Chapter 10 - Cooperative Marketing Associations
CHAPTER 10 - COOPERATIVE MARKETING ASSOCIATIONS
ARTICLE 1 - IN GENERAL
17-10-101. Purpose of chapter.
Inorder to promote, foster, and encourage the intelligent and orderly marketingof agricultural products through cooperation, and to eliminate speculation andwaste; and to make the distribution of agricultural products as direct as canbe efficiently done between producer and consumer; and to stabilize themarketing problems of agricultural products, this act is passed.
17-10-102. Definitions; associations deemed nonprofit; short title.
(a) The term "agricultural products" shall includehorticultural, viticultural, forestry, dairy, livestock, poultry, bee, and anyfarm products.
(b) The term "member" shall include actual members ofassociations without capital stock and holders of common stock in associationsorganized with capital stock.
(c) The term "association" or "cooperative"means any corporation organized under this act.
(d) The term "person" shall include individuals,firms, partnerships, corporations and associations.
(e) Associations organized hereunder shall be deemed nonprofit,inasmuch as they are not organized to make profits for themselves, as such, orfor their members as such, but only for their members as producers.
(f) This act shall be referred to as the "CooperativeMarketing Act".
17-10-103. Formation.
Five(5) or more persons, qualified electors of the state of Wyoming, engaged in theproduction of agricultural products may form a nonprofit, cooperativeassociation, with or without capital stock, under the provisions of this act.
17-10-104. Purposes.
Anassociation may be organized to engage in any activity in connection with themarketing or selling of the agricultural products of its members, or with theharvesting, preserving, drying, processing, canning, packing, storing,handling, shipping, or utilization thereof, of the manufacturing or marketingof the by-products thereof; or in connection with the manufacturing, selling,or supplying to its members of machinery, equipment, or supplies; or in thefinancing of the above enumerated activities; or in any one (1) or more of theactivities specified herein.
17-10-105. Certificate of incorporation; execution and contents.
(a) The incorporators shall sign and acknowledge, in the mannerrequired for the signing and acknowledgment of deeds, a certificate ofincorporation showing the following facts:
(i) The name of the cooperative;
(ii) The purpose of the cooperative;
(iii)(A) If organized without capital stock, whether the propertyrights of each member shall be equal or unequal; and if unequal, the articlesshall set forth the general rule or rules applicable to all members by whichthe property rights and interests, respectively, of each member shall bedetermined and fixed; and the association shall have the power to admit newmembers who shall be entitled to share in the property of the association withthe old members, in accordance with such general rule or rules. This provisionof the articles of incorporation shall not be altered, amended, or repealedexcept by the written consent or the affirmative vote of three-fourths of the members;
(B) If organized with capital stock, the amount of such stock,the number of shares into which the capital stock is divided, and the par valueof each share shall be given.
(iv) The period of duration for the cooperative, if the durationis not to be perpetual;
(v) The number of directors, not less than five (5) and thenames of those who shall manage the concerns of the corporation for the firstcorporate year;
(vi) The name of the town or post office and the county wherethe principal office or place of business of the corporation shall be located;
(vii) Any further provisions, not inconsistent with law, whichthe incorporators may deem expedient to be embodied in such certificate.
17-10-106. Certificate of incorporation; filing; fees; commencement ofcorporate existence.
The certificate of incorporation shall befiled in the office of the secretary of state. The fees for filing or recordingsuch certificate shall be the same as in the case of corporations formed underthe general corporation laws. The corporation shall come into existence uponthe filing of its certificate in the office of the secretary of state.
17-10-107. Certificate of incorporation; amendment.
Thecertificate of incorporation of any association organized under this act orwhich may elect to come under the provisions of this act may be amended in thefollowing manner: the board of directors, by majority vote of its members, maypass a resolution setting forth the full text of the proposed amendment andalso the full text of such section or sections as may be altered or repealed bysuch amendments. Upon such action by the board of directors, notice shall bemailed to each and every member containing a copy of the resolution so adopted,the full text of the proposed amendment and also the full text of such sectionor sections as will be altered or repealed by such amendment. Such notice shallalso designate the time, not less than twenty (20) days from the mailing ofsuch notice, and place of the meeting at which such proposed amendment shall beconsidered and voted upon. If a quorum of the members is registered as beingpresent or represented by mail votes at such meeting, a majority of the membersso present or represented by mail votes may adopt or reject such proposedamendment; provided that no amendment may be adopted inconsistent with W.S.17-10-104. Such amendments shall be put into effect by the directors, who shallsign and acknowledge and file, as above provided by the general corporation lawof this state, new or revised certificates containing such amendments andsuperseding the original certificate.
17-10-108. Applicability of general corporation law relative to noticefor service of process.
Publicnotice of the filing of the original certificate and of all amendedcertificates shall be given in like manner as that required in the case ofcorporations formed under the general corporation law. The corporation shallalso designate an agent and office for the service of papers and processes asrequired by the general corporation law.
17-10-109. Powers.
