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1 | | therein or the foreign cooperative does not pay dividends |
2 | | on stock or membership capital in excess of 8% per year; |
3 | | and |
4 | | (2) the foreign cooperative does not deal in the |
5 | | products of or for nonmembers to an amount greater in value |
6 | | than such as are handled by it for members. |
7 | | "Member" means a person who has been qualified and accepted |
8 | | for membership in an association. If a cooperative has one or |
9 | | more classes of members not entitled to vote, "member" or |
10 | | "members", with respect to the right of a member to vote, |
11 | | voting procedure, the required proportion of member votes, |
12 | | actions that must or may be taken by members, the number of |
13 | | members required for a quorum, and the eligibility of |
14 | | directors, means a member or members entitled to vote, unless |
15 | | the bylaws provide otherwise. |
16 | | "Membership stock" means any class of stock, continuous |
17 | | ownership of which is required for membership in a cooperative. |
18 | | "Patronage" means business done by a patron with a |
19 | | cooperative and, if the bylaws provide, labor performed for a |
20 | | cooperative by a patron.
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21 | | "Secretary" means the Illinois Secretary of State. |
22 | | "Security" means any indebtedness, capital stock, or other |
23 | | equity interest in a cooperative's assets. |
24 | | Section 10. Purposes. A cooperative association may be |
25 | | organized under this Act for any lawful purpose or purposes. |
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1 | | Section 15. General powers. Unless otherwise prohibited by |
2 | | its articles, a cooperative may: |
3 | | (1) Exist perpetually. |
4 | | (2) Sue and be sued, complain, and defend.
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5 | | (3) Have a seal that may be altered at pleasure and use |
6 | | the same by causing it, or a facsimile thereof, to be |
7 | | impressed or affixed or in any other manner reproduced, |
8 | | provided that the affixing of a corporate seal to an |
9 | | instrument shall not give the instrument additional force |
10 | | or effect or change the construction thereof. |
11 | | (4) Make contracts, incur liabilities, and borrow |
12 | | money; issue certificates representing indebtedness or |
13 | | representing equity interests in its assets; acquire |
14 | | property; and dispose of, mortgage, pledge, lease, or |
15 | | otherwise use its property, or any interest therein, |
16 | | wherever situated in any manner. |
17 | | (5) Invest its funds, lend money for its purposes, and |
18 | | hold any property as security for repayment. |
19 | | (6) Have offices, conduct its business and affairs, and |
20 | | exercise its powers in the United States or in any foreign |
21 | | country. |
22 | | (7) Elect officers and appoint agents, define their |
23 | | duties, and fix their compensation. |
24 | | (8) Make and alter bylaws consistent with its articles |
25 | | and the laws of this State for the administration and |
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1 | | regulation of its affairs. |
2 | | (9) Make donations for charitable, scientific, |
3 | | educational, or religious purposes. |
4 | | (10) Effect the forfeiture to the cooperative of |
5 | | unclaimed funds, including all forms of distributions or |
6 | | credits and unclaimed stock, membership fees, and |
7 | | deposits, if all of the following conditions are met: |
8 | | (A) No earlier than 3 years and no later than 5 |
9 | | years after the funds are first made available to their |
10 | | owners, the board declares the funds forfeited to the |
11 | | cooperative unless claimed by the date specified in |
12 | | item (B). |
13 | | (B) After the declaration under item (A), the |
14 | | cooperative gives notice stating that the funds shall |
15 | | be forfeited if not claimed by a specified date. |
16 | | (C) The date specified in the notice under item (B) |
17 | | is a business day at least 60 days after the date of |
18 | | mailing of the notice. |
19 | | (D) The notice under item (B) is mailed to the last |
20 | | known address of each owner and is published in a |
21 | | manner consistent with Section 5 of the Notice By |
22 | | Publication Act on or before the date of mailing in a |
23 | | newspaper published in the city, town, or county |
24 | | containing the service area of the cooperative. |
25 | | (E) The cooperative dedicates any funds remaining |
26 | | unclaimed after the date specified in item (B) to |
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1 | | educational purposes, limited to providing |
2 | | scholarships or loans to students, or to charitable |
3 | | purposes, as the board determines, within one year |
4 | | after the date the funds are declared forfeited under |
5 | | item (A). In this item (E), "educational purposes" does |
6 | | not include contributions as defined in Section 9-1.4 |
7 | | of the Election Code. |
8 | | (11) Cease its activities and surrender its franchise. |
9 | | (12) Exercise all powers necessary or convenient to |
10 | | effect its purposes.
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11 | | Section 20. Refunds after forfeiture. After a forfeiture |
12 | | under Section 15, the owner of the forfeited funds may submit a |
13 | | claim to the board. If the board determines that the person |
14 | | owned the funds at the time of the forfeiture, it shall refund |
15 | | the funds to the person. |
16 | | Section 25. Restrictions on changes to articles. If the |
17 | | articles contain a prohibition on changes to the provision |
18 | | establishing the basis of distribution, no changes may be made |
19 | | to the provision including by amendment, approval of a plan of |
20 | | division, adoption of restated articles, approval of a plan of |
21 | | merger or consolidation, and conversion to a non-stock |
22 | | corporation. If, upon dissolution of a cooperative with |
23 | | articles containing a prohibition on changes in the basis of |
24 | | distribution, the distributions required are wholly or partly |
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1 | | impossible of execution, the whole or part of the net proceeds |
2 | | shall be distributed as provided in Section 220. |
3 | | Section 30. Definitions applicable to indemnification and |
4 | | insurance provisions. As used in Sections 30 through 65: |
5 | | "Cooperative" means a domestic cooperative and any |
6 | | domestic or foreign predecessor of a domestic cooperative where |
7 | | the predecessor cooperative's existence ceased upon the |
8 | | consummation of a merger or other transaction.
