CHAPTER 251. COOPERATIVE ASSOCIATIONS
BUSINESS ORGANIZATIONS CODE
TITLE 6. ASSOCIATIONS
CHAPTER 251. COOPERATIVE ASSOCIATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 251.001. DEFINITIONS. In this chapter:
(1) "Cooperative basis" means that net savings, after payment of
any investment dividends or after provision for separate funds
has been made as required or authorized by law, the certificate
of formation, or bylaws, are:
(A) allocated or distributed to a member patron or to each
patron in proportion to patronage; or
(B) retained by the entity for:
(i) actual or potential expansion of the entity's services;
(ii) the reduction of charges to patrons; or
(iii) any other purpose consistent with the entity's nonprofit
character.
(2) "Invested capital" means funds invested in a cooperative
association by an investor with the expectation of receiving an
investment dividend.
(3) "Investment dividend" means the return on invested capital
or on membership capital derived from the net savings of the
cooperative association.
(4) "Membership capital" means the funds of a cooperative
association derived from members of the cooperative association
generally as a requirement of membership or in lieu of patronage
dividends. The term does not include deposits or loans from
members.
(5) "Net savings" means the total income of a cooperative
association less the costs of operation.
(6) "Patronage dividend" means a share of the net savings
distributed among members of the cooperative association on the
basis of patronage, as provided by the certificate of formation.
(7) "Savings returns" means the amount returned by a cooperative
association to patrons of a cooperative association in proportion
to patronage or otherwise.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.002. APPLICABILITY OF NONPROFIT CORPORATION PROVISIONS.
(a) A provision of Title 1 and Chapters 20 and 22 governing
nonprofit corporations applies to a cooperative association.
(b) Notwithstanding Subsection (a), this chapter controls over
any conflicting provision of Title 1 and Chapters 20 and 22
governing nonprofit corporations.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.003. EXEMPTION. This chapter does not apply to a
corporation or association organized on a cooperative basis under
a statute of this state other than this chapter unless that other
statute specifically states that this chapter does apply.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
Sec. 251.051. ORGANIZATION MEETING. After a cooperative
association's certificate of formation is filed, the cooperative
association shall hold an organization meeting in accordance with
Section 22.104.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.052. AMENDMENT OF CERTIFICATE OF FORMATION. (a) The
board of directors of a cooperative association may propose an
amendment to the cooperative association's certificate of
formation by a two-thirds vote of the board members. The members
of a cooperative association may petition to amend the
certificate of formation as provided by the bylaws.
(b) Not later than the 31st day before the date of the meeting,
the secretary shall:
(1) send notice of a meeting to consider a proposed amendment to
each member of the cooperative association at the member's last
known address; or
(2) post notice of a meeting to consider a proposed amendment in
a conspicuous place in all principal places of activity of the
cooperative association.
(c) The notice required by Subsection (b) must include the full
text of the proposed amendment and the text of the part of the
certificate of formation to be amended.
(d) To be approved, an amendment must be adopted by the
affirmative vote of two-thirds of the members voting on the
amendment.
(e) Not later than the 30th day after the date an amendment is
adopted by the members of a cooperative association, the
cooperative association shall file a certificate of amendment
with the secretary of state in accordance with Chapter 4. The
certificate of amendment must be:
(1) signed by an authorized officer of the cooperative
association; and
(2) in the form required by Section 3.052.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.053. BYLAWS. (a) Unless the certificate of formation
or bylaws of a cooperative association require a greater
majority, the bylaws may be adopted, amended, or repealed by a
majority vote of the cooperative association's members voting on
the matter.
(b) Except as provided by this code, the bylaws may contain:
(1) requirements for admission to membership;
(2) requirements for disposal of a member's interest on
cessation of membership;
(3) the time, place, and manner of calling and conducting
meetings;
(4) the number or percentage of the members constituting a
quorum;
(5) the number, qualifications, powers, duties, and term of
directors and officers;
(6) the method of electing, removing, and filling a vacancy of
directors and officers;
(7) the division or classification, if any, of directors to
provide for staggered terms;
(8) the compensation, if any, of the directors;
(9) the number of directors necessary to constitute a quorum;
(10) the method for distributing the net savings;
(11) a requirement that each officer or employee of the
cooperative association who handles funds or securities be
bonded;
(12) other discretionary provisions of this chapter, Title 1,
and Chapters 20 and 22; and
(13) any other provision incident to a purpose or activity of
the cooperative association.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.054. RESTATED CERTIFICATE OF FORMATION. (a) The board
of directors of a cooperative association may adopt a restated
certificate of formation as provided by Subchapter B, Chapter 3,
by following the procedure to amend the association's certificate
of formation provided by Section 251.052, except that member
approval is required if the restated certificate of formation
contains an amendment.
(b) A person shall file a restated certificate of formation as
provided by Chapter 4, and the restated certificate of formation
takes effect as provided by Subchapter B, Chapter 3.
Added by Acts 2005, 79th Leg., Ch.
64, Sec. 96, eff. January 1, 2006.
SUBCHAPTER C. MANAGEMENT
Sec. 251.101. BOARD OF DIRECTORS. (a) Except as provided by
Subsections (b) and (c), a cooperative association is managed by
a board of directors in accordance with Chapter 22.
(b) The board shall contain at least five directors elected by
and from the cooperative association's members. A director:
(1) serves a term not to exceed three years as provided by the
bylaws; and
(2) holds office until the director is removed or the director's
successor is elected.
(c) The bylaws of a cooperative association may:
(1) apportion the number of directors among the units into which
the cooperative association may be divided; and
(2) provide for the election of the directors by the respective
units to which the directors are apportioned.
(d) An executive committee of the board of directors may be
elected in the manner and with the powers and duties specified by
the certificate of formation or bylaws.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.102. OFFICERS. (a) The directors of a cooperative
association shall annually elect, unless otherwise provided by
the bylaws, the following officers for the cooperative
association:
(1) a president;
(2) one or more vice presidents; and
(3) a secretary and treasurer or a secretary-treasurer.
(b) Any two or more offices, other than the offices of president
and secretary, may be held by the same person.
(c) The officers of a cooperative association may be designated
by other titles as provided by the certificate of formation or
the bylaws of the cooperative association.
(d) A committee duly designated by the board of directors may
perform the functions of any office, and the functions of any two
or more officers may be performed by a single committee,
including the functions of both president and secretary.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.103. REMOVAL OF DIRECTORS AND OFFICERS. (a) A
director or officer of a cooperative association may be removed
from office in the manner provided by the certificate of
formation or bylaws of the cooperative association.
(b) If the certificate of formation or bylaws do not provide for
the person's removal, a director or officer may be removed with
cause by a vote of a majority of the members voting at a regular
or special meeting. The director or officer who is to be removed
is entitled to be heard at the meeting.
(c) Except as provided by the certificate of formation or
bylaws, a vacancy on the board of directors caused by removal
shall be filled by a director elected in the same manner provided
by the bylaws for the election of directors.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.104. REFERENDUM. (a) The certificate of formation or
bylaws of a cooperative association may provide for a referendum
on any action undertaken by the cooperative association's board
of directors if the referendum is:
(1) requested by petition of 10 percent or more of all of the
members of the cooperative association; or
(2) requested and approved by the vote of at least a majority of
the directors of the cooperative association.
(b) The proposition to be voted on in a referendum authorized
under Subsection (a) must be submitted to the members of the
cooperative association for consideration within the time
specified in the document authorizing the referendum.
(c) A right of a third party that has vested between the time of
the action and the time of the referendum is not impaired by the
referendum results.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER D. MEMBERSHIP
Sec. 251.151. ELIGIBILITY AND ADMISSION. A person, an
unincorporated group or other person organized on a cooperative
basis, or a nonprofit group may be admitted to membership in a
cooperative association only if the person meets the
qualifications for eligibility stated in the certificate of
formation or bylaws of the cooperative association.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.152. EXPULSION. (a) A member of a cooperative
association may be expelled by the vote of a majority of the
cooperative association's members voting at a regular or special
meeting.