(a) Each cooperative formed under the provisions of thisarticle shall have power:
(i) To have succession by its corporate name for the periodlimited in its certificate;
(ii) To sue and be sued, complain and defend in any court;
(iii) To establish and use a common seal and alter the same;
(iv) To hold, purchase and convey such real and personalproperty as the purpose of the corporation may require, including stock ormembership in subsidiary, allied or similar cooperative corporations within orwithout this state;
(v) To appoint such officers and agents as the business mayrequire, including in every case, a president and a secretary, and to fix theircompensation;
(vi) To make bylaws not inconsistent with law for the managementof its property, the regulation of its business and the transfer of its stockor membership;
(vii) To engage in any activity in connection with producing,marketing, selling, preserving, drying, processing, canning, packing, handling,storing or utilization of any agricultural products of its members; or themanufacturing or marketing of the by-products thereof; or in connection withthe purchase, hiring or use by its members of supplies, machinery or equipment,or in the financing of such activities, or in any one (1) or more of theactivities specified in this paragraph;
(viii) To borrow money and to make advances to members uponproducts of members in the hands of the association;
(ix) To act as agent or representative of any member or membersin any of the activities mentioned in paragraphs (vii) and (viii) of thissubsection;
(x) To purchase or otherwise acquire, and to hold, own andexercise all rights of ownership in, and to sell, transfer or pledge shares ofthe capital stock or bonds, or memberships of any corporation or associationorganized under this act;
(xi) To establish reserves and invest the funds thereof in bondsor such other property as may be provided in the bylaws;
(xii) To do each and everything necessary, suitable or proper forthe accomplishment of any one (1) of the purposes or the attainment of any one(1) or more of the objects herein enumerated; and to contract accordingly; andin addition to exercise and possess all powers, rights and privileges necessaryor incidental to the purposes for which the association is organized or to theactivities in which it is engaged; and in addition any other rights, powers andprivileges granted by the laws of this state to ordinary corporations, exceptsuch as are inconsistent with the express provisions of this act; and to do anysuch things anywhere.
17-10-110. Members and stock generally.
(a) When a member of an association established without capitalstock has paid his membership fee in full, he shall receive a certificate ofmembership.
(b) No association shall issue stock to a member until it hasbeen fully paid for. The promissory notes of the members may be accepted by theassociation as full or partial payment. The association shall hold the stock assecurity for the payment of the note, but such retention of security shall notaffect the members' right to vote.
(c) Except for debts lawfully contracted between him and theassociation, no member shall be liable for the debts of the association to anamount exceeding the sum remaining unpaid on his membership fee or hissubscription to the capital stock, including any unpaid balance on anypromissory notes given in payment thereof.
(d) No stockholder of a cooperative association shall hold morethan twenty percent (20%) of the common stock of the association; and theassociation, in its bylaws, may limit the amount of common stock which one (1)member may own to any amount less than twenty percent (20%) of the common stock.
(e) No member or stockholder shall be entitled to more than one(1) vote.
(f) The bylaws shall prohibit the transfer of the common stockor membership of the association to persons not engaged in the production ofthe agricultural products handled by the association, and such restrictionsmust be printed upon every certificate of stock or membership certificatesubject thereto.
(g) Any association organized with stock under this act mayissue preferred stock, without the right to vote, and bearing a rate ofinterest not to exceed eight percent (8%). Such stock may be redeemable orretireable by the association on such terms and conditions as may be providedfor by the certificate of incorporation and printed on the face of thecertificate.
17-10-111. Management by board of directors; composition and electionof board; terms of office.
Thestock, property and concerns of such corporation shall be managed by the boardof directors who shall be respectively members, stockholders or subscribers forstock and who shall, after the first corporate year, be annually elected by themembers or stockholders at such time and place as shall be provided by thebylaws. The bylaws may provide that the directors be elected for staggeredterms not to exceed three (3) years. Directors shall hold office until theirsuccessors have been elected and qualified. The bylaws may provide that theterritory in which the association has members shall be divided into districts,and the directors shall be elected according to such districts. In such casethe bylaws shall specify the number of directors to be elected by eachdistrict, the manner and method of reapportioning the directors andredistricting the territory covered by the association. The bylaws may providethat primary elections should be held in each district to elect the directorsapportioned to such district, and the result of all such primary elections mustbe ratified by the next regular meeting of the association.
17-10-112. Regular meetings; calling of special meetings; notice ofmeetings.
Inits bylaws each association shall provide for one (1) or more regular meetingsannually. The board of directors shall have the right to call a special meetingat any time, and ten percent (10%) of the members or stockholders may file apetition stating the specific business to be brought before the association,and demand a special meeting at any time. Such meeting must thereupon be calledby the board of directors. Notice of all meetings, together with a statement ofthe purposes thereof, shall be mailed to each member at least twenty (20) daysprior to the meeting. Provided, however, that the bylaws may require insteadthat such notice may be given by publication in a newspaper of generalcirculation, published at the principal place of business of the association.Date of publication of such meeting is to be at least twenty (20) days beforethe date of such meeting.
17-10-113. Removal of officers or directors.