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9 | | "Director or officer" means any of the following: |
10 | | (1) A natural person who is or was a director or |
11 | | officer of a cooperative. |
12 | | (2) A natural person who, while a director or officer |
13 | | of a cooperative, is or was serving at the cooperative's |
14 | | request as a director, officer, partner, trustee, member of |
15 | | any governing or decision-making committee, manager, |
16 | | employee, or agent of an association, corporation, limited |
17 | | liability company, partnership, joint venture, trust, or |
18 | | other enterprise. |
19 | | (3) A natural person who is or was the chief executive, |
20 | | managerial employee of a cooperative, regardless of the |
21 | | person's title. |
22 | | (4) Unless the context requires otherwise, the estate |
23 | | or personal representative of a director or officer. |
24 | | "Expenses" means fees, costs, charges, disbursements, |
25 | | attorney's fees, and any other expenses incurred in connection |
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1 | | with a proceeding. |
2 | | "Liability" means the obligation to pay a judgment, |
3 | | settlement, forfeiture, or fine and costs, fees, and surcharges |
4 | | imposed under the Clerks of Courts Act. |
5 | | "Party" means a natural person who was or is, or who is |
6 | | threatened to be made, a named defendant or respondent in a |
7 | | proceeding.
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8 | | "Proceeding" means any threatened, pending, or completed |
9 | | civil, criminal, administrative, or investigative action, |
10 | | suit, arbitration, or other proceeding, whether formal or |
11 | | informal, that involves foreign, federal, State, or local law |
12 | | and that is brought by or in the right of the cooperative or by |
13 | | any other person. |
14 | | Section 35. Mandatory indemnification.
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15 | | (a) A cooperative shall indemnify a director or officer, to |
16 | | the extent he or she has been successful on the merits or |
17 | | otherwise in the defense of a proceeding, for all reasonable |
18 | | expenses incurred in the proceeding if the director or officer |
19 | | was a party because he or she is a director or officer of the |
20 | | cooperative. |
21 | | (b) In cases not included under subsection (a), a |
22 | | cooperative shall indemnify a director or officer against |
23 | | liability incurred by the director or officer in a proceeding |
24 | | to which the director or officer was a party because he or she |
25 | | is a director or officer of the cooperative, unless liability |
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1 | | was incurred because the director or officer breached or failed |
2 | | to perform a duty he or she owed to the cooperative and the |
3 | | breach or failure to perform constituted the following: |
4 | | (1) a willful failure to deal fairly with the |
5 | | cooperative, its members, or stockholders in connection |
6 | | with a matter in which the director or officer has a |
7 | | material conflict of interest; |
8 | | (2) a violation of criminal law, unless the director or |
9 | | officer had reasonable cause to believe his or her conduct |
10 | | was lawful or no reasonable cause to believe his or her |
11 | | conduct was unlawful; |
12 | | (3) a transaction from which the director or officer |
13 | | derived an improper personal profit; or |
14 | | (4) willful misconduct. |
15 | | Determination of whether indemnification is required under |
16 | | this subsection shall be made under Section 40 of this Act. |
17 | | The termination of a proceeding by judgment, order, |
18 | | settlement, or conviction or upon a plea of no contest or an |
19 | | equivalent plea does not, by itself, create a presumption that |
20 | | indemnification of the director or officer is not required |
21 | | under this subsection. |
22 | | (c) A director or officer who seeks indemnification under |
23 | | this Section shall make a written request to the cooperative. |
24 | | (d) Indemnification under this Section is not required if |
25 | | the director or officer has previously received |
26 | | indemnification or allowance of expenses from any person, |
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1 | | including the cooperative, in connection with the same |
2 | | proceeding. |
3 | | Section 40. Determination of right to indemnification. |
4 | | Unless otherwise provided by the articles or bylaws or by |
5 | | written agreement between the director or officer and the |
6 | | cooperative, the director or officer seeking indemnification |
7 | | under Section 35 of this Act shall select one of the following |
8 | | means for determining his or her right to indemnification: |
9 | | (1) by majority vote of a quorum of the board |
10 | | consisting of directors not at the time parties to the same |
11 | | or related proceedings. If a quorum of disinterested |
12 | | directors cannot be obtained, by majority vote of a |
13 | | committee duly appointed by the board and consisting solely |
14 | | of 2 or more directors not at the time parties to the same |
15 | | or related proceedings. Directors who are parties to the |
16 | | same or related proceedings may participate in the |
17 | | designation of members of the committee; |
18 | | (2) by independent legal counsel selected by a quorum |
19 | | of the board or its committee in the manner prescribed in |
20 | | item (1) or, if unable to obtain such a quorum or |
21 | | committee, by a majority vote of the full board, including |
22 | | directors who are parties to the same or related |
23 | | proceedings; |
24 | | (3) by a panel of 3 arbitrators consisting of one |
25 | | arbitrator selected by those directors entitled under item |
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1 | | (2) to select independent legal counsel, one arbitrator |
2 | | selected by the director or officer seeking |
3 | | indemnification, and one arbitrator selected by the 2 |
4 | | arbitrators previously selected; |
5 | | (4) by a majority vote of a quorum of the members; |
6 | | however, members who are at the time parties to the same or |
7 | | related proceedings, whether as plaintiffs or defendants |
8 | | or in any other capacity, may not vote in making the |
9 | | determination;
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10 | | (5) by a court under Section 55 of this Act; or |
11 | | (6) by any other method provided for in any additional |
12 | | right to indemnification permitted under Section 50 of this |
13 | | Act. |
14 | | Section 45. Allowance of expenses as incurred. Upon |
15 | | written request by a director or officer who is a party to a |
16 | | proceeding, a cooperative may pay or reimburse the director's |
17 | | reasonable expenses as incurred if the director or officer |
18 | | provides the cooperative with all of the following: |
19 | | (1) a written affirmation of his or her good faith |
20 | | belief that he or she has not breached or failed to perform |
21 | | his or her duties to the cooperative; and |
22 | | (2) a written undertaking, executed personally or on |
23 | | his or her behalf, to repay the allowance and, if required |
24 | | by the cooperative, to pay reasonable interest on the |
25 | | allowance to the extent that it is ultimately determined |
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1 | | under Section 40 of this Act that indemnification under |
2 | | subsection (b) of Section 35 is not required and that |
3 | | indemnification is not ordered by a court under item (2) of |
4 | | subsection (b) of Section 55. The undertaking under this |
5 | | item (2) shall be an unlimited general obligation of the |
6 | | director or officer and may be accepted without reference |
7 | | to his or her ability to repay the allowance. The |
8 | | undertaking may be secured or unsecured. |
9 | | Section 50. Additional rights to indemnification and |
10 | | allowance of expenses. |
11 | | (a) Except as provided in subsection (b), Sections 35 and |
12 | | 45 do not preclude any additional right to indemnification or |
13 | | allowance of expenses that a director or officer may have under |
14 | | any of the following: |
15 | | (1) the articles or bylaws; |
16 | | (2) a written agreement between the director or officer |
17 | | and the cooperative; |
18 | | (3) a resolution of the board; or |
19 | | (4) a resolution, after notice, adopted by a majority |
20 | | vote of members who are entitled to vote. |
21 | | (b) Regardless of the existence of an additional right |
22 | | under subsection (a), the cooperative may not indemnify a |
23 | | director or officer or permit a director or officer to retain |
24 | | any allowance of expenses unless it is determined by or on |
25 | | behalf of the cooperative that the director or officer did not |
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1 | | breach or fail to perform a duty he or she owed to the |
2 | | cooperative which constituted conduct under item (1) of |
3 | | subsection (b) of Section 35. A director or officer who is a |
4 | | party to the same or a related proceeding for which |
5 | | indemnification or an allowance of expenses is sought may not |
6 | | participate in a determination under this subsection. |
7 | | (c) Sections 30 through 55 do not affect a cooperative's |
8 | | power to pay or reimburse expenses incurred by a director or |
9 | | officer in any of the following circumstances: |
10 | | (1) as a witness in a proceeding to which he or she is |
11 | | not a party; or |
12 | | (2) as a plaintiff or petitioner in a proceeding |
13 | | because he or she is or was an employee, agent, director, |
14 | | or officer of the cooperative. |
15 | | Section 55. Court-ordered indemnification.
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16 | | (a) Except as provided otherwise by written agreement |
17 | | between the director or officer and the cooperative, a director |
18 | | or officer who is a party to a proceeding may apply for |
19 | | indemnification to the court conducting the proceeding or to |
20 | | another court of competent jurisdiction. Application shall be |
21 | | made for an initial determination by the court under item (5) |
22 | | of Section 40, or for review by the court of an adverse |
23 | | determination under item (1), (2), (3), (4), or (6) of Section |
24 | | 40. After receipt of an application, the court shall give any |
25 | | notice it considers necessary. |
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1 | | (b) The court shall order indemnification if it determines |
2 | | any of the following: |
3 | | (1) That the director or officer is entitled to |
4 | | indemnification under subsection (a) or (b) of Section 35. |
5 | | If the court also determines that the cooperative |
6 | | unreasonably refused the director's or officer's request |
7 | | for indemnification, the court shall order the cooperative |
8 | | to pay the director's or officer's reasonable expenses |
9 | | incurred to obtain the court-ordered indemnification. |
10 | | (2) That the director or officer is fairly and |
11 | | reasonably entitled to indemnification in view of all the |
12 | | relevant circumstances, regardless of whether |
13 | | indemnification is required under subsection (b) of |
14 | | Section 35. |
15 | | Section 60. Indemnification and allowance of expenses of |
16 | | employees and agents. A cooperative may indemnify and allow |
17 | | reasonable expenses of an employee or agent who is not a |
18 | | director or officer to the extent provided by the articles or |
19 | | bylaws, by general or specific action of the board, or by |
20 | | contract. |
21 | | Section 65. Insurance. A cooperative may purchase and |
22 | | maintain insurance on behalf of an individual who is an |
23 | | employee, agent, director, or officer of the cooperative |
24 | | against liability asserted against and incurred by the |
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1 | | individual in his or her capacity as an employee, agent, |
2 | | director, or officer or arising from his or her status as an |
3 | | employee, agent, director, or officer regardless of whether the |
4 | | cooperative is required or authorized to indemnify or allow |
5 | | expenses to the individual against the same liability under |
6 | | Sections 35, 45, 50, and 60 of this Act. |
7 | | Section 70. Incorporators. Five or more adults, of which |
8 | | one must be a resident, may form a cooperative by signing, |
9 | | acknowledging, and filing articles. |
10 | | Section 75. Reserved or registered name. Sections 4.05 and |
11 | | 4.10 of the Business Corporation Act of 1983 apply to |
12 | | cooperatives. A cooperative shall comply with those Sections |
13 | | with the word "cooperative" being deemed the equivalent of the |
14 | | words "corporation", "company", "incorporated", or "limited", |
15 | | or an abbreviation of one of those words.
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16 | | Section 80. Articles.
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17 | | (a) The articles shall set forth: |
18 | | (1) the name of the cooperative; |
19 | | (2) the period of existence, which may be perpetual; |
20 | | (3) the purposes for which organized. It is sufficient |
21 | | to state that the cooperative may engage in any activity |
22 | | within the purposes for which cooperatives may be |
23 | | organized, and all such activities shall then be deemed |
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1 | | within its purposes, subject to express limitations; |
2 | | (4) whether the cooperative is organized with or |
3 | | without capital stock; |
4 | | (5) the designation of classes of members, if more than |
5 | | one; |
6 | | (6) the number and par value of shares of each |
7 | | authorized class of stock. If more than one class is |
8 | | authorized, the designation, preferences, limitations, and |
9 | | relative rights of each class shall also be set forth; |
10 | | (7) which classes of stock are membership stock; |
11 | | (8) as to each class of stock, the rate of dividend, or |
12 | | that the rate of dividend may be fixed by the board, or |
13 | | that no dividend will be paid. If the dividend on any class |
14 | | of stock is to be cumulative, that fact shall also be |
15 | | stated; |
16 | | (9) any reservation of a right to acquire or recall any |
17 | | stock; |
18 | | (10) the basis of distribution of assets upon |
19 | | liquidation and, if changes in the basis of distribution |
20 | | are to be prohibited, a statement that this provision may |
21 | | not be changed and a reference to the restriction under |
22 | | Section 25; |
23 | | (11) the complete address, including street number, |
24 | | city, town, or village, county, and zip code of its |
25 | | principal office or the name and complete address, |
26 | | including street number, city, town, or village, county, |
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1 | | and zip code of its registered agent; |
2 | | (12) the name and address of each incorporator; and |
3 | | (13) the names and addresses of at least 5 |
4 | | incorporators who will act as the temporary board. |
5 | | (b) It is not necessary to set forth in the articles any of |
6 | | the powers granted by this Act. The articles may include |
7 | | additional provisions, consistent with law, including |
8 | | provisions that are required or permitted to be set forth in |
9 | | the bylaws. Any provision required or permitted in the bylaws |
10 | | has equal force and effect if stated in the articles. Whenever |
11 | | a provision of the articles is inconsistent with a bylaw, the |
12 | | articles control. |
13 | | (c) The articles shall be filed and recorded as provided in |
14 | | Section 235. The legal existence of a cooperative begins when |
15 | | the Secretary files the articles. Upon the filing of the |
16 | | articles, the Secretary shall issue a certificate of |
17 | | incorporation. The Secretary shall forward within 5 days a |
18 | | duplicate original of the articles to the recorder of deeds of |
19 | | the county of the cooperative's principal office or registered |
20 | | agent for recording. |
21 | | (d) The certificate of incorporation shall be conclusive |
22 | | evidence, except as against the State, that all conditions |
23 | | precedent to the cooperative's existence have been met. |
24 | | Section 85. Organization meetings.
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25 | | (a) After articles have been filed, an organization meeting |
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1 | | of the temporary board shall be held at the call of a majority |
2 | | of the incorporators or of a majority of the temporary |
3 | | directors for the adoption of bylaws, election of temporary |
4 | | officers, and transaction of other business. |
5 | | (b) The first meeting of the members shall be called by the |
6 | | temporary president or a majority of the temporary directors. |
7 | | The meeting shall be held as soon as reasonably possible after |
8 | | the organization meeting of the temporary board, but not later |
9 | | than 6 months after filing the articles. Failure to hold the |
10 | | meeting within the time specified does not affect the validity |
11 | | of organization. |
12 | | Section 90. Bylaws.
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13 | | (a) The initial bylaws may be adopted by the temporary |
14 | | board. Thereafter, bylaws may be adopted and amended only by |
15 | | the members unless the members adopt a bylaw that permits the |
16 | | board to make and amend specified bylaws.
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17 | | (b) A bylaw adopted or amended by the board shall be |
18 | | reported at the next regular member meeting. The bylaw shall be |
19 | | at any time subject to amendment or repeal by the members. |
20 | | (c) Unless the bylaws provide otherwise, a bylaw may be |
21 | | adopted, amended, or repealed by a majority of the member votes |
22 | | cast at a meeting. |
23 | | Section 95. Principal office, registered agent, and |
24 | | service of process.
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1 | | (a) A cooperative shall maintain in the State either its |
2 | | principal office or a registered agent. |
3 | | (b) The board may establish or change the location of the |
4 | | principal office or name and address of the registered agent by |
5 | | causing a statement in writing to be filed and recorded as an |
6 | | amendment to the articles as provided in Section 235. The |
7 | | statement shall set forth the name of the cooperative and the |
8 | | mailing address and county of its principal office or the name |
9 | | and address, including the county, of the registered agent as |
10 | | established or changed. If a statement under this subsection |
11 | | results from the action of a governmental agency in changing |
12 | | the address of the principal office or registered agent and |
13 | | there is no corresponding change in physical location, these |
14 | | facts shall be contained in the statement. |
15 | | (c) A registered agent may resign by mailing a written |
16 | | notice to both the Secretary and the cooperative. The |
17 | | resignation becomes effective when the cooperative names a new |
18 | | registered agent or 60 days after the receipt of notice by the |
19 | | Secretary, whichever is sooner. |
20 | | (d) Service of any process, notice, or demand upon a |
21 | | cooperative may be made as provided in Section 5.25 of the |
22 | | Business Corporation Act of 1983. |
23 | | Section 100. Limitation on promotional expenses. |
24 | | Cooperative funds may not be used, nor any stock issued, in |
25 | | payment of any promotion expenses in excess of 5% of the |
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1 | | paid-up capital stock or membership fees. |
2 | | Section 105. Membership. |
3 | | (a) A cooperative shall be organized on a membership basis |
4 | | with no capital stock or on a membership basis with capital |
5 | | stock. |
6 | | (b) A cooperative may have one or more classes of members. |
7 | | The designation, qualifications, requirements, method of |
8 | | acceptance, and incidents of membership of each class shall be |
9 | | set forth in the bylaws. Any person, including a partnership, |
10 | | incorporated or unincorporated association, limited liability |
11 | | company, corporation, or body politic, may become a member in |
12 | | accordance with the bylaws. |
13 | | (c) No member may transfer his or her membership except as |
14 | | permitted in the bylaws. |
15 | | (d) The bylaws may provide for termination of membership |
16 | | and the conditions and terms thereof. |
17 | | Section 110. Voting. |
18 | | (a) Except as permitted in this Section, no person other |
19 | | than a member may vote at any member meeting. A person who has |
20 | | not fully paid for a membership may not vote except as |
21 | | expressly permitted in the bylaws. If the cooperative permits 2 |
22 | | or more persons to hold one membership, the bylaws may provide |
23 | | how such member vote is to be cast. |
24 | | (b) At any member meeting, each member entitled to vote |
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1 | | shall have one vote, except that the articles may permit either |
2 | | or both: |
3 | | (1) A member association to cast additional votes not |
4 | | exceeding a number equal to its membership. |
5 | | (2) A cooperative whose members include other |
6 | | associations to base voting in whole or in part on a |
7 | | patronage basis. |
8 | | (c) Voting by proxy shall not be allowed in any |
9 | | cooperative. |
10 | | (d) The bylaws may provide for representation of members by |
11 | | delegates apportioned territorially or by other districts or |
12 | | units. The bylaws shall specify either that a delegate may cast |
13 | | only one vote or that a delegate may cast one vote for each |
14 | | member represented by the delegate. The procedures set forth in |
15 | | this Act for voting by members apply to voting by delegates, |
16 | | except as provided in all of the following: |
17 | | (1) if any delegate who may cast only one vote is |
18 | | permitted to vote on a matter, only delegates may vote on |
19 | | that matter; |
20 | | (2) if delegates may cast only one vote, in calculating |
21 | | the required proportion of votes on a matter, the number of |
22 | | delegate votes shall be used, but the number of delegates |
23 | | required for a quorum shall be as specified in the bylaws; |
24 | | and |
25 | | (3) if the bylaws provide for representation of members |
26 | | by delegates who may cast one vote for each member |
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1 | | represented by the delegate, in calculating the required |
2 | | proportion of votes on a matter and the number of delegates |
3 | | required for a quorum, the number of members represented by |
4 | | each delegate shall be used. |
5 | | (e) Members entitled to vote on a motion but absent from |
6 | | the meeting at which the vote is taken may vote only as |
7 | | follows: |
8 | | (1) if a cooperative provides ballots for the vote on |
9 | | the motion to the members together with notice of the |
10 | | meeting at which the vote will be taken and exact copies of |
11 | | the motion and any resolution to which it pertains, an |
12 | | absent member may vote on the motion by submitting a signed |
13 | | ballot. If a signed ballot has been submitted on a motion |
14 | | under this subsection, neither the motion nor any |
15 | | resolution to which it pertains may be amended; or |
16 | | (2) if a cooperative makes available ballots for the |
17 | | vote on the motion together with exact copies of the motion |
18 | | and any resolution to which it pertains to any member |
19 | | entitled to vote on the motion, but does not comply fully |
20 | | with the requirements of item (1), an absent member may |
21 | | vote on the motion by submitting a signed ballot; however, |
22 | | the motion and any resolution to which it pertains may be |
23 | | amended at the meeting, and, if the motion or resolution is |
24 | | amended, the ballot is void and may not be counted on any |
25 | | motion to amend or adopt as amended the motion or |
26 | | resolution. |
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1 | | (f) The bylaws may provide for voting on the election or |
2 | | removal of directors by signed ballots. Signed ballots may not |
3 | | be used for this purpose unless the bylaws authorize and |
4 | | prescribe the procedure for their use. |
5 | | (g) The bylaws may set forth provisions, not inconsistent |
6 | | with this Act, relating to the methods and procedures for |
7 | | voting. |
8 | | Section 115. Member meetings.
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9 | | (a) Unless the bylaws provide otherwise, member meetings |
10 | | shall be held at the principal office or such other place as |
11 | | the board may determine. |
12 | | (b) An annual member meeting shall be held at the time |
13 | | fixed in or pursuant to the bylaws. In the absence of a bylaw |
14 | | provision, the annual meeting shall be held within 6 months |
15 | | after the close of the fiscal year at the call of the president |
16 | | or board. |
17 | | (c) Special member meetings may be called by the president, |
18 | | board, or members having one-fifth of the votes entitled to be |
19 | | cast at such meeting. |
20 | | (d) Written notice, stating the place, day, and hour and, |
21 | | in case of a special member meeting, the purposes for which the |
22 | | meeting is called shall be given not less than 7 nor more than |
23 | | 30 days before the meeting at the direction of the person |
24 | | calling the meeting. Notice need be given only to members |
25 | | entitled to vote. Notice shall be given to members having |
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1 | | limited voting rights if they have or may have the right to |
2 | | vote at the meeting. |
3 | | (e) At any meeting when members are to be represented by |
4 | | delegates, notice to such members may be given by notifying |
5 | | such delegates and their alternates. Notice may consist of a |
6 | | notice to all members or may be in the form of an announcement |
7 | | at the meeting at which such delegates or alternates were |
8 | | elected. |
9 | | Section 120. Quorum.
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10 | | (a) A quorum at a member meeting shall be 10% of the first |
11 | | 100 members plus 5% of additional members. |
12 | | (b) Unless the bylaws fix a larger number of members to |
13 | | constitute a quorum and except as provided in the bylaws in |
14 | | accordance with subsection (d) of Section 110, a quorum shall |
15 | | never be more than 50 members nor less than 5 members or a |
16 | | majority of all members, whichever is smaller. Members |
17 | | represented by signed ballots may be counted in computing a |
18 | | quorum only on those motions for which the signed ballots were |
19 | | submitted. |
20 | | Section 125. Notice to members, stockholders, or other |
21 | | persons; waiver.
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22 | | (a) Whenever notice is required by this Act to be given to |
23 | | any person, the notice shall be given either personally or by |
24 | | mail. If mailed, the notice is given when it or a newsletter or |
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1 | | other publication of a cooperative or of an affiliated |
2 | | organization that includes the notice is deposited in the |
3 | | United States mail, with postage prepaid thereon, addressed to |
4 | | such person at his or her address as it appears on the records |
5 | | of the cooperative. |
6 | | (b) A signed waiver is equivalent to personal notice to the |
7 | | person signing. The waiver may be signed at any time. |
8 | | Section 130. Stock.
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9 | | (a) A cooperative may be organized with or without capital |
10 | | stock. |
11 | | (b) A cooperative organized with capital stock may issue |
12 | | the amount of stock stated in its articles. The stock may be |
13 | | divided into 2 or more classes with such designations, |
14 | | preferences, limitations, and relative rights as shall be |
15 | | stated in the articles, except that: |
16 | | (1) stock as such has no voting power, except as stated |
17 | | in Section 210; |
18 | | (2) stock without par value shall not be authorized or |
19 | | issued; and |
20 | | (3) the rate of dividends upon stock shall not exceed |
21 | | 8% of its par value for any year, but dividends may be |
22 | | cumulative. |
23 | | (c) The articles may require that members own one or more |
24 | | shares of membership stock. The stock shall be issued or |
25 | | transferred only to a person eligible to become a member and |
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1 | | only when the person satisfies other requisites for membership. |
2 | | Unless restricted by the articles, stock other than membership |
3 | | stock may be issued or transferred to any person. |
4 | | (d) Each certificate for stock shall bear the manual or |
5 | | facsimile signature of a principal officer and shall state: |
6 | | (1) the name of the cooperative, the number, par value, |
7 | | and class of the shares represented by the certificate, and |
8 | | whether the stock is membership stock; |
9 | | (2) any restrictions on the issuance or transfer of |
10 | | such stock, including those provided in subsection (c); and |
11 | | (3) if more than one class of stock is authorized, the |
12 | | designation of the several classes, their respective |
13 | | preferences, limitations, and relative rights. |
14 | | In lieu of the full statement, this information may be |
15 | | given in summary form or the certificate may state that the |
16 | | cooperative will, upon request, furnish the information |
17 | | required by this subsection. |
18 | | (e) No stock certificate may be issued except upon payment |
19 | | of the par value of the stock it represents. Payment for stock |
20 | | may be in cash or other property. If in other property, the |
21 | | value thereof shall be determined by the board, and the |
22 | | determination, if made in good faith, shall be conclusive. |
23 | | (f) Unless the articles provide otherwise, a cooperative |
24 | | may acquire, recall, exchange, redeem, and reissue its own |
25 | | stock. Provisions in the articles and on the stock certificate |
26 | | may reserve to the cooperative a prior right to acquire any |
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1 | | stock offered for sale or a right to recall the stock of any |
2 | | stockholder, or both. The consideration paid for stock recalled |
3 | | by the cooperative shall be its par value and accrued unpaid |
4 | | dividends, provided that if the book value of such stock is |
5 | | less than the par value, the consideration shall be the book |
6 | | value. The cooperative may set off obligations of the |
7 | | stockholder to it. If the remaining assets would be less than |
8 | | the aggregate amount payable to creditors and persons holding |
9 | | stock with preferential rights upon liquidation, no stock shall |
10 | | be acquired, recalled, exchanged, or redeemed for a |
11 | | consideration other than stock or certificates of equity |
12 | | interest of equal or subordinate rank. |
13 | | (g) When stock is acquired, recalled, exchanged, or |
14 | | redeemed by the cooperative, the stock is restored to the |
15 | | status of authorized but unissued stock. |
16 | | (h) Stockholders as such have no preemptive right to |
17 | | purchase additional stock. |
18 | | Section 135. Subscriptions and liability for stock.
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19 | | (a) A subscription for stock of a cooperative is |
20 | | irrevocable for 6 months unless otherwise provided by the |
21 | | subscription agreement or unless all subscribers consent to the |
22 | | revocation. |
23 | | (b) Except as provided in Section 170, a stockholder or |
24 | | subscriber is under no obligation to any person with respect to |
25 | | the stockholder's or subscriber's stock or subscription other |
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1 | | than the obligation to pay to the cooperative the full |
2 | | consideration for which the stock was to be issued. |
3 | | Section 140. Missing securities or records.
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4 | | (a) When a security issued by a cooperative is missing, the |
5 | | cooperative shall issue a duplicate security if the owner so |
6 | | requests and furnishes an indemnity acceptable to the |
7 | | cooperative. |
8 | | (b) When records showing ownership of securities of |
9 | | apportionment of equity interest in the assets are missing and |
10 | | the information therein contained is necessary to a proposed |
11 | | redemption of the interest, the cooperative may give notice and |
12 | | redeem as follows: |
13 | | (1) the cooperative shall set aside an amount equal to |
14 | | the value of the interests to be redeemed; |
15 | | (2) the cooperative shall give notice of the redemption |
16 | | to all owners of interests of which the cooperative has |
17 | | knowledge; and |
18 | | (3) if there are interests, the ownership of which is |
19 | | unknown to the cooperative, it shall publish notice of the |
20 | | redemption at least once a month for 4 months in a |
21 | | publication circulated among members of cooperatives in |
22 | | the area. |
23 | | Section 145. Directors; number, election, removal, and |
24 | | vacancies.
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1 | | (a) All powers of the cooperative shall be exercised by or |
2 | | under authority of, and the business and affairs of a |
3 | | cooperative shall be managed under the direction of, the board, |
4 | | except as otherwise provided in this Act. A director shall be a |
5 | | member or a representative of a member who is other than a |
6 | | natural person. The bylaws shall prescribe any other |
7 | | qualifications for directors. |
8 | | (b) The number of directors shall not be less than 5, |
9 | | provided that, in a cooperative with less than 50 members, the |
10 | | number of directors shall not be less than 3. Subject to such |
11 | | limitation, the number shall be fixed in the articles, or if |
12 | | the articles so provide, in the bylaws. |
13 | | (c) The directors constituting the temporary board, named |
14 | | in the articles, shall hold office until the first member |
15 | | meeting. At that meeting and thereafter, directors shall be |
16 | | elected by the members at a member meeting in the manner and |
17 | | for the terms provided in the bylaws. If the bylaws provide |
18 | | that directors be from specified districts, the articles may |
19 | | limit voting for any director to members from within the |
20 | | district from which the director is to be elected. Unless the |
21 | | bylaws provide otherwise, a director's term of office shall be |
22 | | one year. Each director shall hold office for the term for |
23 | | which elected and until a successor takes office. The bylaws |
24 | | may permit selection of alternates to take the place of |
25 | | directors absent at a meeting of the board. Whenever any change |
26 | | is made in the board, the cooperative shall file within 20 days |
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1 | | with the Secretary a report showing the names and addresses of |
2 | | all directors. |
3 | | (d) Unless the bylaws provide otherwise, a director may be |
4 | | removed upon a majority vote of all members. |
5 | | (e) Unless the bylaws provide otherwise, any vacancy |
6 | | existing in the board, including any vacancy created by an |
7 | | increase in the number of directors, may be filled until the |
8 | | next annual meeting by appointment by a majority vote of the |
9 | | directors then in office. |
10 | | Section 150. Directors; meetings, quorum, and waiver of |
11 | | notice.
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12 | | (a) Meetings of the board shall be held at such place and |
13 | | upon such notice as is prescribed in or pursuant to the bylaws. |
14 | | (b) Unless a greater number is required in the bylaws, a |
15 | | majority of the directors in office shall constitute a quorum |
16 | | for transaction of business. Unless a greater number is |
17 | | required in the bylaws, an act of the majority of the directors |
18 | | present at a meeting at which a quorum is present shall be the |
19 | | act of the board. |
20 | | (c) A signed waiver of notice of a board meeting is |
21 | | equivalent to personal notice to the person so signing. The |
22 | | waiver may be signed at any time. Attendance at a meeting is a |
23 | | waiver of notice of such meeting, except when a director |
24 | | attends the meeting and objects at the meeting to the |
25 | | transaction of business because the meeting was not lawfully |
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1 | | convened. |
2 | | (d) Unless the bylaws provide otherwise, the purposes of |
3 | | any meeting of the board need not be specified in the notice or |
4 | | waiver of notice of the meeting. |
5 | | (e) Unless the articles or bylaws provide otherwise, the |
6 | | board may permit any or all directors to participate in a |
7 | | regular or special meeting or in a committee meeting, including |
8 | | an executive committee meeting, of the board by, or to conduct |
9 | | the meeting through the use of, any means of communication by |
10 | | which any of the following occurs: |
11 | | (1) all participating directors may simultaneously |
12 | | hear each other during the meeting; or |
13 | | (2) all communication during the meeting is |
14 | | immediately transmitted to each participating director, |
15 | | and each participating director is able to immediately send |
16 | | messages to all other participating directors. |
17 | | (f) If a meeting will be conducted through the use of any |
18 | | means described in subsection (e), all participating directors |
19 | | shall be informed that a meeting is taking place at which |
20 | | official business may be transacted. A director participating |
21 | | in a meeting by any means described in subsection (e) is deemed |
22 | | to be present in person at the meeting. If requested by a |
23 | | director, minutes of the meeting shall be prepared and |
24 | | distributed to each director. |
25 | | Section 155. Executive committee.
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1 | | (a) If the bylaws so provide, the board may elect an |
2 | | executive committee to consist of 3 or more directors. When the |
3 | | board is not in session, the committee shall have all powers of |
4 | | the board except in respect to: |
5 | | (1) powers reserved by the board to itself;
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6 | | (2) apportionment or distribution of proceeds; |
7 | | (3) election of officers; |
8 | | (4) filling of vacancies in the board; and
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9 | | (5) amendments to the bylaws. |
10 | | (b) The board may elect other directors as alternates for |
11 | | members of the executive committee. |
12 | | Section 160. Officers.
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13 | | (a) Unless the articles of incorporation provide |
14 | | otherwise, the principal officers of a cooperative are a |
15 | | president, one or more vice presidents as prescribed in the |
16 | | bylaws, a secretary, and a treasurer. They shall be elected |
17 | | annually by the board at the time and in such manner as the |
18 | | bylaws provide. Upon original election and whenever any change |
19 | | is made in the officers, the cooperative shall file with the |
20 | | Secretary, within 20 days, a report showing the name and |
21 | | address of all officers. Each principal officer except the |
22 | | secretary and the treasurer must be a director of the |
23 | | cooperative. The offices of secretary and treasurer may be |
24 | | combined in one person. |
25 | | (b) Any other officer may be chosen by the board or as |
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1 | | provided in the bylaws. |
2 | | (c) All officers shall have such authority and perform such |
3 | | duties as the bylaws provide or as the board may determine not |
4 | | inconsistent with the bylaws. An officer may be removed by the |
5 | | board whenever in its judgment the best interests of the |
6 | | cooperative will be served thereby. Election or appointment |
7 | | does not of itself create contract rights. |
8 | | Section 165. Limited liability of directors and officers.
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9 | | (a) Except as provided in subsections (b) and (c), a |
10 | | director or officer is not liable to the cooperative, its |
11 | | members, stockholders, or creditors, or any person asserting |
12 | | rights on behalf of the cooperative, its members, stockholders, |
13 | | or creditors, or any other person for damages, settlements, |
14 | | fees, fines, penalties, or other monetary liabilities arising |
15 | | from a breach of, or failure to perform, any duty resulting |
16 | | solely from his or her status as a director or officer, unless |
17 | | the person asserting liability proves that the breach or |
18 | | failure to perform constitutes any of the following: |
19 | | (1) A willful failure to deal fairly with the |
20 | | cooperative, its members, or stockholders in connection |
21 | | with a matter in which the director or officer has a |
22 | | material conflict of interest. |
23 | | (2) A violation of criminal law, unless the director or |
24 | | officer had reasonable cause to believe his or her conduct |
25 | | was lawful or no reasonable cause to believe his or her |
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1 | | conduct was unlawful.
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2 | | (3) A transaction from which the director or officer |
3 | | derived an improper personal profit. |
4 | | (4) Willful misconduct. |
5 | | (b) Except as provided in subsection (c), this Section does |
6 | | not apply to any of the following: |
7 | | (1) A civil or criminal proceeding brought by or on |
8 | | behalf of any governmental unit, authority, or agency. |
9 | | (2) A proceeding brought by any person for a violation |
10 | | of State or federal law where the proceeding is brought |
11 | | pursuant to an express private right of action created by |
12 | | State or federal statute.
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13 | | (3) The liability of a director under Section 170. |
14 | | Items (1) and (2) of this subsection do not apply to a |
15 | | proceeding brought by a governmental unit, authority, or agency |
16 | | in its capacity as a private party or contractor. |
17 | | Section 170. Liability of directors and members.
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18 | | (a) Directors who negligently or in bad faith vote for any |
19 | | distribution of assets contrary to this Act or the articles are |
20 | | jointly and severally liable to the cooperative for the value |
21 | | of assets distributed in excess of the amount that could have |
22 | | been distributed without violating this Act or the articles. |
23 | | Section 165 does not apply to the liability of directors under |
24 | | this subsection. |
25 | | (b) Members, stockholders, and patrons of a cooperative are |
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1 | | neither obligated to pay, nor liable upon, any cooperative |
2 | | obligation, except that stockholders are liable to an amount |
3 | | equal to the par value of their shares for debts due an |
4 | | employee for not more than 6 months' service to the |
5 | | cooperative. |
6 | | Section 175. Cooperative contracts.
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7 | | (a) If otherwise lawful, contracts for any of the following |
8 | | purposes, whether written or contained in the bylaws, are valid |
9 | | when made between an association and any member in which the |
10 | | member agrees to: |
11 | | (1) sell, market, or deliver all or any specified part |
12 | | of products produced or to be produced either by the member |
13 | | or under the member's control to or through the association |
14 | | or any facilities furnished by it; |
15 | |
(2) authorize the association or any facilities |
16 | | furnished by it to act for the member in any manner with |
17 | | respect to all or any specified part of such products and |
18 | | any services to be furnished by the member; |
19 | | (3) buy or procure all or a specified part of goods or |
20 | | services from or through the association or any facilities |
21 | | furnished by it; or |
22 | | (4) authorize the association or any facilities |
23 | | furnished by it to act for the member in any manner in the |
24 | | procurement of goods or services. |
25 | | (b) The term of the contracts may not exceed 5 years, but |
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1 | | they may be made self-renewing for periods not exceeding 5 |
2 | | years each, subject to the right of either party to terminate |
3 | | at the end of the original and each renewal term upon giving |
4 | | written notice of such termination during a period specified in |
5 | | the contract. The period shall be of at least 30 days' duration |
6 | | during the last year of each term. The association shall |
7 | | furnish to each member-maker a completed original or copy of |
8 | | the member-maker's contract and, on the member-maker's request |
9 | | at any time, promptly furnish the member-maker information as |
10 | | to the member-maker's rights of termination. The 5-year |
11 | | limitation herein contained does not apply to contracts for the |
12 | | furnishing of electric energy or service involving an |
13 | | investment by the vendor in fixed assets to be amortized over a |
14 | | longer term. |
15 | | (c) A contract may require liquidated damages to be paid by |
16 | | the member in the event of a breach of the contract. