statutes; and
(3)
each of the other entities complies with its governing statute in effecting the
merger.
(b)
A plan of merger must be in a record and must include:
(1)
the name and form of each constituent entity;
(2)
the name and form of the surviving entity and, if the surviving entity is to be
created by the merger, a statement to that effect;
(3)
the terms and conditions of the merger, including the manner and basis for
converting the interests in each constituent entity into any combination of
money, interests in the surviving entity, and other consideration;
(4)
if the surviving entity is to be created by the merger, the surviving entity’s
organizational documents;
(5)
if the surviving entity is not to be created by the merger, any amendments to
be made by the merger to the surviving entity’s organizational documents; and
(6)
if a member of a constituent limited cooperative association will have personal
liability with respect to a surviving entity, the identity of the member by
descriptive class or other reasonable manner.
(a)
For a limited cooperative association to merge with another entity, a plan of
merger must be approved by a majority vote of the board of directors or a
greater percentage if required by the association’s organic rules.
(b)
The board of directors shall call a members meeting to consider a plan of
merger approved by the board, hold the meeting not later than 90 days after
approval of the plan by the board, and mail or otherwise transmit or deliver in
a record to each member:
(1)
the plan of merger, or a summary of the plan and a statement of the manner in
which a copy of the plan in a record may be reasonably obtained by a member;
(2)
a recommendation that the members approve the plan of merger, or if the board
determines that because of conflict of interest or other special circumstances
it should not make a favorable recommendation, the basis for that
determination;
(3)
a statement of any condition of the board’s submission of the plan of merger to
the members; and
(4)
notice of the meeting at which the plan of merger will be considered, which
must be given in the same manner as notice of a special meeting of members.
(a)
Subject to subsections (b) and (c), a plan of merger must be approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under Section 1607(b); and
(2)
if the limited cooperative association has investor members, at least a
majority of the votes cast by patron members, unless the organic rules require
a greater percentage vote by patron members.
(b)
The organic rules may provide that the percentage of votes under subsection
(a)(1) is:
(1)
a different percentage that is not less than a majority of members voting at
the meeting;
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs (1) and (2).
(c)
The vote required to approve a plan of merger may not be less than the vote
required for the members of the limited cooperative association to amend the
articles of organization.
(d)
Consent in a record to a plan of merger by a member must be delivered to the
limited cooperative association before delivery of articles of merger for
filing pursuant to Section 1609 if as a result of the merger the member will
have:
(1)
personal liability for an obligation of the association; or
(2)
an obligation or liability for an additional contribution.
(e)
Subject to subsection (d) and any contractual rights, after a merger is
approved, and at any time before the effective date of the merger, a limited
cooperative association that is a party to the merger may approve an amendment
to the plan of merger or approve abandonment of the planned merger:
(1)
as provided in the plan; and
(2)
except as prohibited by the plan, with the same affirmative vote of the board
of directors and of the members as was required to approve the plan.
(f)
The voting requirements for districts, classes, or voting groups under Section
404 apply to approval of a merger under this [article].
(a)
After each constituent entity has approved a merger, articles of merger must be
signed on behalf of each constituent entity by an authorized representative.
(b)
The articles of merger must include:
(1)
the name and form of each constituent entity and the jurisdiction of its
governing statute;
(2)
the name and form of the surviving entity, the jurisdiction of its governing
statute, and, if the surviving entity is created by the merger, a statement to
that effect;
(3)
the date the merger is effective under the governing statute of the surviving
entity;
(4)
if the surviving entity is to be created by the merger and:
(A)
will be a limited cooperative association, the limited cooperative
association’s articles of organization; or
(B)
will be an entity other than a limited cooperative association, the organizational
document that creates the entity;
(5)
if the surviving entity is not created by the merger, any amendments provided
for in the plan of merger to the organizational document that created the
entity;
(6)
a statement as to each constituent entity that the merger was approved as
required by the entity’s governing statute;
(7)
if the surviving entity is a foreign organization not authorized to
transact business in this state,
the street address and, if different, mailing address of an office which the
[Secretary of State] may use for the purposes of Section 120; and
(8)
any additional information required by the governing statute of any constituent
entity.
(c)
Each limited cooperative association that is a party to a merger shall deliver
the articles of merger to the [Secretary of State] for filing.
(d)
A merger becomes effective under this [article]:
(1)
if the surviving entity is a limited cooperative association, upon the later
of:
(A)
compliance with subsection (c); or
(B)
subject to Section 203(c), as specified in the articles of merger; or
(2)
if the surviving entity is not a limited cooperative association, as provided
by the governing statute of the surviving entity.
(a)
When a merger becomes effective:
(1)
the surviving entity continues or comes into existence;
(2)
each constituent entity that merges into the surviving entity ceases to exist
as a separate entity;
(3)
all property owned by each constituent entity that ceases to exist vests in the
surviving entity;
(4)
all debts, liabilities, and other obligations of each constituent entity that
ceases to exist continue as obligations of the surviving entity;
(5)
an action or proceeding pending by or against any constituent entity that
ceases to exist may be continued as if the merger had not occurred;
(6)
except as prohibited by law other than this [act], all rights, privileges,
immunities, powers, and purposes of each constituent entity that ceases to
exist vest in the surviving entity;
(7)
except as otherwise provided in the plan of merger, the terms and conditions of
the plan take effect;
(8)
except as otherwise provided in the plan of merger, if a merging limited
cooperative association ceases to exist, the merger does not dissolve the
association for purposes of [Article] 12;
(9)
if the surviving entity is created by the merger and:
(A)
is a limited cooperative association, the articles of organization become
effective; or
(B)
is an entity other than a limited cooperative association, the organizational
document that creates the entity becomes effective; and
(10)
if the surviving entity is not created by the merger, any amendments made by
the articles of merger for the organizational documents of the surviving entity
become effective.
(b)
A surviving entity that is an entity organized under the laws of a jurisdiction
other than this state consents to the jurisdiction of the courts of this state
to enforce any obligation owed by the constituent entity if, before the merger,
the constituent entity was subject to suit in this state on the obligation. A
surviving entity that is an entity organized under the laws of a jurisdiction
other than this state and not authorized to transact business in this state
appoints the [Secretary of State] as its agent for service of process for
purposes of enforcing an obligation under this subsection. Service on the
[Secretary of State] under this subsection is made in the same manner and with
the same consequences as in Section 120(c) and (d).
(a)
Constituent entities that are limited cooperative associations or foreign
cooperatives may agree to call a merger a consolidation under this [article].
(b)
All provisions governing mergers or using the term merger in this [act] apply
equally to mergers that the constituent entities choose to call consolidations
under subsection (a).
SECTION 1612. [ARTICLE] NOT EXCLUSIVE. This [article] does not prohibit a limited cooperative
association from being converted or merged under law other than this [act].
SECTION 1601.
DEFINITIONS. In
this [article]:
(1) “Acquired entity” means the entity, all of
one or more classes or series of interests in which are acquired in an interest
exchange.
(2) “Acquiring entity” means the entity that
acquires all of one or more classes or series of interests of the acquired
entity in an interest exchange.
(3) “Conversion” means a transaction authorized
by [Part] 4.
(4) “Converted entity” means the converting
entity as it continues in existence after a conversion.
(5) “Converting entity” means the domestic entity
that approves a plan of conversion pursuant to Section 1643 or the foreign
entity that approves a conversion pursuant to the law of its jurisdiction of
formation.
(6) “Distributional interest” means the right
under an unincorporated entity’s organic law and organic rules to receive
distributions from the entity.
(7) “Domestic”, with respect to an entity, means
governed as to its internal affairs by the law of this state.
(8) “Domesticated limited cooperative association”
means the domesticating limited cooperative association as it continues in
existence after a domestication.
(9) “Domesticating limited cooperative
association” means the domestic limited cooperative association that approves a
plan of domestication pursuant to Section 1653 or the foreign limited
cooperative association that approves a domestication pursuant to the law of
its jurisdiction of formation.
(10) “Domestication” means a transaction
authorized by [Part] 5.
(11) “Entity”:
(A)
means:
(i) a
business corporation;
(ii) a
nonprofit corporation;
(iii)
a general partnership, including a limited liability partnership;
(iv)
a limited partnership, including a limited liability limited partnership;
(v)
a limited liability company;
[(vi)
a general cooperative association;]
(vii) a
limited cooperative association;
(viii) an
unincorporated nonprofit association;
(ix) a statutory trust, business trust, or
common-law business trust; or
(x) any
other person that has:
(I)
a legal existence separate from any interest holder of that person; or
(II)
the power to acquire an interest in real property in its own name; and
(B) does not include:
(i) an
individual;
(ii) a
testamentary or inter vivos trust with a predominantly donative purpose, or
charitable trust;
(iii) an
association or relationship that is not a partnership solely by reason of
[Section 202(c) of the Revised Uniform Partnership Act] [Section 7 of the
Uniform Partnership Act] or a similar provision of the law of another
jurisdiction;
(iv) a
decedent’s estate; [or]
(v) a
government or a governmental subdivision, agency, or instrumentality [; or]
[(vi) a person
excluded under Section 1610].
(12) “Filing entity” means an entity whose formation
requires the filing of a public organic record.
(13) “Foreign”, with respect to an entity, means
an entity governed as to its internal affairs by the law of a jurisdiction
other than this state.
(14) “Governance interest” means a right under the
organic law or organic rules of an unincorporated entity, other than as a
governor, agent, assignee, or proxy, to:
(A) receive or demand access to information
concerning, or the books and records of, the entity;
(B) vote for the election of the governors of the
entity; or
(C) receive notice of or vote on an issue
involving the internal affairs of the entity.
(15) “Governor” means:
(A) a director of a
business corporation;
(B) a director or
trustee of a nonprofit corporation;
(C) a general partner
of a general partnership;
(D) a general partner
of a limited partnership;
(E) a manager of a
manager-managed limited liability company;
(F) a member of a member-managed
limited liability company;
[(G) a director of a
general cooperative association;]
(H) a director of a
limited cooperative association;
(I) a manager of an
unincorporated nonprofit association;
(J) a trustee of a
statutory trust, business trust, or common-law business trust; or
(K) any other person by
or under whose authority the powers of an entity are exercised and under whose
direction the activities and affairs of the entity are managed pursuant to the
organic law and organic rules of the entity.
(16) “Interest” means:
(A) a share in a
business corporation;
(B) a membership in a
nonprofit corporation;
(C) a partnership
interest in a general partnership;
(D) a partnership
interest in a limited partnership;
(E) a membership
interest in a limited liability company;
[(F) a share in a
general cooperative association;]
(G) a member’s
interest in a limited cooperative association;
(H) a membership in
an unincorporated nonprofit association;
(I) a beneficial
interest in a statutory trust, business trust, or common-law business trust; or
(J) a governance or
distributional interest in any other type of unincorporated entity.
(17) “Interest exchange” means a transaction
authorized by [Part] 3.
(18) “Interest holder” means:
(A) a shareholder of
a business corporation;
(B) a member of a
nonprofit corporation;
(C) a general partner
of a general partnership;
(D) a general partner
of a limited partnership;
(E) a limited partner
of a limited partnership;
(F) a member of a
limited liability company;
[(G) a shareholder of
a general cooperative association;]
(H) a member of a
limited cooperative association;
(I) a member of an
unincorporated nonprofit association;
(J) a beneficiary or
beneficial owner of a statutory trust, business trust, or common-law business
trust; or
(K) any other direct
holder of an interest.
(19) “Interest holder liability” means:
(A) personal liability for a liability of an
entity which is imposed on a person:
(i)
solely by reason of the status of the person as an interest holder; or
(ii) by
the organic rules of the entity which make one or more specified interest
holders or categories of interest holders liable in their capacity as interest
holders for all or specified liabilities of the entity; or
(B) an obligation of an interest holder under the
organic rules of an entity to contribute to the entity.
(20) “Jurisdiction of formation” means the
jurisdiction whose law includes the organic law of an entity.
(21) “Merger” means a transaction authorized by
[Part] 2.
(22) “Merging entity” means an entity that is a
party to a merger and exists immediately before the merger becomes effective.
(23) “Organic law” means the law of an entity’s
jurisdiction of formation governing the internal affairs of the entity.
(24) “Organic rules” means the public organic
record and private organic rules of an entity.
(25) “Plan” means a plan of merger, plan of interest
exchange, plan of conversion, or plan of domestication.
(26) “Plan of conversion” means a plan under
Section 1642.
(27) “Plan of domestication” means a plan under
Section 1652.
(28) “Plan of interest exchange” means a plan
under Section 1632.
(29) “Plan of merger” means a plan under Section 1622.
(30) “Private organic rules” means the rules,
whether or not in a record, that govern the internal affairs of an entity, are
binding on all of its interest holders, and are not part of its public organic
record, if any. The term includes:
(A) the bylaws of a
business corporation;
(B) the bylaws of a
nonprofit corporation;
(C) the partnership
agreement of a general partnership;
(D) the partnership
agreement of a limited partnership;
(E) the operating
agreement of a limited liability company;
[(F) the bylaws of a
general cooperative association;]
(G) the bylaws of a
limited cooperative association;
(H) the governing
principles of an unincorporated nonprofit association; and
(I) the trust instrument
of a statutory trust or similar rules of a business trust or common-law
business trust.
(31) “Protected agreement” means:
(A) a record evidencing indebtedness and any
related agreement in effect on [the effective date of this [act]];
(B) an agreement that is binding on an entity on [the
effective date of this [act]];
(C) the organic rules of an entity in effect on [the
effective date of this [act]]; or
(D) an agreement that is binding on any of the
governors or interest holders of an entity on [the effective date of this [act]].
(32) “Public organic record” means the record the
filing of which by the [Secretary of State] is required to form an entity and
any amendment to or restatement of that record.
The term includes:
(A) the articles of
incorporation of a business corporation;
(B) the articles of
incorporation of a nonprofit corporation;
(C) the certificate
of limited partnership of a limited partnership;
(D) the certificate
of organization of a limited liability company;
[(E) the articles of
incorporation of a general cooperative association;]
(F) the articles of
organization of a limited cooperative association; and
(G) the certificate
of trust of a statutory trust or similar record of a business trust.
(33) “Record” means information that is inscribed
on a tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(34) “Registered foreign entity” means a foreign
entity that is registered to do business in this state pursuant to a record filed
by the [Secretary of State].
(35) “Statement of conversion” means a statement
under Section 1645.
(36) “Statement of domestication” means a
statement under Section 1655.
(37) “Statement of interest exchange” means a
statement under Section 1635.
(38) “Statement of merger” means a statement under
Section 1625.
(39) “Surviving entity” means the entity that
continues in existence after or is created by a merger.
(40) “Type of entity” means a generic form of
entity:
(A) recognized at common law; or
(B) formed under an organic law, whether or not
some entities formed under that organic law are subject to provisions of that
law that create different categories of the form of entity.
SECTION 1602.
RELATIONSHIP OF [ARTICLE] TO OTHER LAWS. This
[article] does not authorize an act prohibited by, and does not affect the
application or requirements of, law other than this [article].
(a) A domestic or foreign entity that is required
to give notice to, or obtain the approval of, a governmental agency or officer of
this state to be a party to a merger must give the notice or obtain the
approval to be a party to an interest exchange, conversion, or domestication.
(b) Property held for a charitable purpose under
the law of this state by a domestic or foreign entity immediately before a
transaction under this [article] becomes effective may not, as a result of the
transaction, be diverted from the objects for which it was donated, granted,
devised, or otherwise transferred unless, to the extent required by or pursuant
to the law of this state concerning cy pres or other law dealing with
nondiversion of charitable assets, the entity obtains an appropriate order of [the
appropriate court] [the Attorney General] specifying the disposition of the
property.
SECTION 1604.
STATUS OF FILINGS.
A filing under this [article] signed by a domestic entity becomes part
of the public organic record of the entity if the entity’s organic law provides
that similar filings under that law become part of the public organic record of
the entity.
SECTION 1605.
NONEXCLUSIVITY.
The fact that a transaction under this [article] produces a certain
result does not preclude the same result from being accomplished in any other
manner permitted by law other than this [article].
SECTION 1606.
REFERENCE TO EXTERNAL FACTS. A plan may refer to facts ascertainable
outside the plan if the manner in which the facts will operate upon the plan is
specified in the plan. The facts may
include the occurrence of an event or a determination or action by a person,
whether or not the event, determination, or action is within the control of a
party to the transaction.
SECTION 1607. ALTERNATIVE MEANS OF APPROVAL OF
TRANSACTIONS. Except as otherwise provided in the organic
law or organic rules of a domestic entity, approval of a transaction under this
[article] by the unanimous vote or consent of its interest holders satisfies
the requirements of this [article] for approval of the transaction.
(a) An interest holder of a
domestic merging, acquired, converting, or domesticating entity is entitled to
appraisal rights in connection with the transaction if the interest holder
would have been entitled to appraisal rights under the entity’s organic law in
connection with a merger in which the interest of the interest holder was
changed, converted, or exchanged unless:
(1) the organic law permits the organic rules to
limit the availability of appraisal rights; and
(2) the organic rules provide such a limit.
(b) An interest holder of a
domestic merging, acquired, converting, or domesticating entity is entitled to
contractual appraisal rights in connection with a transaction under this
[article] to the extent provided in:
(1) the entity’s organic rules; or
(2) the plan.
(a)
For a limited cooperative association to approve a transaction under this
[article], a plan must be approved by a majority of the board of directors, or
a greater percentage if required by the organic rules, and the board of
directors must call a members meeting to consider the plan, hold the meeting
not later than 90 days after approval of the plan by the board, and mail or
otherwise transmit or deliver in a record to each member:
(1)
the plan, or a summary of the plan and a statement of the manner in which a
copy of the plan in a record may be reasonably obtained by a member;
(2)
a recommendation that the members approve the plan, or if the board determines
that because of a conflict of interest or other circumstances it should not
make a favorable recommendation, the basis for that determination;
(3)
a statement of any condition of the board’s submission of the plan to the
members; and
(4)
notice of the meeting at which the plan will be considered, which must be given
in the same manner as notice of a special meeting of members.
(b)
Subject to subsections (c) and (d), a plan must be approved by:
(1)
at least two-thirds of the voting power of members present at a members meeting
called under subsection (a); and
(2)
if the limited cooperative association has investor members, at least a
majority of the votes cast by patron members, unless the organic rules require
a greater percentage vote by patron members.
(c)
The organic rules may require that the percentage of votes under subsection
(b)(1) is:
(1)
a different percentage that is not less than a majority of members voting at
the meeting;
(2)
measured against the voting power of all members; or
(3)
a combination of paragraphs (1) and (2).
(d)
The vote required to approve a plan may not be less than the vote required for
the members of the limited cooperative association to amend the articles of
organization.
(e)
Consent in a record to a plan by a member must be delivered to the limited
cooperative association before delivery to the [Secretary of State] for filing
of articles of merger, interest exchange, conversion, or domestication, if, as
a result of the merger, interest exchange, conversion, or domestication, the
member will have interest holder liability for debts, obligations, or other
liabilities that arise after the transaction becomes effective.
(f)
The voting requirements for districts, classes, or voting groups under Section
404 apply to approval of a transaction under this [article].
Reporters’
Note
Based
on former Section 1603 of the act.
(a) The
following entities may not participate in a transaction under this [article]:
(1)
(2).
(b) This
[article] may not be used to effect a transaction that:
(1)
(2).]
(a) By complying with this [part]:
(1) one or more domestic limited cooperative associations may merge with one or more domestic or foreign
entities into a domestic or foreign surviving entity; and
(2) two or more foreign entities may merge into a
domestic limited cooperative association.
(b) By complying with the provisions of this
[part] applicable to foreign entities a foreign entity may be a party to a
merger under this [part] or may be the surviving entity in such a merger if the
merger is authorized by the law of the foreign entity’s jurisdiction of formation.
(a) A domestic limited cooperative association
may become a party to a merger under this [part] by approving a plan of
merger. The plan must be in a record and
contain:
(1) as to each merging entity, its name, jurisdiction
of formation, and type of entity;
(2) if the surviving entity is to be created in
the merger, a statement to that effect and its name, jurisdiction of formation,
and type of entity;
(3) the manner of converting the interests in
each party to the merger into interests, securities, obligations, money, other
property, rights to acquire interests or securities, or any combination of the
foregoing;
(4) if the surviving entity exists before the
merger, any proposed amendments to its public organic record, if any, or to its
private organic rules that are, or are proposed to be, in a record;
(5) if the surviving entity is to be created in
the merger, its proposed public organic record, if any, and the full text of
its private organic rules that are proposed to be in a record;
(6) the other terms and conditions of the merger;
and
(7) any other provision required by the law of a
merging entity’s jurisdiction of formation or the organic rules of a merging
entity.
(b) In addition to the requirements of subsection
(a), a plan of merger may contain any other provision not prohibited by law.
(a) A plan of merger is not effective unless it
has been approved by a domestic merging limited cooperative association as
provided in Section 1609.
(b) A merger involving a domestic merging entity
that is not a limited cooperative association is not effective unless the
merger is approved by that entity in accordance with its organic law.
(c) A merger involving a foreign merging entity is
not effective unless the merger is approved by the foreign entity in accordance
with the law of the foreign entity’s jurisdiction of formation.
(a) A plan of merger may be amended only with the
consent of each party to the plan except as otherwise provided in the plan.
(b) A domestic merging limited
cooperative association may approve an amendment to a plan of merger:
(1) in the same manner as the plan was approved,
if the plan does not provide for the manner in which it may be amended; or
(2) by the directors or members in the manner
provided in the plan, but a member that was entitled to vote on or consent to
approval of the merger is entitled to vote on or consent to any amendment of
the plan that will change:
(A) the amount or kind of interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing,
to be received by the members of any party to the plan;
(B) the public organic record, if any, or private
organic rules of the surviving entity that will be in effect immediately after
the merger becomes effective, except for changes that do not require approval
of the interest holders of the surviving entity under its organic law or
organic rules; or
(C) any other terms or conditions of the plan, if
the change would adversely affect the member in any material respect.
(c) After a plan of merger has been approved by a
domestic merging limited cooperative association and before a statement of
merger becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a domestic
merging association may abandon the plan in the same manner as the plan was
approved.
(d) If a plan of merger is abandoned after a
statement of merger has been delivered to the [Secretary of State] for filing
and before the statement becomes effective, a statement of abandonment, signed
by a party to the plan, must be delivered to the [Secretary of State] for
filing before the statement of merger becomes effective. The statement of abandonment takes effect
upon filing, and the merger is abandoned and does not become effective. The statement of abandonment must contain:
(1) the name of each party to the plan or merger;
(2) the date on which the statement of merger was
delivered to the [Secretary of State] for filing; and
(3) a statement that the merger has been
abandoned in accordance with this section.
(a) A statement of merger must be signed by each
merging entity and delivered to the [Secretary of State] for filing.
(b) A statement of merger must contain:
(1) the name, jurisdiction of formation, and type
of entity of each merging entity that is not the surviving entity;
(2) the name, jurisdiction of formation, and type
of entity of the surviving entity;
(3) a statement that the merger was approved by
each domestic merging entity, if any, in accordance with this [part] and by
each foreign merging entity, if any, in accordance with the law of its
jurisdiction of formation;
(4) if the surviving entity exists before the
merger and is a domestic filing entity, any amendment to its public organic
record approved as part of the plan of merger;
(5) if the surviving entity is created by the
merger and is a domestic filing entity, its public organic record, as an
attachment;
(6) if the surviving entity is created by the
merger and is a domestic limited liability partnership, its statement of
qualification, as an attachment; and
(7) if the surviving entity is a foreign entity
that is not a registered foreign entity, a mailing address to which the
[Secretary of State] may send any process served on the [Secretary of State]
pursuant to Section 1626(e).
(c) In addition to the requirements of subsection
(b), a statement of merger may contain any other provision not prohibited by
law.
(d) If the surviving entity is a domestic entity,
its public organic record, if any, must satisfy the requirements of the law of
this state, but the public organic record does not need to be signed.
(e) A plan of merger that is signed by all the
merging entities and meets all the requirements of subsection (b) may be
delivered to the [Secretary of State] for filing instead of a statement of
merger and upon filing has the same effect.
If a plan of merger is filed as provided in this subsection, references
in this [article] to a statement of merger refer to the plan of merger filed
under this subsection.
(a) When a merger becomes effective:
(1) the surviving entity continues or comes into
existence;
(2) each merging entity that is not the surviving
entity ceases to exist;
(3) all property of each merging entity vests in
the surviving entity without transfer, reversion, or impairment;
(4) all debts, obligations, and liabilities of
each merging entity are debts, obligations, and liabilities of the surviving
entity;
(5) except as otherwise provided by law or the
plan of merger, all the rights, privileges, immunities, powers, and purposes of
each merging entity vest in the surviving entity;
(6) if the surviving entity exists before the
merger:
(A) all its property continues to be vested in it
without transfer, reversion, or impairment;
(B) it remains subject to all its debts,
obligations, and liabilities; and
(C) all its rights, privileges, immunities,
powers, and purposes continue to be vested in it;
(7) the name of the surviving entity may be
substituted for the name of any merging entity that is a party to any pending
action or proceeding;
(8) if the surviving entity exists before the
merger:
(A) its public organic record, if any, is amended
as provided in the statement of merger; and
(B) its private organic rules that are to be in a
record, if any, are amended to the extent provided in the plan of merger;
(9) if the surviving entity is created by the
merger:
(A) its public organic record, if any, is
effective; and
(B) its private organic rules are effective; and
(10) the interests in each merging entity which are
to be converted in the merger are converted, and the interest holders of those
interests are entitled only to the rights provided to them under the plan of
merger and to any appraisal rights they have under Section 1608 and the merging
entity’s organic law.
(b) Except as otherwise provided in the organic
law or organic rules of a merging entity, the merger does not give rise to any
rights that an interest holder, governor, or third party would otherwise have
upon a dissolution, liquidation, or winding up of the merging entity.
(c) When a merger becomes effective, a person
that did not have interest holder liability with respect to any of the merging
entities and that becomes subject to interest holder liability with respect to
a domestic entity as a result of a merger has interest holder liability only to
the extent provided by the organic law of that entity and only for those debts,
obligations, and liabilities that arise after the merger becomes effective.
(d) When a merger becomes effective, the interest
holder liability of a person that ceases to hold an interest in a domestic
merging entity with respect to which the person had interest holder liability
is as follows:
(1) The merger does not discharge any interest
holder liability under the organic law of the domestic merging entity to the
extent the interest holder liability arose before the merger became effective.
(2) The person does not have interest holder
liability under the organic law of the domestic merging entity for any
liability that arises after the merger becomes effective.
(3) The organic law of the domestic merging
entity continues to apply to the release, collection, or discharge of any
interest holder liability preserved under paragraph (1) as if the merger had
not occurred and the surviving entity were the domestic merging entity.
(4) The person has whatever rights of
contribution from any other person as are provided by law other than this
[act], this [act], or the organic rules of the domestic merging entity with
respect to any interest holder liability preserved under paragraph (1) as if
the merger had not occurred.
(e) When a merger becomes effective, a foreign
entity that is the surviving entity may be served with process in this state
for the collection and enforcement of any debts, obligations, or other
liabilities of a domestic merging entity as provided in Section 122.
(f) When a merger becomes effective, the registration
to do business in this state of any foreign merging entity that is not the
surviving entity is canceled.
(a) By
complying with this [part]:
(1) a domestic limited cooperative association may
acquire all of one or more classes or series of interests of another domestic
or foreign entity in exchange for interests, securities, obligations, money,
other property, rights to acquire
interests or securities, or any combination of the foregoing; or
(2) all of one or more classes or series of
interests of a domestic limited cooperative association may be acquired by
another domestic or foreign entity in exchange for interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing.
(b) By complying with the provisions of this
[part] applicable to foreign entities, a foreign entity may be the acquiring or
acquired entity in an interest exchange under this [part] if the interest
exchange is authorized by the law of the foreign entity’s jurisdiction of
formation.
(c) If a protected agreement contains a provision
that applies to a merger of a domestic limited cooperative association but does
not refer to an interest exchange, the provision applies to an interest
exchange in which the domestic limited cooperative association is the acquired
entity as if the interest exchange were a merger until the provision is amended
after [the effective date of this [act]].
(a) A domestic limited cooperative association
may be the acquired entity in an interest exchange under this [part] by
approving a plan of interest exchange.
The plan must be in a record and contain:
(1) the name of the acquired entity;
(2) the name, jurisdiction of formation, and type
of entity of the acquiring entity;
(3) the manner of converting the interests in the
acquired entity into interests, securities, obligations, money, other property,
rights to acquire interests or securities,
or any combination of the foregoing;
(4) any proposed amendments to the organic rules
of the acquired entity;
(5) the other terms and conditions of the
interest exchange; and
(6) any other provision required by the law of
this state or the organic rules of the acquired entity.
(b) In addition to the requirements of subsection
(a), a plan of interest exchange may contain any other provision not prohibited
by law.
(a) A plan of interest exchange is not effective
unless it has been approved by a domestic converting limited cooperative
association as provided in Section 1609.
(b) An interest exchange involving a domestic
acquired entity that is not a limited cooperative association is not effective
unless it is approved by the domestic entity in accordance with its organic
law.
(c) An interest exchange involving a foreign
acquired entity is not effective unless it is approved by the foreign entity in
accordance with the law of the foreign entity’s jurisdiction of formation.
(d) Except as otherwise provided in its organic
law or organic rules, the interest holders of the acquiring entity are not
required to approve the interest exchange.
(a) A plan of interest exchange may be amended
only with the consent of the domestic acquired limited cooperative association.
(b) A domestic acquired limited
cooperative association may approve an amendment to a plan of interest
exchange:
(1) in the same manner as the plan was approved,
if the plan does not provide for the manner in which it may be amended; or
(2) by the directors or members of the limited
cooperative association in the manner provided in the plan, but a member that
was entitled to vote on or consent to approval of the interest exchange is
entitled to vote on or consent to any amendment of the plan that will change:
(A) the amount or kind of interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing,
to be received by any of the members of the acquired association under the
plan;
(B) the organic rules of the acquired association
that will be in effect immediately after the interest exchange becomes
effective, except for changes that do not require approval of the members of
the acquired association under this [act] or the bylaws; or
(C) any other terms or conditions of the plan, if
the change would adversely affect the member in any material respect.
(c) After a plan of interest exchange has been
approved by a domestic acquired limited cooperative association and before a
statement of interest exchange becomes effective, the plan may be abandoned as
provided in the plan. Unless prohibited
by the plan, a domestic acquired association may abandon the plan in the same
manner as the plan was approved.
(d) If a plan of interest exchange is abandoned
after a statement of interest exchange has been delivered to the [Secretary of
State] for filing and before the statement becomes effective, a statement of
abandonment, signed by the acquired limited cooperative association, must be
delivered to the [Secretary of State] for filing before the statement of interest
exchange becomes effective. The
statement of abandonment takes effect upon filing, and the interest exchange is
abandoned and does not become effective.
The statement of abandonment must contain:
(1) the name of the acquired limited cooperative
association;
(2) the date on which the statement of interest
exchange was delivered to the [Secretary of State] for filing; and
(3) a statement that the interest exchange has
been abandoned in accordance with this section.
(a) A statement of interest exchange must be
signed by a domestic acquired limited cooperative association and delivered to
the [Secretary of State] for filing.
(b) A statement of interest exchange must
contain:
(1) the name of the acquired limited cooperative
association;
(2) the name, jurisdiction of formation, and type
of entity of the acquiring entity;
(3) if the statement of interest exchange is not
to be effective upon filing, the later date and time on which it will become
effective pursuant to Section 1636;
(4) a statement that the plan of interest
exchange was approved by the acquired association in accordance with this
[part]; and
(5) any amendments to the acquired association’s articles
of organization approved as part of the plan of interest exchange.
(c) In addition to the requirements of subsection
(b), a statement of interest exchange may contain any other provision not
prohibited by law.
(d) A plan of interest exchange that is signed by
a domestic acquired limited cooperative association and meets all the
requirements of subsection (b) may be delivered to the [Secretary of State] for
filing instead of a statement of interest exchange and upon filing has the same
effect. If a plan of interest exchange
is filed as provided in this subsection, references in this [article] to a
statement of interest exchange refer to the plan of interest exchange filed
under this subsection.
(a) When an interest exchange in which the
acquired entity is a domestic limited cooperative association becomes
effective:
(1) the interests in a domestic acquired entity
that are the subject of the interest exchange cease to exist or are converted
or exchanged, and the members holding those interests are entitled only to the
rights provided to them under the plan of interest exchange and to any
appraisal rights they have under Section 1608;
(2) the acquiring entity becomes the interest holder
of the interests in the acquired limited cooperative association stated in the
plan of interest exchange to be acquired by the acquiring entity; and
(3) the organic rules of the acquired entity is
amended as provided in the statement of interest exchange.
(b) Except as otherwise provided in the organic
rules of a domestic acquired limited cooperative association, the interest
exchange does not give rise to any rights that a member, director, or third
party would otherwise have upon a dissolution, liquidation, or winding up of
the acquired association.
(c) When an interest exchange becomes effective,
a person that did not have interest holder liability with respect to a domestic
acquired limited cooperative association and that becomes subject to interest
holder liability with respect to a domestic entity as a result of the interest
exchange has interest holder liability only to the extent provided by the
organic law of the entity and only for those debts, obligations and liabilities
that arise after the interest exchange becomes effective.
(d) When an interest exchange becomes effective,
the interest holder liability of a person that ceases to hold an interest in a
domestic acquired limited cooperative association with respect to which the
person had interest holder liability is as follows:
(1) The interest exchange does not discharge any
interest holder liability to the extent the interest holder liability arose
before the interest exchange became effective.
(2) The person does not have interest holder
liability for any liability that arises after the interest exchange becomes
effective.
(3) The person has whatever rights of
contribution from any other person as are provided by law other than this [act]
or the bylaws of the acquired entity with respect to any interest holder liability
preserved under paragraph (1) as if the interest exchange had not occurred.
(a) By complying with this [part], a domestic limited
cooperative association may become:
(1) a domestic entity of a different type; or
(2) a foreign entity of a different type, if the
conversion is authorized by the law of the foreign jurisdiction.
(b) By complying with the provisions of this
[part] applicable to foreign entities a foreign entity that is not a foreign limited
cooperative association may become a domestic limited cooperative association
if the conversion is authorized by the law of the foreign entity’s jurisdiction
of formation.
(c) If a protected agreement contains a provision
that applies to a merger of a domestic limited cooperative association but does
not refer to a conversion, the provision applies to a conversion of the entity
as if the conversion were a merger until the provision is amended after [the
effective date of this [act]].
(a) A domestic limited cooperative association
may convert to a different type of entity under this [part] by approving a plan
of conversion. The plan must be in a
record and contain:
(1) the name of the converting limited
cooperative association;
(2) the name, jurisdiction of formation, and type
of entity of the converted entity;
(3) the manner of converting the interests in the
converting limited cooperative association into interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing;
(4) the proposed public organic record of the
converted entity if it will be a filing entity;
(5) the full text of the private organic rules of
the converted entity that are proposed to be in a record;
(6) the other terms and conditions of the
conversion; and
(7) any other provision required by the law of
this state or the bylaws of the converting limited cooperative association.
(b) In addition to the requirements of subsection
(a), a plan of conversion may contain any other provision not prohibited by
law.
(a) A plan of conversion is not effective unless
it has been approved by a domestic converting limited cooperative association
as provided in Section 1609.
(b) A conversion involving a domestic converting entity
that is not a limited cooperative association is not effective unless it is
approved by the domestic converting entity in accordance with its organic law.
(c) A conversion of a foreign converting entity
is not effective unless it is approved by the foreign entity in accordance with
the law of the foreign entity’s jurisdiction of formation.
(a) A plan of conversion of a domestic converting
limited cooperative association may be amended:
(1) in the same manner as the plan was approved,
if the plan does not provide for the manner in which it may be amended; or
(2) by the mangers or members of the entity in
the manner provided in the plan, but an interest holder that was entitled to
vote on or consent to approval of the conversion is entitled to vote on or
consent to any amendment of the plan that will change:
(A) the amount or kind of interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing,
to be received by any of the interest holders of the converting entity under
the plan;
(B) the public organic record or private organic
rules of the converted entity that will be in effect immediately after the
conversion becomes effective, except for changes that do not require approval
of the interest holders of the converted entity under its organic law or
organic rules; or
(C) any other terms or conditions of the plan, if
the change would adversely affect the interest holder in any material respect.
(b) After a plan of conversion has been approved
by a domestic converting limited cooperative association and before a statement
of conversion becomes effective, the plan may be abandoned:
(1) as provided in the plan; or
(2) unless prohibited by the plan, in the same
manner as the plan was approved.
(c) If a plan of conversion is abandoned after a
statement of conversion has been delivered to the [Secretary of State] for
filing and before the filing becomes effective, a statement of abandonment,
signed by the entity, must be delivered to the [Secretary of State] for filing
before the time the statement of conversion becomes effective. The statement of abandonment takes effect
upon filing, and the conversion is abandoned and does not become
effective. The statement of abandonment
must contain:
(1) the name of the converting limited cooperative
association;
(2) the date on which the statement of conversion
was delivered to the [Secretary of State] for filing; and
(3) a statement that the conversion has been
abandoned in accordance with this section.
(a) A statement of conversion must be signed by
the converting entity and delivered to the [Secretary of State] for filing.
(b) A statement of conversion must contain:
(1) the name, jurisdiction of formation, and type
of entity of the converting entity;
(2) the name, jurisdiction of formation, and type
of entity of the converted entity;
(3) if the converting entity is a domestic
entity, a statement that the plan of conversion was approved in accordance with
this [part] or, if the converting entity is a foreign entity, a statement that
the conversion was approved by the foreign converting entity in accordance with
the law of its jurisdiction of formation;
(4) if the converted entity is a domestic filing
entity, the text of its public organic record, as an attachment;
(5) if the converted entity is a domestic limited
liability partnership, the text of its [statement of qualification], as an
attachment; and
(6) if the converted entity is a foreign entity
that is not a qualified foreign entity, a mailing address to which the
[Secretary of State] may send any process served on the [Secretary of State]
pursuant to Section 1646(e).
(c) In addition to the requirements of subsection
(b), a statement of conversion may contain any other provision not prohibited
by law.
(d) If the converted entity is a domestic entity,
its public organic record, if any, must satisfy the requirements of the law of
this state, but it does not need to be signed and may omit any provision that
is not required to be included in a restatement of the public organic record.
(e) A plan of conversion that is signed by a
domestic converting entity and meets all of the requirements of subsection (b)
may be delivered to the [Secretary of State] for filing instead of a statement
of conversion and upon filing has the same effect. If a plan of conversion is filed as provided
in this subsection, references in this [article] to a statement of conversion
refer to the plan of conversion filed under this subsection.
(a) When a conversion in which the converted
entity is a domestic limited cooperative association becomes effective:
(1) the converted entity is:
(A) organized under and subject to this [act];
and
(B) the same entity without interruption as the
converting entity;
(2) all property of the converting entity
continues to be vested in the converted entity without transfer, reversion, or
impairment;
(3) all debts, obligations, and liabilities of
the converting entity continue as debts, obligations, and liabilities of the
converted entity;
(4) except as otherwise provided by law or the
plan of conversion, all the rights, privileges, immunities, powers, and
purposes of the converting entity remain in the converted entity;
(5) the name of the converted entity may be
substituted for the name of the converting entity in any pending action or
proceeding;
(6) the private organic rules of the converted
entity that are to be in a record, if any, approved as part of the plan of
conversion are effective; and
(7) the interests in the converting entity are
converted, and the interest holders of the converting entity are entitled only
to the rights provided to them under the plan of conversion and to any
appraisal rights they have under Section 1608 and the converting entity’s
organic law.
(b) Except as otherwise provided in the bylaws of
a domestic converting limited cooperative association, the conversion does not
give rise to any rights that a member, director, or third party would otherwise
have upon a dissolution, liquidation, or winding up of the converting entity.
(c) When a conversion becomes effective, a person
that did not have interest holder liability with respect to the converting
entity and that becomes subject to interest holder liability with respect to a
domestic entity as a result of a conversion has interest holder liability only
to the extent provided by the organic law of the entity and only for those
debts, obligations, and liabilities that arise after the conversion becomes
effective.
(d) When a conversion becomes effective, the
interest holder liability of a person that ceases to hold an interest in a
domestic limited cooperative association with respect o which the person had
interest holder liability is as follows:
(1) The conversion does not discharge any
interest holder liability to the extent the interest holder liability arose
before the conversion became effective.
(2) The person does not have interest holder
liability for any liability that arises after the conversion becomes effective.
(3) The person has whatever rights of
contribution from any other person as are provided by law other than this [act]
or the bylaws of the converting entity with respect to any interest holder liability
preserved under paragraph (1) as if the conversion had not occurred.
(e) When a conversion becomes effective, a
foreign entity that is the converted entity may be served with process in this
state for the collection and enforcement of any of its debts, obligations, and
liabilities as provided in Section 122.
(f) If the converting entity is a qualified
foreign entity, its registration to do business in this state is canceled when
the conversion becomes effective.
(g) A conversion does not require the entity to
wind up its affairs and does not constitute or cause the dissolution of the
entity.
(a) By complying with this [part], a domestic limited
cooperative association may become a foreign limited cooperative association if
the domestication is authorized by the law of the foreign jurisdiction.
(b) By complying with the provisions of this
[part] applicable to foreign limited cooperative associations a foreign limited
cooperative association may become a domestic limited cooperative association
if the domestication is authorized by the law of the foreign limited
cooperative association’s jurisdiction of formation.
(c) If a protected agreement contains a provision
that applies to a merger of a domestic limited cooperative association but does
not refer to a domestication, the provision applies to a domestication of the limited
cooperative association as if the domestication were a merger until the
provision is amended after [the effective date of this [act]].
(a) A domestic limited cooperative association
may become a foreign limited cooperative association in a domestication by
approving a plan of domestication. The
plan must be in a record and contain:
(1) the name of the domesticating limited
cooperative association;
(2) the name and jurisdiction of formation of the
domesticated limited cooperative association;
(3) the manner of converting the interests in the
domesticating limited cooperative association into interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing;
(4) the proposed public organic record of the
domesticated limited cooperative association;
(5) the full text of the bylaws of the
domesticated limited cooperative association that are proposed to be in a
record;
(6) the other terms and conditions of the
domestication; and
(7) any other provision required by the law of
this state or the bylaws of the domesticating limited cooperative association.
(b) In addition to the requirements of subsection
(a), a plan of domestication may contain any other provision not prohibited by
law.
(a) A plan of domestication of a domestic
domesticating limited cooperative association is not effective unless it has
been approved as provided in Section 1609.
(b) A domestication of a foreign domesticating limited
cooperative association is not effective unless it is approved in accordance
with the law of the foreign limited cooperative association’s jurisdiction of
formation.
(a) A plan of domestication of a domestic
domesticating limited cooperative association may be amended:
(1) in the same manner as the plan was approved,
if the plan does not provide for the manner in which it may be amended; or
(2) by the directors or members of the limited
cooperative association in the manner provided in the plan, but an interest
holder that was entitled to vote on or consent to approval of the domestication
is entitled to vote on or consent to any amendment of the plan that will
change:
(A) the amount or kind of interests, securities,
obligations, money, other property, rights
to acquire interests or securities, or any combination of the foregoing,
to be received by any of the interest holders of the domesticating limited
cooperative association under the plan;
(B) the articles of organization or bylaws of the
domesticated limited cooperative association that will be in effect immediately
after the domestication becomes effective, except for changes that do not
require approval of the interest holders of the domesticated limited cooperative
association under its organic law or bylaws; or
(C) any other terms or conditions of the plan, if
the change would adversely affect the interest holder in any material respect.
(b) After a plan of domestication has been
approved by a domestic domesticating limited cooperative association and before
a statement of domestication becomes effective, the plan may be abandoned:
(1) as provided in the plan; or
(2) unless prohibited by the plan, in the same
manner as the plan was approved.
(c) If a plan of domestication is abandoned after
a statement of domestication has been delivered to the [Secretary of State] for
filing and before the filing becomes effective, a statement of abandonment,
signed by the limited cooperative association, must be delivered to the
[Secretary of State] for filing before the time the statement of domestication
becomes effective. The statement of
abandonment takes effect upon filing, and the domestication is abandoned and
does not become effective. The statement
of abandonment must contain:
(1) the name of the domesticating limited
cooperative association;
(2) the date on which the statement of
domestication was delivered to the [Secretary of State] for filing; and
(3) a statement that the domestication has been
abandoned in accordance with this section.
(a) A statement of domestication must be signed
by the domesticating limited cooperative association and delivered to the
[Secretary of State] for filing.
(b) A statement of domestication must contain:
(1) the name and jurisdiction of formation of the
domesticating limited cooperative association;
(2) the name and jurisdiction of formation of the
domesticated limited cooperative association;
(3) if the domesticating limited cooperative
association is a domestic limited cooperative association, a statement that the
plan of domestication was approved in accordance with this [part] or, if the
domesticating limited cooperative association is a foreign limited cooperative
association, a statement that the domestication was approved in accordance with
the law of its jurisdiction of formation;
(4) the articles of organization of the
domesticated limited cooperative association, as an attachment; and
(5) if the domesticated foreign limited
cooperative association is not a registered foreign limited cooperative
association, a mailing address to which the [Secretary of State] may send any
process served on the [Secretary of State] pursuant to Section 1656(e).
(c) In addition to the requirements of subsection
(b), a statement of domestication may contain any other provision not
prohibited by law.
(d) The articles of organization of a
domesticated domestic limited cooperative association must satisfy the requirements of the law of
this state, but they do not need to be signed.
(e) A plan of domestication that is signed by a
domesticating domestic limited cooperative association and meets all of the
requirements of subsection (b) may be delivered to the [Secretary of State] for
filing instead of a statement of domestication and upon filing has the same
effect. If a plan of domestication is
filed as provided in this subsection, references in this [article] to a
statement of domestication refer to the plan of domestication filed under this
subsection.
(a) When a domestication becomes effective:
(1) the domesticated limited cooperative
association is:
(A) organized under and subject to the organic
law of the domesticated limited cooperative association; and
(B) the same entity without interruption as the
domesticating limited cooperative association;
(2) all property of the domesticating limited
cooperative association continues to be vested in the domesticated entity
without transfer, reversion, or impairment;
(3) all debts, obligations, and other liabilities
of the domesticating limited cooperative association continue as debts,
obligations, and other liabilities of the domesticated limited cooperative association;
(4) except as otherwise provided by law or the
plan of domestication, all the rights, privileges, immunities, powers, and
purposes of the domesticating limited cooperative association remain in the
domesticated limited cooperative association;
(5) the name of the domesticated limited
cooperative association may be substituted for the name of the domesticating limited
cooperative association in any pending action or proceeding;
(6) the articles of organization of the
domesticated limited cooperative association is effective;
(7) the provisions of bylaws of the domesticated limited
cooperative association that are to be in a record, if any, approved as part of
the plan of domestication are effective; and
(8) the interests in
the domesticating limited cooperative association are converted to the extent
and as approved in connection with the domestication, and the interest holders
of the domesticating limited cooperative association limited cooperative
association are entitled only to the rights provided to them under the plan of
domestication and to any appraisal rights they have under Section 1708.
(b) Except as otherwise provided in the organic
law or bylaws of the domesticating limited cooperative association, the
domestication does not give rise to any rights that an interest holder, director,
or third party would otherwise have upon a dissolution, liquidation, or
winding-up of the domesticating limited cooperative association.
(c) When a domestication becomes effective, a
person that did not have interest holder liability with respect to the
domesticating limited cooperative association and that becomes subject to
interest holder liability with respect to a domestic entity as a result of the
domestication has interest holder liability only to the extent provided by the
organic law of the entity and only for those debts, obligations, and
liabilities that arise after the domestication becomes effective.
(d) When a domestication becomes effective:
(1) The domestication does not discharge any
interest holder liability under this [article] to the extent the interest
holder liability arose before the domestication became effective.
(2) A person does not have interest holder
liability under this [article] for any debts, obligations, and liabilities that
arise after the domestication becomes effective.
(3) A person has whatever rights of contribution
from any other person as are provided by law other than this [act] or the bylaws
of a domestic domesticating limited cooperative association with respect to any
interest holder liability preserved under paragraph (1) as if the domestication
had not occurred.
(e) When a domestication becomes effective, a
foreign limited cooperative association that is the domesticated limited
cooperative association may be served with process in this state for the
collection and enforcement of any of its debts, obligations, and liabilities as provided in Section 122.
(f) If the domesticating limited cooperative
association is a registered foreign limited cooperative association, the
registration of the limited cooperative association is canceled when the
domestication becomes effective.
(g) A domestication does not require the limited
cooperative association to wind up its affairs and does not constitute or cause
the dissolution of the limited cooperative association.
MISCELLANEOUS PROVISIONS
SECTION 1701. UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and
construing this uniform act, consideration must be given to the need to promote
uniformity of the law with respect to its subject matter among states that
enact it.
SECTION 1702. SEVERABILITY CLAUSE.
If any provision of this [act] or its application to any person or
circumstance is held invalid, the invalidity does not affect other provisions
or applications of this [act] which can be given effect without the invalid
provision or application, and to this end the provisions of this [act] are
severable.
Legislative Note:
Include this section only if this state lacks a general severability
statute or decision by the highest court of this state stating a general rule
of severability.
SECTION 1702 1703. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT. This [act] modifies, limits, or supersedes
the federal Electronic Signatures in Global and National Commerce Act,
15 U.S.C. Section 7001 et seq., but does not modify, limit, or supersede
Section 101(c) of that act, 15 U.S.C. Section 7001(c) or authorize electronic
delivery of any of the notices described in Section 103(b) of that act, 15
U.S.C. Section 7003(b).
SECTION 1703 1704. SAVINGS CLAUSE. This [act] does not
affect an action or proceeding commenced, or right accrued, before [the
effective date of this [act]].
SECTION 1704 1705. EFFECTIVE DATE. This [act] takes
effect [effective date] . . .