(a) Any member may bring charges against an officer or directorby filing them in writing with the secretary of the association, together witha petition signed by ten percent (10%) of the members, requesting the removalof the officer or director in question. The removal shall be voted upon at thenext regular or special meeting of the association, and by a vote of a majorityof the members of the association, the association may remove the officer ordirector and fill the vacancy. The director or officer against whom suchcharges have been brought shall be informed in writing of the charges previousto the meeting, and shall have an opportunity at the meeting, to be heard inperson or by counsel, and to present witnesses; and the person or personsbringing the charges against him shall have the same opportunity.
(b) In case the bylaws provide for the election of directors bydistricts, with primary elections in each district, then the petition for theremoval of a director must be signed by twenty percent (20%) of the membersresiding in the district from which he was elected. The board of directors mustcall a special meeting of the members residing in that district to consider theremoval of the director. By a vote of the majority of the members of thatdistrict, the director in question shall be removed from office.
17-10-114. Liability of directors for excess of indebtedness overassets or capital.
Ifthe indebtedness of such corporation shall at any time exceed the amount of theassets of a nonstock corporation or the amount of subscribed capital stock of astock company, the directors assenting thereto shall be personally andindividually liable for such excess to the creditors.
17-10-115. Apportionment of net profits by directors of corporationwith capital stock.
(a) The directors in any cooperative association organizedunder this article may set aside a portion of net income to create or maintaina capital reserve as they see fit or may set aside none, in their discretion.In addition to a capital reserve, the board may:
(i) Set aside an amount not to exceed five percent (5%) of theannual net income of the cooperative association for:
(A) Promoting and encouraging cooperative organization;
(B) Promotion, education or research activities which arebeneficial to the cooperative, its members and products; and
(C) Any other endeavor or effort which the board deems is inthe best interests of the cooperative or its members.
(ii) Establish and accumulate reserves for new buildings,machinery and equipment depreciation, losses and other purposes.
(b) Repealed By Laws 2001, Ch. 144, 4.
17-10-116. Repealed By Laws 2001, Ch. 144, 4.
17-10-117. Sales contracts with members.
Anyassociation organized under this act, as agent to sell the products of membersor purchase supplies for members may operate upon a nonprofit basis bycontracting to pay the members, for products sold by said members to or throughthe association, the resale price minus a uniform charge to cover the expensesinvolved in the handling of said products; there shall also be set aside for areserve fund a small percentage of the sale price, said percentage to be fixedby the bylaws; resale price to be the actual resale price to be based upon theaverage price during any period for products of the same type and quality; theuniform charges for expenses to be specified in the contract or made otherwiseascertainable or left for determination by the directors.
17-10-118. Liability of directors upon payment of dividends orappointment when corporation insolvent; exception.
Ifthe directors of any corporation organized under this act shall declare and payany dividend or apportionment of earnings or profits to members or nonmemberswhen the corporation is insolvent or when it would be rendered insolvent bysuch payment, such directors shall be jointly and severally liable for alldebts of the corporation then existing and for all such debts thereafterincurred while they shall respectively continue in office. Any director mayrelieve himself from such liability at any time before the time fixed for thepayment of such dividend or apportionment by filing a certificate in writing ofhis objection with the secretary of the corporation, and with the county clerkof the county in which the principal office is located.
17-10-119. Preparation and disposition of financial statement.
Atthe time of each dividend or apportionment of profits, and at least once inevery year, the directors shall cause to be prepared a statement showing thefinancial condition of the corporation. This statement shall be in such form asshall fully exhibit the assets and liabilities of the corporation; its earningsand profits, purchases and sales, expenses and outlays, for the period coveredby such dividend, apportionment of earnings, or yearly statement, and thisstatement, shall be in such form that good understanding of the financialcondition of said company may be obtained from such statement. The directorsshall cause one (1) copy of this statement to be mailed to each member orstockholder of the corporation and one (1) copy to be kept on file with thesecretary where the same may be examined by any member of the corporation atall reasonable times.
17-10-120. Repealed by Laws 1992, ch. 53, 3.
17-10-121. Marketing contracts generally.
(a) The association and its members may make and executemarketing contracts, requiring the members to sell, for a period of time, notover ten (10) years, all or any specified part of their agricultural productsor specified commodities exclusively to or through the association or anyfacilities to be created by the association. The contract may provide that theassociation may sell or resell the products of its members, with or withouttaking title thereto, and pay over to its members the resale price, afterdeducting all necessary selling, overhead, and other costs and expenses, ifany; and other proper reserves; and in interest not exceeding six percent (6%)per annum upon common stock.
(b) The bylaws of the marketing contract may fix, as liquidateddamages, specified sums to be paid by the member or stockholder to theassociation upon the breach by him of any provision of the marketing contractregarding the sale or delivery or withholding of products; and may furtherprovide that the member will pay all costs, premiums for bonds, expenses orfees in case any action is brought upon the contract by the association; andany such provision shall be valid and enforceable in the courts of this state.
(c) In the event of any such breach or threatened breach ofsuch marketing contract by a member, the association shall be entitled to aninjunction to prevent the further breach of the contract, and to a decree ofspecific performance thereof. Pending the adjudication of such an action, andupon filing a certified complaint, showing the breach or threatened breach, andupon filing a sufficient bond, the association shall be entitled to a temporaryrestraining order and preliminary injunction against the member.
17-10-122. Inducing breach of marketing contract or spreading falsereports of finances or management; penalty.
Anyperson who, or any corporation whose officers or employees knowingly induces orattempts to induce any member or stockholder of an association organizedhereunder to breach his marketing contract with the association, or whomaliciously and knowingly spreads false reports about the finances ormanagement thereof, shall be guilty of a misdemeanor and subject to a fine ofnot less than one hundred dollars ($100.00), and not more than one thousanddollars ($1,000.00), for each such offense and shall be liable to theassociation aggrieved in a civil suit in the penal sum of five hundred dollars($500.00) for each such offense; provided, that this section shall not apply toa bona fide creditor of such association, or the agent or attorney of any suchbona fide creditor, endeavoring to make collections of the indebtedness.
17-10-123. Legality of associations.
Noassociation organized hereunder shall be deemed to be a combination in restraintof trade or an illegal monopoly; or an attempt to lessen competition or fixprices arbitrarily, nor shall the marketing contracts or agreements between theassociation and its members, or any agreements authorized in this act beconsidered illegal or in restraint of trade.
17-10-124. Applicability of conflicting laws.
Anyprovisions of law which are in conflict with this act shall not be construed asapplying to the associations herein provided for.
17-10-125. Applicability of general corporation laws.
Theprovisions of the general corporation laws of this state, and all powers andrights thereunder, shall apply to the associations organized hereunder, exceptwhere such provisions are in conflict with or inconsistent with the expressprovisions of this act.
17-10-126. Agricultural product marketing contract.
A cooperative organized under theprovisions of this article and its patron members or patrons may make andexecute a marketing contract under W.S. 17-10-214.
ARTICLE 2 - PROCESSING COOPERATIVE
17-10-201. Title.
This act may be cited as the "WyomingProcessing Cooperative law."
17-10-202. Definitions.
(a) As used in this article:
(i) "Address" means mailing address, including a zipcode. In the case of a registered address, the term means the mailing addressand the actual office location, which may not be a post office box;
(ii) "Articles" means the articles of organization ofa cooperative as originally filed and subsequently amended;
(iii) "Association" means an organization conductingbusiness on a cooperative plan under the laws of this state or another statethat is chartered to conduct business under other laws of this state or anotherstate;
(iv) "Board" means the board of directors of acooperative;
(v) "Business entity" means a company, limitedliability company, limited liability partnership or other legal entity, whetherdomestic or foreign, association or body vested with the power or function of alegal entity;
(vi) "Cooperative" means an association organizedunder this article conducting business on a cooperative plan as provided underthis article;
(vii) "Domestic business entity" means a businessentity organized under the laws of this state;
(viii) "Filed with the secretary of state" means that adocument meeting the applicable requirements of this article, signed andaccompanied by the required filing fee, has been delivered to the secretary ofstate of this state. The secretary of state shall endorse on the document theword "Filed" or a similar word determined by the secretary of stateand the month, day, and year of filing, record the document in the office ofthe secretary of state, and return a document to the person or entity whodelivered it for filing;
(ix) "Foreign business entity" means a business entitythat is not a domestic business entity;
(x) "Member" means a person or entity reflected onthe books of the cooperative as the owner of governance rights of a membershipinterest of the cooperative and includes patron and nonpatron members;
(xi) "Membership interest" means a member's interestin a cooperative consisting of a member's financial rights, a member's right toassign financial rights, a member's governance rights and a member's right toassign governance rights. Membership interest includes patron membershipinterests and nonpatron membership interests;
(xii) "Members' meeting" means a regular or specialmembers' meeting;
(xiii) "Nonpatron membership interest" means amembership interest that does not require the holder to conduct patronagebusiness for or with the cooperative to receive financial rights ordistributions;
(xiv) "Patron" means a person or entity who conductspatronage business with the cooperative;
(xv) "Patronage" means business, transactions, orservices done for or with the cooperative as defined by the cooperative;
(xvi) "Patron member" means a member holding a patronmembership interest;
(xvii) "Patron membership interest" means the membershipinterest requiring the holder to conduct patronage business for or with thecooperative, as specified by the cooperative to receive financial rights ordistributions;
(xviii) "Signed" means that the signature of a person hasbeen written on a document, and, with respect to a document required by thisarticle to be filed with the secretary of state, means that the document hasbeen signed by a person authorized to do so by this article, the articles orbylaws, or by a resolution approved by the directors or the members. Asignature on a document may be a facsimile affixed, engraved, printed, placed,stamped with indelible ink, transmitted by facsimile or electronically or inany other manner reproduced on the document;
(xix) "The act" means W.S. 17-10-201 through 17-10-253.
17-10-203. Filing fee; rules and regulations; annual reports andlicense taxes.
(a) Unless otherwise provided, the filing fee for documentsfiled under this article with the secretary of state shall be subject to theprovisions of W.S. 17-16-122. The secretary of state shall promulgate rules andregulations necessary to implement the provisions of this article.
(b) The provisions of W.S. 17-16-1630 regarding the filing ofreports, license taxes and records shall apply to cooperatives formed underthis article.
17-10-204. Registered agent; change of registered office or registeredagent.
(a) Each cooperative shall have and continuously maintain inthis state:
(i) A registered office as provided in W.S. 17-28-101 through17-28-111;
(ii) A registered agent as provided in W.S. 17-28-101 through17-28-111.
(b) Repealed by Laws 2008, Ch. 90, 3.
(c) Repealed by Laws 2008, Ch. 90, 3.
(d) Repealed by Laws 2008., Ch. 90, 3
(e) If any cooperative has failed for thirty (30) days toappoint and maintain a registered agent in this state, or has failed for thirty(30) days after change of its registered office or registered agent to file inthe office of the secretary of state a statement of the change it shall bedeemed to be transacting business within this state without authority and tohave forfeited any franchises, rights or privileges acquired under the lawsthereof and the forfeiture shall be made effective in the following manner. Thesecretary of state shall mail by certified mail a notice of its failure tocomply with aforesaid provisions. Unless compliance is made within thirty (30)days of the delivery of notice, the cooperative shall be deemed defunct and tohave forfeited its certificate of organization acquired under the laws of thisstate. Provided, that any defunct cooperative may at any time within two (2)years after the forfeiture of its certificate, in the manner herein provided,be revived and reinstated, by filing the necessary statement under this act andpaying a reinstatement fee established by the secretary of state by rule,together with a penalty of one hundred dollars ($100.00). The reinstatement feeshall not exceed the costs of providing the reinstatement service. Thecooperative shall retain its registered name during the two (2) year reinstatementperiod under this section.
(f) The provisions of W.S. 17-28-101 through 17-28-111 shallapply to all cooperatives.
17-10-205. Organizational purpose.
A cooperative may be formed and organizedon a cooperative plan as provided under this article to market, process, orotherwise change the form or marketability of crops, livestock and otheragricultural products, including manufacturing and further processing of thoseproducts and other purposes that are necessary or convenient to facilitate theproduction or marketing of agricultural products by patron members and otherpurposes that are related to the business of the cooperative.
17-10-206. Organizers.
A cooperative may be organized by one (1)or more organizers who shall be adult natural persons, who may act forthemselves as individuals or as the agents of other entities. The organizersforming the cooperative need not be members of the cooperative.
17-10-207. Cooperative name.
(a) The name of a cooperative shall distinguish the cooperativeupon the records in the office of the secretary of state from the name of adomestic business entity or a foreign business entity, authorized or registeredto do business in this state or a name the right to which is, at the time oforganization, reserved or provided for by law.
(b) The cooperative name shall be reserved for the cooperativeduring its existence.
17-10-208. Articles of organization.
(a) The organizers shall prepare the articles, which shallinclude:
(i) The name of the cooperative;
(ii) The purpose of the cooperative;
(iii) The principal place of business for the cooperative and thename and address of its registered agent in this state;
(iv) The period of duration for the cooperative, if the durationis not to be perpetual;
(v) The capital structure of the cooperative including astatement of the classes and relative rights, preferences, and restrictionsgranted to or imposed upon each class of member interests, the rights to sharein profits or distributions of the cooperative, and the authority to issuemember interests, which may be designated to be determined by the board;
(vi) A provision designating the voting and governance rights,including which membership interests have voting power and any limitations orrestrictions on the voting power, which shall be in accordance with theprovisions of this article;
(vii) A statement that patron membership interests with votingpower shall be restricted to one (1) vote for each member regardless of theamount of patron membership interests held in the affairs of the cooperative ora statement describing the allocation of voting power allocated as prescribedin this article;
(viii) A statement that membership interests held by a member aretransferable only with the approval of the board or as provided in the bylaws;
(ix) The names, post office addresses, and terms of office ofthe directors of the first board;
(x) A statement as to how profits and losses will be allocatedand cash will be distributed between patron membership interests collectivelyand nonpatron membership interests collectively, a statement that net incomeallocated to a patron membership interests as determined by the board in excessof dividends and additions to reserves shall be distributed on the basis ofpatronage, and that the records of the cooperative shall include the interestsof patron membership interests and nonpatron membership interests which may befurther described in the bylaws, of any classes, and in the reserves; and
(xi) The registered address of the cooperative.
(b) The articles shall contain the provisions in subsection (a)of this section, except that the names, post office addresses of the directorsof the first board may be omitted after their successors have been elected bythe members or the articles are amended in their entirety.
(c) The articles may contain any other lawful provision.
(d) The articles shall be signed by the organizers.
(e) The original articles shall be filed with the secretary ofstate. The fee for filing the articles with the secretary of state shall besubject to the provisions of W.S. 17-16-122.
(f) When the articles of organization have been filed with thesecretary of state and the required fee has been paid to the secretary ofstate, it shall be presumed that:
(i) All conditions precedent that are required to be performedby the organizers have been complied with;
(ii) The organization of the cooperative has been chartered bythe state as a separate legal entity; and
(iii) The secretary of state shall issue a certificate oforganization to the cooperative.
17-10-209. Amendment of articles.
(a) The articles of a cooperative shall be amended as follows:
(i) The board by majority vote shall pass a resolution statingthe text of the proposed amendment. The text of the proposed amendment and anattached mail ballot, if the board has provided for a mail ballot in theresolution or alternative method approved by the board and stated in theresolution, shall be mailed or distributed with a regular or special meetingnotice to each member. The notice shall designate the time and place of themeeting for the proposed amendment to be considered and voted on;
(ii) If a quorum of the members is registered as being presentor represented by alternative vote at the meeting, the proposed amendment isadopted:
(A) If approved by a majority of the votes cast; or
(B) For a cooperative with articles or bylaws requiring morethan majority approval or other conditions for approval, the amendment isapproved by a proportion of the votes cast or a number of total members asrequired by the articles or bylaws and the conditions for approval in thearticles or bylaws have been satisfied.
(b) After an amendment has been adopted by the members, theamendment shall be signed by the chair, vice-chair, records officer, orassistant records officer and a copy of the amendment filed in the office ofthe secretary of state.
(c) A certificate shall be prepared stating:
(i) The vote and meeting of the board adopting a resolution ofthe proposed amendment;
(ii) The notice given to members of the meeting at which theamendment was adopted;
(iii) The quorum registered at the meeting; and
(iv) The vote cast adopting the amendment.
(d) The certificate shall be signed by the chair, vice-chair,records officer or financial officer and filed with the records of thecooperative.
(e) A majority of directors may amend the articles if thecooperative does not have any members with voting rights.
17-10-210. Amendment of organizational documents to be governed by thisarticle.
(a) A business entity organized and doing business under otherstatutes of this state or under the laws of other states that has or willconduct business as a cooperative may become subject to this article byamending its organizational documents to conform to the requirements ofarticles of organization under this article.
(b) A business entity organized under other statutes of thisstate may amend its articles in the manner provided under the statute that itis governed by for the adoption of amendments to comply with the provisions ofthis article and file the amended articles with the secretary of state to be acooperative governed under this article. The status of the business entityunder the other statutes terminates with the filing of articles to be governedunder this article.
(c) A business entity organized under laws of other statesshall amend its organizational documents in the manner required by the laws ofthe state where it was organized to comply with the provisions of this article.After the organizational documents are amended, the business entity shall filea certified copy of the organizational documents as amended with the secretaryof state to comply with the provisions of this article with the fees andrequirements prescribed for filing articles. After filing, the business entityis a cooperative in this state organized under and subject to the provisions ofthis article.
17-10-211. Existence.
(a) The existence of a cooperative shall begin when thearticles are filed with the secretary of state.
(b) A cooperative shall have a perpetual duration unless thecooperative provides for a limited period of duration in the articles oforganization.
17-10-212. Bylaws.
(a) A cooperative shall have bylaws governing the cooperative'sbusiness affairs, structure, the qualifications, classification, rights andobligations of members, and the classifications, allocations and distributionsof membership interests.
(b) The bylaws of a cooperative may be adopted or amended bythe directors as provided in subsection (c) of this section, or at a regular orspecial members' meeting if:
(i) The notice of the meeting contains a statement that thebylaws or restated bylaws will be voted upon and copies are included with thenotice, or copies are available upon request from the cooperative and summarystatement of the proposed bylaws or amendment is included with the notice;
(ii) A quorum is registered as being present or represented bymail or alternative voting method if the mail or alternative voting method isauthorized by the board; and
(iii) The bylaws or amendment is approved by a majority votecast, or for a cooperative with articles or bylaws requiring more than majorityapproval or other conditions for approval, the bylaws or amendment is approvedby a proportion of the vote cast or a number of the total members as requiredby the articles or bylaws and the conditions for approval in the articles orbylaws have been satisfied.
(c) Until the next annual or special members' meeting, themajority of directors may adopt and amend bylaws for the cooperative that areconsistent with subsection (d) of this section which may be further amended orrepealed by the members at an annual or special members' meeting.
(d) Bylaws may contain any provision relating to the managementor regulation of the affairs of the cooperative that are not inconsistent withlaw or the articles, and shall include the following:
(i) The number of directors, and the qualifications, manner ofelection, powers, duties, and compensation, if any, of directors;
(ii) The qualifications of members and any limitations on theirnumber;
(iii) The manner of admission, withdrawal, suspensions, andexpulsion of members;
(iv) Generally the governance rights, financial rights,assignability of governance and financial rights, and other rights, privilegesand obligations of members and their membership interests, which may be furtherdescribed in member control agreements.
17-10-213. Powers.
(a) In addition to other powers, a cooperative as an agent orotherwise:
(i) May perform every act and thing necessary or proper to theconduct of the cooperative's business or the accomplishment of the purposes ofthe cooperative;
(ii) Has other rights, powers, or privileges granted by the lawsof this state to other cooperatives, except those that are inconsistent withthe express provisions of this article; and
(iii) Has the powers given in this section.
(b) A cooperative may buy, sell, or deal in its own products,the products of the cooperative's individual members, patrons or nonmembers,the products of another cooperative association, or of its members or patrons,or the products of another person or entity. A cooperative may negotiate theprice at which the products the cooperative is selling may be sold.
(c) A cooperative may enter into or become a party to acontract or agreement for the cooperative or for the cooperative's individualmembers or patrons or between the cooperative and its members.
(d) A cooperative may purchase and hold, lease, mortgage,encumber, sell, exchange and convey as a legal entity real estate, buildingsand personal property as the business of the cooperative may require includingthe sale or other disposition of assets required by the business of thecooperative as determined by the board.
(e) A cooperative may erect buildings or other structures orfacilities on the cooperative's owned or leased property or on a right-of-waylegally acquired by the cooperative.
(f) A cooperative may issue bonds or other evidence ofindebtedness and may borrow money to finance the business of the cooperative.
(g) A cooperative may make advances to the cooperative's membersor patrons on products delivered by the members or patrons to the cooperative.
(h) A cooperative may accept deposits of money from othercooperatives, associations or members from which it is constituted.
(j) A cooperative may loan or borrow money to or fromindividual members, cooperatives or associations from which it is constitutedwith security that it considers sufficient in dealing with the members,cooperatives, or associations.
(k) A cooperative may purchase, acquire, hold, or dispose of theownership interests of another business entity whether organized under the lawsof this state or another state and assume all rights, interests, privileges,responsibilities and obligations arising out of the ownership interests.
(m) A cooperative may acquire and hold ownership interests inanother business entity organized under the laws of this state or another stateof the United States, including a business entity organized:
(i) As a federation of associations;
(ii) For the purpose of forming a district, state, or nationalmarketing, sales or service agency; or
(iii) For the purpose of acquiring marketing facilities atterminal or other markets in this state or other states.
(n) A cooperative may purchase, own, and hold ownership interests,memberships, interests in nonstock capital, evidences of indebtedness of anydomestic business entity or foreign business entity when reasonably necessaryor incidental to accomplish the purposes stated in the articles.
(o) A cooperative may exercise any and all fiduciary powers inrelations with members, cooperatives, associations or business entities fromwhich it is constituted.
(p) A cooperative may take, receive, and hold real and personalproperty, including the principal and interest of money or other funds andrights in a contract, in trust for any purpose not inconsistent with thepurposes of the cooperative in its articles and may exercise fiduciary powersin relation to taking, receiving, and holding the real and personal property.
17-10-214. Agricultural product marketing contracts.
(a) A cooperative and its patron member or patron may make andexecute a marketing contract, requiring the patron member or patron to sell aspecified portion of his agricultural product or specified commodity producedfrom a certain area exclusively to or through the cooperative or facilityestablished by the cooperative.
(b) If a sale is contracted to the cooperative, the sale shalltransfer title to the product absolutely, except for a recorded lien orsecurity interest, to the cooperative on delivery of the product or at anotherspecified time if expressly provided in the contract. The contract may allowthe cooperative to sell or resell the product of its patron member or patronwith or without taking title to the product, and pay the resale price to thepatron member or patron, after deducting all necessary selling, overhead andother costs and expenses, including other proper reserves and interest.
(c) A single term of a marketing contract shall not exceed ten(10) years, but a marketing contract may be made self-renewing for periods notexceeding five (5) years each, subject to the right of either party toterminate by giving written notice of the termination during a period of thecurrent term as specified in the contract.
(d) The bylaws or the marketing contract, or both, may set aspecific sum as liquidated damages to be paid by the patron member or patron tothe cooperative for breach of any provision of the marketing contract regardingthe sale or delivery or withholding of a product and may provide that themember or patron shall pay the costs, premiums for bonds, expenses and fees ifan action is brought on the contract by the cooperative. The remedies forbreach of contract are valid and enforceable in the courts of this state. Theprovisions shall be enforced as liquidated damages and are not to be consideredor regarded as a penalty.
(e) If there is a breach or threatened breach of a marketingcontract by a patron member or patron, the cooperative is entitled to aninjunction to prevent the further breach of the contract and to a decree ofspecific performance of the contract. Pending the adjudication of the actionafter filing a certified complaint showing the breach or threatened breach andfiling a sufficient bond, the cooperative is entitled to a temporaryrestraining order and preliminary injunction against the patron member orpatron.
(f) Any person who knowingly induces or attempts to induce anymember or patrons of a cooperative organized under this article to breach hismarketing contract with the cooperative, or who maliciously and knowinglyspreads false reports about the finances or management thereof, shall be guiltyof a misdemeanor and subject to a fine of not less than one hundred dollars($100.00), and not more than one thousand dollars ($1,000.00), for each suchoffense; provided, that this section shall not apply to a bona fide creditor ofsuch cooperative, or the agent or attorney of any such bona fide creditor,endeavoring to make collections of the indebtedness.
(g) In addition to the penalty provided in subsection (f) ofthis section, the person, corporation or other entity may be liable to thecooperative for civil damages for any violation of the provisions of subsection(f) of this section. Each violation shall constitute a separate offense and issubject to the penalties in this subsection and subsection (f) of this section.
17-10-215. Board governs cooperative.
A cooperative shall be governed by itsboard.
17-10-216. Number of directors.
The board shall have not less than three(3) directors.
17-10-217. Election of directors.
(a) Directors shall be elected for the term, at the time, andin the manner provided in this section and the bylaws. A majority of thedirectors shall be members and at least one (1) director shall be electedexclusively by the members holding patron membership interests. The votingauthority of the directors may be allocated according to allocation units orequity classifications of the cooperative provided that at least one-half (1/2)of the voting power on general matters of the cooperative shall be allocated toone (1) or more directors elected by members holding patron membershipinterests or in the alternative the one (1) or more directors elected by themembers holding patron membership interests shall have an equal or shall nothave a minority voting power on general matters of the cooperative.
(b) Directors shall be elected at the regular members' meetingfor the terms of office prescribed in the bylaws. Except for directors electedat district meetings, all directors shall be elected at the regular members'meeting.
(c) For a cooperative with districts or other units, membersmay elect directors on a district or unit basis if provided in the bylaws. Thedirectors may be nominated or elected at district meetings if provided in thebylaws. Directors who are nominated at district meetings shall be elected atthe annual regular members' meeting by vote of the entire membership, unlessthe bylaws provide that directors who are nominated at district meetings are tobe elected by vote of the members of the district at the annual regularmembers' meeting.
(d) The following shall apply to alternative voting:
(i) A member may not vote other than by their presence at ameeting for a director unless alternative voting is authorized for election ofdirectors by the articles or bylaws;
(ii) The ballot shall be in a form prescribed by the board;
(iii) The member shall mark the ballot for the candidate chosenand mail the ballot to the cooperative in a sealed plain envelope insideanother envelope bearing the member's name, or shall vote in the alternativemanner prescribed by the board;
(iv) If the ballot of the member is received by the cooperativeon or before the date of the regular members' meeting, the ballot shall beaccepted and counted as the vote of the absent member.
(e) If a member of a cooperative is not a natural person, andthe bylaws do not provide otherwise, the member may appoint or elect one (1) ormore natural persons to be eligible for election as a director to the board.
17-10-218. Filling vacancies.
If a patron member director's positionbecomes vacant for a director that was elected by patron members, the boardshall appoint a patron member of the cooperative to fill the director'sposition until the next regular or special members' meeting. If the vacatingdirector was not a patron member, the board shall appoint a patron member tofill the vacant position. At the next regular or special members' meeting, themembers or patron members shall elect a director to fill the unexpired term ofthe vacant director's position.
17-10-219. Removal of directors.
The members electing a director may removethe director at a members' meeting for cause related to the duties of theposition of director and fill the vacancy caused by the removal.
17-10-220. Limitation of director's liability.
(a) A director's personal liability to the cooperative ormembers for monetary damages for breach of fiduciary duty as a director may beeliminated or limited in the articles except as provided in subsection (b) ofthis section.
(b) The articles may not eliminate or limit the liability of adirector:
(i) For a breach of the director's duty of loyalty to thecooperative or its members;
(ii) For acts or omissions that are not in good faith or involveintentional misconduct or a knowing violation of law;
(iii) For a transaction from which the director derived animproper personal benefit; or
(iv) For an act or omission occurring before the date when theprovision in the articles eliminating or limiting liability becomes effective.
17-10-221. Officers.
(a) The board shall elect:
(i) A chair; and
(ii) One (1) or more vice-chairs.
(b) The board shall elect or appoint:
(i) A records officer; and
(ii) A financial officer.
(c) The board may elect additional officers as the articles orbylaws authorize or require.
(d) The offices of records officer and financial officer may becombined.
(e) The chair and first vice-chair shall be directors andmembers. The financial officer, records officer, and additional officers neednot be directors or members.
(f) The board may employ a chief executive officer to managethe day-to-day affairs and business of the cooperative.
(g) Other than the chief executive officer, members may removean officer at a members' meeting for cause related to the duties of theposition of the officer and fill the vacancy caused by the removal.
17-10-222. Membership interests.
(a) The authorized amount and divisions of patron membershipinterests and nonpatron membership interests may be increased or decreased orestablished or altered, in accordance with the restrictions in this article byamending the articles at a regular members' meeting or at a special members'meeting called for the purpose of the amendment.
(b) Authorized membership interests may be issued on terms andconditions prescribed in the articles, bylaws, or as determined by the board.The cooperative shall disclose to any person or entity acquiring membershipinterests to be issued by the cooperative, the organization, capital structureand business prospects and risks of the cooperative, the nature of the governanceand financial rights of the membership interest being acquired and of otherclasses of membership and membership interests. The cooperative shall notifyall members of the membership interests being offered by the cooperative. Amembership interest may not be issued until the subscription price of themembership interest has been paid for in cash or a cash equivalent or propertywith the agreed upon value of the property to be contributed.
(c) The patron membership interests collectively shall have notless than fifteen percent (15%) of the cooperative's financial rights to profitallocations and distributions.
(d) After issuance by the cooperative, membership interests ina cooperative may only be sold or transferred with the approval of the board.
(e) The cooperative may solicit and issue nonpatron membershipinterests on terms and conditions determined by the board and disclosed in thearticles, bylaws or by separate disclosure to the members. Each memberacquiring non