(b) Not later than the 11th day before the date of the meeting,
the cooperative association shall give the member written notice
of the charges. The member is entitled to be heard at the meeting
in person or by counsel.
(c) If the cooperative association votes to expel a member, the
cooperative association's board of directors shall cause the
cooperative association to purchase the member's capital holdings
at par value if the purchase does not jeopardize the cooperative
association's solvency.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.153. SUBSCRIBERS. (a) A person is a subscriber of a
cooperative association only if the person is:
(1) eligible for membership in the cooperative association under
Section 251.151; and
(2) legally obligated to purchase a share or membership in the
cooperative association.
(b) The certificate of formation or bylaws of a cooperative
association may state whether and the conditions under which
voting rights or other membership rights are granted to a
subscriber of the cooperative association.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.154. LIABILITY. (a) Except as provided by Subsection
(b), a member or subscriber of a cooperative association is not
jointly or severally liable for a debt of the cooperative
association. A subscriber is liable for any unpaid amount on the
subscriber's membership certificates or invested capital
certificates.
(b) A subscriber who assigns the subscriber's interest in
membership certificates or invested capital certificates is
jointly and severally liable with the assignee until the
appropriate certificates are fully paid.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER E. SHARES
Sec. 251.201. SHARE AND MEMBERSHIP CERTIFICATES: ISSUANCE AND
CONTENTS. (a) A cooperative association may not issue a
certificate for membership capital or for invested capital until
any par value of the certificate has been paid in full.
(b) Each certificate for membership capital issued by a
cooperative association must contain a statement of the
requirements of Sections 251.202(a) and (b), 251.254, and
251.255.
(c) Each certificate for invested capital issued by a
cooperative association must contain a statement of the
restrictions on transferability as provided by the cooperative
association's bylaws.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.202. TRANSFER OF SHARES AND MEMBERSHIP; WITHDRAWAL.
(a) A member who decides to withdraw from a cooperative
association shall make a written offer to sell the member's
membership certificates to the cooperative association's board of
directors.
(b) Not later than the 90th day after the date the directors
receive an offer under Subsection (a), the directors may cause
the cooperative association to purchase the holdings by paying
the member the par value of the certificates and the directors
shall cause the cooperative association to reissue or cancel the
shares after purchasing the holdings. The directors shall cause
the cooperative association to purchase the shares if a majority
of the cooperative association's members voting at a regular or
special meeting vote to require the purchase.
(c) An investor owning investor certificates must sell, assign,
or convey the certificates in accordance with the cooperative
association's bylaws. If an investor fails to sell, assign, or
convey investor certificates in accordance with the bylaws, the
cooperative association on written notice to its directors shall
repurchase the certificates by paying the investor the par value
of the certificate plus all accrued investment dividends. The
certificates must be repurchased not later than the 90th day
after the date the cooperative association receives notice of the
failure.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.203. SHARE AND MEMBERSHIP CERTIFICATES; RECALL. (a)
The bylaws of a cooperative association may authorize the
cooperative association's board of directors to recall during a
specified time and in accordance with the bylaws the membership
certificates of a member who fails to patronize the cooperative
association. The board may use the reserve funds to recall, at
par value, the membership certificates of any member in excess of
the amount required for membership.
(b) After the board of directors of a cooperative association
recalls a membership certificate under Subsection (a), membership
in the cooperative association is terminated and the board shall
cause the cooperative association to reissue or cancel the
certificate. The board of directors may not recall membership
certificates if recalling the certificates would jeopardize the
cooperative association's solvency.
(c) The board of directors may use the reserve funds to recall
and repurchase the investment certificates of an investor at par
value plus any investment dividends due.
(d) The bylaws of a cooperative association may establish
specific procedures, terms, and conditions for recalls and
repurchases of investment certificates.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.204. CERTIFICATES; ATTACHMENT. The minimum amount
necessary for membership in a cooperative association, not to
exceed $50, is exempt from attachment, execution, or garnishment
for the debts of a member of a cooperative association. If a
member's holdings are subject to attachment, execution, or
garnishment, the directors of the cooperative association may
admit the purchaser to membership or may purchase the holdings at
par value.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER F. MEETINGS AND VOTING
Sec. 251.251. MEETINGS. (a) Regular meetings of members of a
cooperative association shall be held at least once a year as
prescribed by the cooperative association's bylaws.
(b) A special meeting of the members of a cooperative
association may be requested by a majority vote of the directors
or by written petition of at least one-tenth of the membership of
the cooperative association. The secretary shall call a special
meeting to be held 30 days after receipt of the request for a
special meeting.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.252. NOTICE OF SPECIAL MEETING. The notice of a
special meeting of the members of a cooperative association shall
state the purpose of the meeting.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.253. MEETINGS BY UNITS OF MEMBERSHIP. (a) The
certificate of formation or bylaws of a cooperative association
may provide for the holding of meetings by units of the
membership of the cooperative association and may provide for:
(1) a method of transmitting the votes cast at unit meetings to
the central meeting;
(2) a method of representation of units of the membership by the
election of delegates to the central meeting; or
(3) a combination of both methods.
(b) Except as otherwise provided by the certificate of formation
or bylaws, a meeting by a unit of the membership shall be called
and held in the same manner as a regular meeting of the members.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.254. ONE MEMBER--ONE VOTE. (a) Except as provided by
Subsection (b), a member of a cooperative association has one
vote.
(b) If a cooperative association includes among its membership
another cooperative association or a group that is organized on a
cooperative basis, the voting rights of the cooperative
association member or group member may be prescribed by the
certificate of formation or bylaws of the cooperative
association.
(c) Any voting agreement or other device that is made to evade
the one-member-one-vote rule is not enforceable.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.255. NO PROXY. A member is not entitled to vote by
proxy.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.256. VOTING BY MAIL. (a) The certificate of formation
or bylaws of a cooperative association may contain the procedures
in Subsection (b) or (c), or both, for voting by mail.
(b) With notice of a meeting sent to members of the cooperative
association, the secretary may include a copy of a proposal to be
offered at the meeting. If a mail vote is returned to the
cooperative association within the specified number of days, the
mail vote shall be counted with the votes cast at the meeting.
(c) The secretary may send to a member of the cooperative
association who is absent from a meeting an exact copy of the
proposal considered at the meeting. If the vote is returned to
the cooperative association within the specified number of days,
the mail vote is counted with the votes cast at the meeting.
(d) The certificate of formation or bylaws may state whether and
to what extent mail votes are counted in computing a quorum.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.257. VOTING BY MAIL OR BY DELEGATES. (a) If a
cooperative association has provided for voting by mail or by
delegates, a provision of this chapter referring to votes cast by
members of the cooperative association applies to votes cast by
mail or by delegates.
(b) A delegate may not vote by mail.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER G. CAPITAL AND NET SAVINGS
Sec. 251.301. LIMITATIONS ON RETURN ON CAPITAL. (a) Except as
otherwise provided by the cooperative association's bylaws, an
investment dividend of a cooperative association may not be
cumulative and may not exceed eight percent of investment
capital.
(b) Total investment dividends distributed for a fiscal year may
not exceed 50 percent of the net savings for the period.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.302. ALLOCATION AND DISTRIBUTION OF NET SAVINGS. (a)
At least once each year the members or directors of a cooperative
association, as provided by the certificate of formation or
bylaws of the cooperative association, shall apportion the net
savings of the cooperative association in the following order:
(1) subject to Section 251.301, investment dividends payable
from the surplus of the total assets over total liabilities may
be paid on invested capital or, if authorized by the bylaws, may
be paid on the membership certificates;
(2) a portion of the remainder, as determined by the certificate
of formation or bylaws, may be allocated to an educational fund
to be used in teaching cooperation;
(3) a portion of the remainder may be allocated to funds for the
general welfare of the members of the cooperative association;
(4) a portion of the remainder may be allocated to retained
earnings; and
(5) the remainder shall be allocated at the same uniform rate to
each patron of the cooperative association in proportion to
individual patronage as follows:
(A) for a member patron, the proportionate amount of savings
return distributed to the member may be any combination of cash,
property, membership certificates, or investment certificates;
and
(B) for a subscriber patron, the patron's proportionate amount
of savings returns as provided by the certificate of formation or
bylaws may be distributed to the subscriber patron or credited to
the subscriber patron's account until the amount of capital
subscribed for has been fully paid.
(b) This section does not prevent a cooperative association
engaged in rendering services from disposing of the net savings
from the rendering of services in a manner that lowers the fees
charged for services or furthers the common benefit of the
members.
(c) A cooperative association may adopt a system in which:
(1) the payment of savings returns that would otherwise be
distributed are deferred for a fixed period; or
(2) the savings returns distributed are partly in cash or partly
in shares, to be retired at a fixed future date, in the order of
the shares' serial numbers or issuance dates.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER H. REPORTS AND RECORDS
Sec. 251.351. RECORDKEEPING. A cooperative association shall
keep books and records relating to the cooperative association's
business operation in accordance with standard accounting
practices.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.352. REPORTS TO MEMBERS. (a) A cooperative
association shall submit a written report to its members at the
annual meeting of the cooperative association. The annual report
must contain:
(1) a balance sheet;
(2) an income and expense statement;
(3) the amount and nature of the cooperative association's
authorized, subscribed, and paid-in capital;
(4) the total number of shareholders;
(5) the number of shareholders who were admitted to or withdrew
from the association during the year;
(6) the par value of the association's shares;
(7) the rate at which any investment dividends have been paid;
and
(8) if the cooperative association does not issue shares:
(A) the total number of members;
(B) the number of members who were admitted to or withdrew from
the association during the year; and
(C) the amount of membership fees received.
(b) The directors shall appoint a committee composed of members
who are not principal bookkeepers, accountants, or employees of
the cooperative association to review the cooperative
association.
(c) The committee appointed under Subsection (b) shall report on
the quality of the annual report required by this section and the
bookkeeping system of the cooperative association at the annual
meeting.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.353. ANNUAL REPORT OF FINANCIAL CONDITION. (a) This
section applies only to a cooperative association that has at
least 100 members or at least $20,000 in annual business.
(b) Not later than the 120th day after the date on which the
association closes its business each year, a cooperative
association shall file in the association's registered office a
report of the association's financial condition stating:
(1) the name of the association;
(2) the address of the association's principal office;
(3) the name, address, occupation, and date of expiration of the
term of office of each officer and director;
(4) any compensation paid by the association to each officer or
director of the association;
(5) the amount and nature of the authorized, subscribed, and
paid-in capital;
(6) the total number of shareholders;
(7) the number of shareholders who were admitted to or withdrew
from the association during the year;
(8) the par value of the association's shares;
(9) the rate at which any investment dividends have been paid;
and
(10) if the association has no shares:
(A) the total number of members;
(B) the number of members who were admitted to or withdrew from
the association during the year; and
(C) the amount of membership fees received.
(c) The report required by Subsection (b) must:
(1) include a balance sheet and income and expense statement of
the cooperative association; and
(2) be signed by the president and secretary.
(d) A cooperative association that has at least 3,000 members or
at least $750,000 in annual business shall file a copy of the
report required by this section with the secretary of state.
(e) A person commits an offense if the person signs a report
that is required by this section and contains a materially false
statement that the person knows is false. An offense under this
subsection is a misdemeanor punishable by:
(1) a fine of not less than $25 or more than $200;
(2) confinement in county jail for a term of not less than 30
days or more than one year; or
(3) both the fine and confinement.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.354. FAILURE TO FILE REPORT. (a) If a cooperative
association required by Section 251.353 to file a copy of a
report with the secretary of state does not file the report
within the prescribed time, the secretary of state shall send
written notice of the requirement by registered mail to the
cooperative association. The notice must be sent to the
cooperative association's principal office not later than the
60th day after the date the report becomes due.
(b) If a cooperative association is required by Section 251.353
to file a report at its registered office but not with the
secretary of state and fails to file the report within the
prescribed time, the secretary of state or any member of the
cooperative association may send written notice of the
requirement by registered mail to the cooperative association's
principal office.
(c) If the cooperative association does not file the report
before the 61st day after the date notice is sent under
Subsection (a) or (b), a member of the cooperative association or
the attorney general may seek a writ of mandamus against the
cooperative association and the appropriate officer or officers
to compel the filing of the report. The court shall require the
cooperative association or the officer who is determined to be at
fault to pay the expenses of the proceeding, including attorney's
fees.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER I. WINDING UP AND TERMINATION
Sec. 251.401. VOLUNTARY WINDING UP AND TERMINATION. (a) A
cooperative association may wind up and terminate its affairs in
accordance with Chapter 11 and Sections 22.301-22.303.
(b) If a cooperative association is directed to wind up and
liquidate its affairs, three members of the cooperative
association elected by a vote of at least a majority of the
members voting shall be designated as trustees on behalf of the
cooperative association to:
(1) pay debts;
(2) liquidate the cooperative association's assets within the
time set in the trustees' designation or any extension of time;
and
(3) distribute the cooperative association's assets in the
manner provided by Section 251.403.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.402. EXECUTION OF CERTIFICATE OF TERMINATION. An
officer of a cooperative association or one or more of the
persons designated as a liquidating trustee under Section 251.401
shall execute the certificate of termination on behalf of the
cooperative association.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.403. DISTRIBUTION OF ASSETS. Subject to Sections
11.052 and 11.053(a), the trustees designated under Section
251.401 shall distribute the cooperative association's assets in
the following order:
(1) by returning the par value of the investors' capital to
investors;
(2) by returning the amounts paid on subscriptions to
subscribers for invested capital;
(3) by returning the amount of patronage dividends credited to
patrons' accounts to the patrons;
(4) by returning to members their membership capital; and
(5) by distributing any surplus in the manner provided by the
certificate of formation:
(A) among the patrons who have been members or subscribers of
the cooperative association during the six years preceding the
date of termination, on the basis of patronage during that
period;
(B) as a gift to any cooperative association or other nonprofit
enterprise designated in the certificate of formation; or
(C) by a combination of both methods of distribution.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
688, Sec. 133, eff. September 1, 2007.
Sec. 251.404. INVOLUNTARY TERMINATION. A suit for involuntary
termination of a cooperative association organized under this
chapter may be instituted for the causes and prosecuted in the
manner provided by Chapter 11. The assets of a cooperative
association that is involuntarily terminated shall be distributed
in accordance with Section 251.403.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
SUBCHAPTER J. MISCELLANEOUS PROVISIONS
Sec. 251.451. EXEMPTION FROM TAXES. A cooperative association
organized under this chapter is exempt from the franchise tax and
license fees imposed by the state or a political subdivision of
the state, except that a cooperative association is exempt from
the franchise tax imposed by Chapter 171, Tax Code, only if the
cooperative association is exempt under that chapter.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Sec. 251.452. USE OF NAME "COOPERATIVE." (a) Only a
cooperative association governed by this chapter, a group
organized on a cooperative basis under another law of this state,
or a foreign entity operating on a cooperative basis and
authorized to do business in this state may use the term
"cooperative" or any abbreviation or derivation of the term
"cooperative" as part of its business name or represent itself,
in advertising or otherwise, as conducting business on a
cooperative basis.
(b) A person commits an offense if the person violates
Subsection (a). An offense under this subsection is a misdemeanor
punishable by:
(1) a fine of not less than $25 or more than $200 for the first
month in which the violation occurs;
(2) a fine of not more than $200 for each month during which a
violation occurs after the first month;
(3) confinement in the county jail for not less than 30 days or
more than one year; or
(4) a combination of those punishments.
(c) The attorney general may sue to enjoin a violation of this
section.
(d) If a court renders a judgment that a person who used the
term "cooperative" before September 1, 1975, is not organized on
a cooperative basis but is authorized to continue to use the
term, the business shall place immediately after its name the
words "does not comply with the cooperative association law of
Texas" in the same kind of type and in letters not less than
two-thirds the size of the letters used in the word
"cooperative."
(e) Notwithstanding this section, The University Cooperative
Society, a domestic nonprofit corporation related to The
University of Texas, may continue to use the word "cooperative"
in its name.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.