CHAPTER 1. AGRICULTURAL COOPERATIVES
IC 15-12
ARTICLE 12. AGRICULTURAL ASSISTANCE
ORGANIZATIONS AND PROGRAMS
IC 15-12-1
Chapter 1. Agricultural Cooperatives
IC 15-12-1-1
Purpose; legislative declaration
Sec. 1. (a) The following are the purposes of this chapter:
(1) To promote, foster, and encourage the intelligent and
orderly production and marketing of agricultural products
through cooperation.
(2) To eliminate speculation and waste.
(3) To make the distribution of agricultural products between
producer and consumer as direct as can be efficiently done.
(4) To stabilize the marketing of agricultural products.
(5) To provide for the organization and incorporation of
agricultural cooperative associations and societies.
(b) The general assembly recognizes the following:
(1) That agriculture is characterized by individual production in
contrast to the group or factory system that characterizes other
forms of industrial production.
(2) That the ordinary form of corporate organization permits
industrial groups to combine for the purpose of group
production and the ensuing group marketing.
(3) That the public has an interest in permitting farmers to bring
their industry to the high degree of efficiency and
merchandising skill evidenced in the manufacturing industries.
(4) That the public interest demands that the farmer be
encouraged to attain a superior and more direct system of
marketing as an alternative to the blind, unscientific, and
speculative selling of crops.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-2
Application of definitions in IC 23-1
Sec. 2. The definitions in IC 23-1 apply to this chapter to the
extent they do not conflict with the definitions in this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-3
"Agricultural products"
Sec. 3. As used in this chapter, "agricultural products" includes
horticultural, viticultural, forestry, dairy, livestock, grain, poultry,
bee, and any other farm product.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-4
"Association"
Sec. 4. As used in this chapter, "association" means any
corporation organized under or governed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-5
"Member"
Sec. 5. As used in this chapter, "member" means the following:
(1) With respect to a nonstock membership association, the term
means those persons admitted in accordance with the bylaws of
the association.
(2) With respect to an association having capital stock, the term
means the holders of voting stock of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-6
"Person"
Sec. 6. As used in this chapter, "person" includes the following:
(1) Individuals.
(2) Firms.
(3) Partnerships.
(4) Business trusts.
(5) Limited liability companies.
(6) Corporations.
(7) Executors.
(8) Administrators.
(9) Receivers.
(10) Bodies politic or political subdivisions.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-7
Associations governed as nonprofit corporations
Sec. 7. An association organized under or governed by this
chapter is a nonprofit corporation within the meaning of this chapter
and for purposes of interpreting Indiana law concerning associations
organized under or governed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-8
Eligibility to form an association
Sec. 8. The following may form an association under this chapter:
(1) Five (5) or more persons engaged in the production of
agricultural products.
(2) Two (2) or more associations that:
(A) are:
(i) organized under or governed by this chapter; or
(ii) organized under any other Indiana law or under the
laws of any other state or territory of the United States or
of the District of Columbia; and
(B) are operated on a cooperative basis for the mutual
benefit of the associations' members, members and patrons,
or patrons as producers or associations of producers.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-9
Authorized activities
Sec. 9. An association may be organized to engage in any activity
in connection with the following:
(1) Producing, marketing, or selling the agricultural products of
the association's members and others.
(2) Harvesting, preserving, drying, processing, canning,
packing, grading, storing, handling, shipping, or use of
agricultural products of the association's members and others.
(3) Manufacturing or marketing the byproducts of agricultural
products of the association's members and others.
(4) Manufacturing, selling, or supplying machinery, equipment,
or supplies to the association's members and others.
(5) Financing activities described in subdivisions (1) through
(4).
(6) Performing or furnishing services of an economic or
educational nature, on a cooperative basis for persons engaged
in agriculture or in any one (1) or more of the activities
specified in this section.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-10
Association; powers
Sec. 10. Each association incorporated under this chapter has the
following powers:
(1) To engage in any activity in connection with the following:
(A) Producing, marketing, selling, preserving, harvesting,
drying, processing, manufacturing, canning, packing,
grading, storing, handling, or use of any agricultural
products produced or delivered to the association by the
association's members or others.
(B) Manufacturing or marketing the byproducts of
agricultural products produced or delivered to the
association by the association's members or others.
(C) Manufacturing, producing, processing, procuring,
purchasing, or supplying supplies, machinery, or equipment
to the association's members or others.
(D) Financing any activities described in clauses (A) through
(C).
(E) Performing or furnishing economic, educational, or other
services.
(F) Any one (1) or more of the activities specified in this
section.
(2) To transact business with and perform services for
nonmembers in an amount not greater in value than the total
amount of business transacted with and services performed for
members in the same fiscal year.
(3) To borrow money without limitation as to the amount of
corporate indebtedness or liability.
(4) To act as the agent or representative of any member or
members or others in any of the activities described in
subdivisions (1) through (3).
(5) To make advances to members and other persons.
(6) To:
(A) purchase or acquire;
(B) hold, own, and exercise all rights of ownership in;
(C) sell, transfer, or pledge; or
(D) guarantee the payment of dividends or interest on or the
retirement or redemption of;
shares of the capital stock or bonds of any corporation or
association engaged in any related activity or in the
warehousing, handling, or marketing of any of the products
handled by the association.
(7) To establish and accumulate reserves and surplus.
(8) To:
(A) buy; or
(B) acquire, hold, and exercise all privileges of ownership
over;
real and personal property as may be necessary, convenient, or
incidental to the conduct and operation of the business and
activities of the association.
(9) To:
(A) establish, secure, own, and develop; and
(B) dispose of;
patents, trademarks, and copyrights.
(10) To:
(A) do anything:
(i) necessary or proper for the accomplishment of any one
(1) of the purposes or the performance of any one (1) or
more of the activities listed in this section; or
(ii) conducive to or expedient for the interest or benefit of
the association; and
(B) contract accordingly.
(11) To exercise and possess the following:
(A) All powers, rights, and privileges necessary for or
incidental to:
(i) the purposes for which the association is organized; or
(ii) the activities in which the association is engaged.
(B) Any other rights, powers, and privileges granted by
Indiana law or to for-profit or nonprofit corporations, except
as are inconsistent with the express provisions of this
chapter.
(12) To recover, after two (2) years, any unclaimed stocks,
dividends, capital credits, patronage refunds, utility deposits,
membership fees, account balances, or book equities:
(A) for which the owner cannot be found; and
(B) that are the result of distributable savings of the
association returned to the members on a pro rata basis.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-11
Association; membership; issuance of stock
Sec. 11. (a) An association may under the terms and conditions
prescribed in the bylaws adopted by the association admit as
members or issue common and voting stock to any of the following:
(1) The individuals or political subdivisions of Indiana that
meet the requirements of subsection (b).
(2) The associations that meet the requirements of subsection
(c).
(b) To meet the requirements of this subsection, individuals or
political subdivisions must be engaged in the production of
agricultural products. For purposes of this section, a lessor or
landlord of land used for the production of agricultural products or
any individual devoting a substantial part of the individual's time to
assisting others to produce agricultural products, whether employed
by a farmer, an agricultural cooperative corporation, or an
association, is considered to be engaged in the production of
agricultural products. Except as otherwise provided in this section,
the holders of common stock of an association limited by its articles
of incorporation to one (1) or more particular agricultural services
must be producers of agricultural products that use the articles or
services to which the activities of the association are limited.
(c) An association:
(1) organized under or governed by this chapter or organized
under or governed by the agricultural law of another state of the
United States; or
(2) that complies with 7 U.S.C. 291 and 7 U.S.C. 292, whether
incorporated in or outside the United States, and with acts
amendatory or supplementary to 7 U.S.C. 291 and 7 U.S.C. 292;
may become a member or stockholder of any association or
associations organized under this chapter. Any corporation, however
organized, that is lawfully engaged in the production of agricultural
products, either as owner, lessor, or lessee of land used for the
production of agricultural products, may become a stockholder or
member in any association that is organized under this chapter and
for which more than one-half (1/2) of the value of the association's
business consists of the patronage of individuals who are direct
producers of agricultural products.
(d) A member of an association organized under this chapter that
is not an individual may be represented by any individual authorized
to do so in writing by the member.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-12
Articles of incorporation
Sec. 12. (a) The incorporators of an association to be formed
under this chapter shall execute and file articles of incorporation
setting forth the following:
(1) The name of the proposed association.
(2) The purpose or purposes for which it is formed.
(3) The period during which it is to continue to exist, if the
period is to be limited.
(4) The post office address of its principal office and the name
and post office address of its resident agents.
(5) If organized without capital stock, whether the property
rights and interest of the members are equal or unequal. If
property rights and interest of the members are unequal, the
articles of incorporation must set forth the provisions under and
by which the property rights and interests of the respective
members are to be determined and fixed.
(6) The following information, if the association is organized
with capital stock:
(A) The total number of shares that the association may
issue.
(B) Whether all or part of the shares have a par value.
(C) If all or part of the shares have a par value, the number
and par value of the shares.
(D) Whether all or part of the shares are without a par value.
(E) If all or part of the shares are without a par value, the
number of shares without a par value.
(F) If the shares are to be divided into classes or kinds:
(i) the number and par value, if any, of the shares of each
class; and
(ii) subject to the limitations provided in this chapter with
respect to issuance of voting stock, either a statement of
the relative rights, preferences, limitations, and restrictions
of each class, or a provision expressly vesting authority in
the board of directors to determine the relative rights,
preferences, limitations, and restrictions of each class by
resolution or resolutions adopted before the issuance of
any shares of the specific class.
(G) If the shares of any class are to be issuable in series:
(i) descriptions of the several series; and
(ii) subject to the limitation provided in this chapter with
respect to the issuance of voting stock, a statement of the
relative rights, preferences, limitations, and restrictions of
each series, or a provision expressly vesting authority in
the board of directors to determine the relative rights,
preferences, limitations, and restrictions of each series by
resolution or resolutions adopted before the issuance of
any of the shares of the specific series.
(7) The number of directors constituting the initial board of
directors of the association.
(8) The names and post office addresses of the first board of
directors.
(9) The names and post office addresses of the incorporators.
(10) Any other provisions, consistent with Indiana laws, for the
regulation of the business and conduct of the affairs of the
association and for creating, defining, limiting, or regulating the
powers of the following:
(A) The association.
(B) The directors.
(C) The members.
(D) The shareholders of any class or classes of shareholders.
(b) The articles of incorporation must be:
(1) prepared and signed in duplicate by the incorporators;
(2) acknowledged by at least one (1) of the incorporators before
a notary public; and
(3) presented in duplicate to the secretary of state at the
secretary of state's office and accompanied by the fees
prescribed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-13
Presentation of articles of incorporation
Sec. 13. (a) Upon presentation of articles of incorporation that
comply with the requirements of this chapter, if the secretary of state
finds that the articles of incorporation conform to law, the secretary
of state shall do the following:
(1) Endorse the secretary of state's approval upon the duplicate
copies of the articles.
(2) When all fees have been paid as required by law:
(A) file one (1) copy of the articles in the secretary of state's
office; and
(B) issue a certificate of incorporation to the incorporators.
(3) Return the certificate of incorporation, together with the
remaining copy of the articles of incorporation bearing the
endorsement of the secretary of state's approval, to the
incorporators or their representative.
(b) Upon the issuance of the certificate of incorporation by the
secretary of state under subsection (a):
(1) the corporate existence of the association begins;
(2) all subscriptions to membership, subscriptions for shares of
the association, or subscriptions to membership and for shares
of the association are considered to be accepted by the
association; and
(3) the subscribers are considered to be members, shareholders,
or members and shareholders of the association.
(c) The certificate of incorporation issued by the secretary of state
under this section is conclusive evidence of the fact that the
association has been incorporated and of the corporation's right to
transact business and to incur indebtedness.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-14
Association; merging, consolidating, or dissolving association;
amending articles of incorporation
Sec. 14. (a) Subject to subsections (b) and (c), an association may
amend the association's articles of incorporation, merge or
consolidate with one (1) or more other associations or corporations,
effect special corporate transactions as described in IC 23-1, or
dissolve by following the procedures specified in IC 23-1.
(b) An amendment to the articles of incorporation of an
association organized under or governed by this chapter or an
agreement of merger or consolidation to which an association
organized under or governed by this chapter is a party may be
adopted:
(1) by the affirmative votes of the majority of the members
entitled to vote with respect to the amendment or agreement and
voting at the meeting called for that purpose, if the voting rights
of the members are equal; or
(2) by the affirmative votes of the majority of the votes cast by
the members entitled to vote with respect to the amendment or
agreement and voting at the meeting called for that purpose, if
the voting rights of the members are not equal.
(c) A special corporate transaction or dissolution of an association
organized under or governed by this chapter may be authorized:
(1) by the affirmative votes of three-fourths (3/4) of the
members entitled to vote with respect to the transaction or
dissolution and voting at the meeting called for that purpose, if
the voting rights of the members are equal; or
(2) by the affirmative votes of three-fourths (3/4) of the votes
cast by the members entitled to vote with respect to the
transaction or dissolution and voting at the meeting called for
that purpose, if the voting rights of the members are not equal.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-15
Bylaws; adoption and amendment; scope
Sec. 15. (a) Each association organized under or governed by this
chapter shall, not more than thirty (30) days after the association's
incorporation or after the association's acceptance of the
requirements of this chapter, adopt a code of bylaws.
(b) The power to adopt, make, alter, amend, or repeal the bylaws
is vested in the board of directors, unless specifically provided in the
articles of incorporation.
(c) The bylaws may contain any provisions for the regulation and
management of the business and affairs of the association that are not
inconsistent with the articles of incorporation and the laws of this
state, including provisions concerning the following:
(1) The time and place of holding and the manner of calling and
conducting meetings of members and directors.
(2) The number of members that constitute a quorum at a
meeting of the members.
(3) The number of directors that constitute a quorum at a
meeting of the directors.
(4) The right of members to vote by proxy, by mail, or by
delegates elected by members in their respective districts, or by
any one (1) or more such methods.
(5) The number of directors, their qualifications, the date, time,
place, and manner of their election, and the length of their terms
of office.
(6) The powers, duties, tenure, and qualifications of officers of
the association and the date, time, place, and manner of electing
the officers.
(7) The creation and appointment of executive and other
committees, and the number of members of the committees and
their powers.
(8) The:
(A) amount of entrance, organization, and membership fees,
if any;
(B) manner and method of collection of the fees; and
(C) purposes for which the fees may be used.
(9) The:
(A) amount, if any, that each member is required to pay
annually or from time to time to carry on the business of the
association;
(B) charge, if any, to be paid by each member for services
rendered by the association to the member; and
(C) time of payment and manner of collection of the
amounts.
(10) The requirements made or imposed on members to enter
into contracts with the association for the marketing of the
members' products or for the purchasing of the members'
supplies, machinery, or equipment, or both.
(11) The following:
(A) Qualifications for membership in the association and the
conditions precedent to membership.
(B) The method, time, and manner in which a member can
withdraw from membership.
(C) The conditions upon which and the time when the
membership of any member ceases.
(D) The automatic suspension of the voting rights of a
member when the member ceases to be eligible for
membership in the association.
(E) The method, manner, and effect of the expulsion of a
member.
(F) The manner of determining the value of a member's
interest or shares:
(i) when the member is expelled; or
(ii) upon the member's death or withdrawal from
membership.
(G) The manner in which the interest or shares of a member
can be transferred or assigned.
(H) The time and manner in which a member's interest or
shares may be redeemed by the association.
(12) Penalties for violation of the bylaws.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-16
Association; meetings; special meetings
Sec. 16. (a) Each association shall provide in the association's
bylaws for one (1) or more regular meetings annually.
(b) The board of directors of an association may call a special
meeting at any time.
(c) Ten percent (10%) of the members or stockholders of an
association may file a petition stating the specific business to be
brought before the association and demand a special meeting at any
time. If the requirements of this subsection are satisfied, the directors
of the association shall call the special meeting.
(d) Notice of all meetings, together with a statement of the
purposes of the meeting, shall be mailed to each member at least ten
(10) days before the meeting. However, the association's bylaws may
instead provide that the notice may be given by publication in a
newspaper of general circulation, published at the principal place of
business of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-17
Board of directors; management of association
Sec. 17. (a) The business and affairs of an association shall be
managed by a board of directors of at least five (5) directors. Subject
to this limitation, unless specifically provided in the articles of
incorporation, the number of directors shall be fixed by the bylaws,
except as to the number constituting the initial board of directors.
The number constituting the initial board of directors shall be fixed
by the articles of incorporation.
(b) The number of directors may be increased or decreased from
time to time by amendment of the bylaws, but a decrease in the
number of directors may not shorten the term of an incumbent
director. In the absence of articles of incorporation or bylaws that fix
the number of directors, the number of directors must be the same as
stated in the articles of incorporation for the initial board of
directors.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-18
Board of directors; election; terms
Sec. 18. Except as otherwise provided in this chapter, the
directors:
(1) shall be elected by the members at the annual meeting of the
members; and
(2) may, if provided in the bylaws, be elected for terms of office
that expire at different times.
A term of office may not continue for longer than three (3) years. In
the absence of a provision in the bylaws for terms of office, each
director, except the first board of directors, shall be elected for a term
of one (1) year and hold office until the director's successor is elected
and qualified. The first board of directors, as named in the articles of
incorporation, shall hold office until the first annual meeting of the
members.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-19
Board of directors; districts; primary elections
Sec. 19. The territory served by an association may be divided
into districts and the directors elected according to districts. In this
case, the bylaws must specify:
(1) the number of directors to be elected in each district; and
(2) the manner and method of reapportioning the directors and
of redistricting the territory served by the association.
The bylaws may provide that primary elections shall be held in each
district to elect the directors apportioned to the district and that the
result of the primary elections may be ratified by the members at the
next annual or special meeting of the members of the association or
may be considered as final.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-20
Board of directors; appointment
Sec. 20. One (1) or more directors may be appointed by any
public official or commission or by the other directors elected by the
members or their delegates. Directors appointed as provided in this
section:
(1) shall represent primarily the interest of the general public in
the association, but have the same powers and rights as other
directors; and
(2) may not total more than one-fifth (1/5) of the entire number
of directors.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-21
Board of directors; payment; restrictions
Sec. 21. (a) An association may provide a fair remuneration for:
(1) the time actually spent by the association's officers and
directors in the association's service; and
(2) the service of the members of the association's executive
committee and other committees.
(b) A director may not during the term of the director's office be
a party to a contract for profit with the association differing in any
way from the business relations accorded other members or patrons
of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-22
Executive committee; powers
Sec. 22. If the association's bylaws provide for an executive
committee, all of the functions and powers of the board of directors
may be delegated to the committee, subject to the general direction
and control of the board.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-23
Board of directors; vacancies
Sec. 23. When a vacancy on the board of directors occurs, other
than by expiration of term of office, the remaining members of the
board may fill the vacancy by a majority vote of the remaining
members, unless the bylaws provide for the election of directors by
districts. If the bylaws provide for the election of directors by
districts, the board of directors may call a special meeting of the
members in that district to fill the vacancy or may fill the vacancy as
in the case of any other vacancy. A director who is elected or
appointed by the board of directors to fill a vacancy on the board
shall serve until the next annual or special meeting of the members.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-24
Board of directors; eligibility
Sec. 24. (a) Each director must during the director's term of office
be a citizen of the United States. Each director, other than a public
director, must be engaged in or have a direct interest in the
production of agricultural products.
(b) An association may provide in the association's bylaws that a
person is not eligible for election as a director unless the person is a
member or patron of the association.
(c) An association may provide in the association's bylaws that a
person is not eligible for election as a director unless the person has
paid any indebtedness owed by the person to the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-25
Board of directors; financial report; records
Sec. 25. (a) The board of directors shall require a report to be
presented to the board, at intervals determined by the board but not
less often than semiannually, showing:
(1) the amount of indebtedness owed to the association by each
director, officer, and employee at the close of the period; and
(2) the amount of stock, membership capital, or credits for the
purchase of stock or membership capital shown on the books of
the association as belonging to each director, officer, and
employee.
The board of directors shall take action with respect to any individual
indebtedness to the association that is larger than permitted by the
bylaws as is best for the association in the sound discretion of the
board.
(b) The board of directors shall require a record of attendance to
be kept and the secretary of the board to make a report at the annual
meeting of members detailing the directors' attendance up to and
including the last directors' meeting before the annual meeting,
indicating:
(1) the number of regular and special meetings of the board; and
(2) the number of regular and of special meetings attended by
each member of the board designated by name.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-26
Extension of credit
Sec. 26. (a) An association may provide in the association's
bylaws limits within which the association may extend credit, either
directly or indirectly, to any director, officer, or employee of the
association.
(b) A person who is a director, officer, or employee of the
association may not be extended credit on terms that are more
favorable than the terms available to any other customer or member
of the association.
(c) The provisions of this chapter:
(1) concerning the extension of credit to any director, officer,
or employee;
(2) requiring the inclusion of information concerning the
extension of credit to any director, officer, or employee in the
association's annual reports to the secretary of state; and
(3) providing penalties for failure to comply with those
provisions;
apply only to associations in which more than twenty-five percent
(25%) of the gross income arises directly from the purchasing of
supplies for their members and others. An association with a lesser
percentage of gross income arising from purchasing of supplies may
adopt similar provisions in the association's articles of incorporation
as originally filed or later amended. If adopted, the provisions apply
in every respect to the association and to the association's directors,
officers, and employees.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-27
Election of officers
Sec. 27. (a) The officers of an association must consist of a
president, one (1) or more vice presidents, a secretary, a treasurer,
and other officers that may be prescribed by the bylaws. Each officer
shall be elected or appointed by the board of directors at the time, in
the manner, and for the terms as the bylaws provide, subject to the
following conditions:
(1) The president and one (1) vice president must be members
of the board of directors.
(2) A vice president who is not a director may not succeed to or
fill the office of president.
(b) Except for the offices of the president and secretary, any two
(2) or more offices may be held by the same individual.
(c) The treasurer may be a bank or depository. If the treasurer is
a bank or depository:
(1) the treasurer is considered to be a function of the board of
directors but not an officer of the board of directors; and
(2) the secretary shall perform the usual accounting duties of
the treasurer.
However, the funds of the association must be deposited only as and
where authorized by the board of directors.
(d) The bylaws may provide for the election of the president and
one (1) vice president by the members or their delegates at the annual
meeting of the members.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-28
Membership certificates
Sec. 28. (a) A certificate of membership or a share or shares of
voting stock may not be issued by an association until the
membership fee or consideration for the share of stock has been paid
in full. A promissory note may be accepted in full or partial payment
for a share of stock or membership fee. However, the stock or
membership certificate shall be held as security for the payment of
the note. The acceptance of a note in full or partial payment of a
share of stock or membership fee does not affect the member's right
to vote if the member is not in default under the terms of the note.
(b) A member is not liable for the debts of the association to an
amount exceeding the sum remaining unpaid on the member's
membership fee or on the member's subscription or agreement to
purchase a share or shares of stock, including any unpaid balance on
any note given in payment.
(c) An association may provide in the association's articles of
incorporation or bylaws that a member may not own more than a
fixed amount or percentage of the association's membership capital
or a fixed percentage or number of shares of the association's
outstanding voting stock.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-29
Voting stock; votes; transfer
Sec. 29. (a) An association may provide in the association's
articles of incorporation or bylaws that a member is not entitled to
more than one (1) vote regardless of the amount of capital invested
in or number of shares of voting stock owned by the member.
(b) The voting stock of or membership in an association may not
be transferred to persons or associations that are not qualified to be
members of an association organized under or governed by this
chapter, and this restriction must be printed on every membership
certificate and certificate of voting stock.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-30
Distribution of dividends
Sec. 30. (a) The net earnings or savings of an association from the
association's marketing activities, purchasing activities, or marketing
and purchasing activities that exceed the amounts needed to restore
a deficit, to pay dividends on outstanding stock, or to establish or
provide for additions to reserves or surplus, or both, must be
distributed, unless otherwise provided by the bylaws, to the patrons
of the association on a patronage basis. If provided in the bylaws, the
distribution of the net earnings or savings from the marketing
activities, purchasing activities, or marketing and purchasing
activities that exceed the amounts needed to restore a deficit, to pay
dividends on outstanding stock, or to establish or provide for
additions to reserves or surplus, or both, may be made at different
rates for members and nonmembers, or may be restricted only to
members, or only to members and those patrons with whom the
association has contracted to pay patronage refunds, but all the
distributions must be made on a patronage basis.
(b) If the reserves or surplus of an association are distributed at
any time, the reserves or surplus must be distributed on a patronage
basis as provided by the bylaws of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-31
Redemption of stock
Sec. 31. (a) An association organized with capital stock may, at
any time, unless otherwise provided in the association's articles of
incorporation or bylaws, and except when the debts of the
association exceed fifty percent (50%) of the assets:
(1) redeem, purchase, or acquire the association's outstanding
common stock at the book value, as conclusively determined by
the association's board of directors, but not to exceed par; and
(2) pay for the stock in cash within one (1) year.
(b) An association organized with capital stock may, at any time,
unless otherwise provided in its articles of incorporation or bylaws,
redeem, purchase, or acquire the association's outstanding preferred
stock. However, an association may not redeem or purchase the
association's outstanding preferred stock:
(1) when the association is insolvent; or
(2) when the redemption or purchase would render the
association insolvent or would reduce the net assets of the
association below the total amount payable to the holders of
stock having prior or equal rights to the assets of the association
upon involuntary dissolution.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-32
Issuance of various classes of stock
Sec. 32. (a) If the board of directors of an association, under
authority expressly vested in the board by the articles of
incorporation, adopts a resolution that determines and states the
relative rights, preferences, limitations, or restrictions of any class or
classes of shares, or of any series of any class or classes, the
association may not issue any of such shares unless the association
first presents in duplicate in the office of the secretary of state,
accompanied by the fees prescribed by this chapter, a certificate
signed by the secretary or assistant secretary, and verified under oath
by the president or a vice president of the association, setting forth
the resolution so adopted and the time and manner of its adoption.
(b) Upon presentation of a certificate under subsection (a), the
secretary of state, if the secretary of state finds that the certificate
conforms to law and to the articles of incorporation of the
association:
(1) shall endorse the secretary of state's approval on each copy
of the certificate; and
(2) when all fees have been paid as required by law, shall:
(A) file one (1) copy of the certificate in the secretary of
state's office;
(B) issue the secretary of state's certificate of approval and
filing; and
(C) forward to the association the secretary of state's
certificate, together with the other copy of the certificate of
the officers of the association bearing the endorsement of the
secretary of state's approval.
After the secretary of state takes the actions under subdivisions (1)
and (2), the association may issue the shares.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-33
Officers and director; charges; removal
Sec. 33. (a) A member of an association may bring charges
against an officer or a director by filing the charges in writing with
the secretary of the association, together with a petition that is signed
by five percent (5%) of the members and that requests the removal
of the officer or director.
(b) The removal of the officer or director shall be voted upon at
the next regular or special meeting of the association. The
association may by a vote of a majority of the members of the
association remove the officer or director and fill the vacancy.
(c) The director or officer against whom the charges have been
brought must:
(1) be informed in writing of the charges before the meeting
described in subsection (b); and
(2) have an opportunity at the meeting to be heard in person or
by counsel and to present witnesses.
The person or persons bringing the charges against the director or
officer are entitled to the same opportunity to be heard in person or
by counsel and to present witnesses.
(d) If the bylaws provide for the election of directors by districts
with primary elections in each district, a petition for removal of a
director must be signed by twenty percent (20%) of the members
residing in the district from which the director was elected. The
board of directors must call a special meeting of the members
residing in that district to consider the removal of the director. The
director in question may be removed from office by a vote of the
majority of the members of that district.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-34
Marketing contracts
Sec. 34. (a) An association and its members may make and
execute marketing contracts requiring the members to sell, for any
period that is not more than ten (10) years:
(1) all or any specified part of the members' agricultural
products; or
(2) specified commodities;
exclusively to or through the association or any facilities to be
created by the association.
(b) If a member contracts a sale to the association, it shall be
conclusively held that title to the products passes absolutely and
unreservedly, except for recorded liens, to the association:
(1) upon delivery; or
(2) at any other specified time, if expressly and definitely
agreed in the contract.
(c) A contract authorized under this section may provide that the
association may:
(1) sell or resell the products delivered by the association's
members, with or without taking title to the products; and
(2) pay over to the association's members the resale price, with
or without pooling, actual or proportionate, after deducting all
necessary selling, overhead, and other costs and expenses,
including:
(A) interest on preferred stock, not exceeding eight percent
(8%) per year;
(B) reserves for retiring the stock, if any;
(C) other proper reserves;
(D) interest not exceeding eight percent (8%) per year on
common stock; and
(E) any other deductions specified in the contract.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-35
Remedies for breach of contract
Sec. 35. (a) The bylaws or a marketing contract of an association
may do the following:
(1) Fix, as liquidated damages, specific amounts to be paid by
the members or stockholders to the association upon the breach
of any provision of the marketing contract regarding the sale,
delivery, or withholding of products.
(2) Provide that the contracting member will pay all costs,
premiums for bonds, expenses, and fees if any action is brought
upon the contract by the association.
A provision described in this subsection is valid and enforceable, and
a clause providing for liquidated damages is enforceable and is not
regarded as a penalty.
(b) If there is a breach or threatened breach of a marketing
contract regarding the sale, delivery, or withholding of products by
a member, the association is entitled to:
(1) an injunction to prevent the further breach of the contract;
and
(2) a decree of specific performance of the contract.
(c) Pending the adjudication of an action under subsection (b) and
upon:
(1) filing a verified complaint showing the breach or threatened
breach; and
(2) filing a sufficient bond;
the association is entitled to a temporary restraining order and
preliminary injunction against the member.
(d) Subsections (a), (b), and (c) are applicable to, and the rights
and remedies described in subsections (a), (b), and (c) are available
to, any corporation that is organized under any agricultural
cooperative law of any other state of the United States and is
admitted to do business in Indiana.
(e) A grower of agricultural products that signs a marketing
agreement with a cooperative marketing association organized under
this chapter is permitted to place crop mortgages on the grower's
crops. However, the crop mortgages and other liens are subordinate
to the right of the association to take delivery of any such crops
covered by the marketing agreement. In such cases, if the mortgagee
or lien holder serves proper notice on the association, the
proportionate proceeds due or payable to that grower become subject
to the mortgages or liens instead of the crops originally covered by
the mortgages or liens. If any deficiency remains at the end of the
season, the grower is liable for the deficiency under the present
practice, and the mortgagee or lienholder has the same rights against
the grower for the deficiency as the grower possesses.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-36
Purchase of property or stock in another entity
Sec. 36. If an association that is organized under or governed by
this chapter with capital stock purchases:
(1) the stock;
(2) any property; or
(3) any interest in any property;
of any person, firm, corporation, or association, the association may
discharge the obligations incurred in the purchase, wholly or in part,
by exchanging for the acquired interest, shares of the association's
capital stock to an amount that at par value would equal the fair
market value of the stock or interest purchased, as determined by the
board of directors. In that case, the transfer to the association of the
stock or interest purchased must be equivalent to payment in cash for
the shares of stock issued.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-37
Biennial report; contents; form; delivery
Sec. 37. (a) During April of every other year, each association
organized or reorganized under this chapter shall prepare and file a
biennial report setting forth the following information:
(1) The name of the association and the state or country under
whose law the association is incorporated.
(2) The address of the association's registered office and the
name of the association's registered agent at that office in
Indiana.
(3) The address of the association's principal office.
(4) The names and business or residence addresses of the
association's directors, secretary, and highest executive officer.
(b) The biennial report of each association must be:
(1) made on a form prescribed and furnished by the secretary of
state;
(2) signed by any current officer of the association or, if the
association is in the hands of a receiver or a trustee, by the
receiver or trustee;
(3) verified and affirmed subject to the penalties for perjury;
and
(4) filed in the office of the secretary of state, accompanied by
the fees prescribed by law.
(c) Information in the biennial report must be current as of the
date the biennial report is executed on behalf of the association.
(d) The first biennial report of the association must be delivered
to the secretary of state in the second year following the calendar
year in which the association was organized. Subsequent biennial
reports must be delivered to the secretary of state every second year
following the year in which the last biennial report was filed.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-38
Disclosure of financial condition; offense
Sec. 38. (a) If, upon receipt of a biennial report delivered under
section 37 of this chapter, the secretary of state determines or has
reason to believe that the association filing the report is not
disclosing the association's true financial condition or is violating
this chapter, the secretary of state may require the association to
disclose all material facts by:
(1) submitting a verified audit bearing the certificate under oath
of a qualified public accountant approved by the secretary of
state;
(2) replying to interrogatories; or
(3) reporting under oath on any matters requested by the
secretary of state.
(b) An officer or a director of an association who knowingly
distributes, publishes, or files with the secretary of state a written
report, certificate, or statement of the condition or business of the
association that is false in any material respect commits a Class D
felony.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-39
Application of other laws
Sec. 39. A law in conflict with this chapter may not be construed
to apply to an association provided for in this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-40
Limitation on the use of the term "cooperative"
Sec. 40. A person, or a firm, a limited liability company, a
corporation, or an association organized in Indiana after February 23,
1925, may not use the word "cooperative" as part of its corporate or
other business name or title for cooperative activities of producers of
agricultural products unless it has complied with this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-41
Membership of association in other corporations or associations
Sec. 41. An association may organize, form, operate, own,
control, have an interest in, own stock of, or be a member of any
corporation or corporations, or association or associations, with or
without capital stock, that are engaged in:
(1) any activity in connection with the producing, marketing,
selling, preserving, harvesting, drying, processing,
manufacturing, canning, packing, grading, storing,
transportation, handling, or use of any:
(A) agricultural products; or
(B) byproducts of any agricultural products;
handled by the association or the association's patrons;
(2) any activity in connection with the manufacturing,
assembling, selling, supplying, purchasing, hiring,
transportation, or use of supplies, machinery, or equipment that
the association or the association's patrons use; or
(3) the financing of any activities described in subdivision (1)
or (2) or in performing or furnishing economic or educational
service for persons engaged in agriculture.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-42
Joint activities with other associations
Sec. 42. (a) An association may, upon resolution adopted by the
association's board of directors:
(1) enter into all necessary and proper contracts and
agreements; and
(2) make all necessary and proper stipulations, agreements, and
contracts and arrangements with any other cooperative
corporation, association, or associations formed in Indiana or in
any other state;
for the cooperative and more economical performance of all or any
part of the association's business.
(b) Any two (2) or more as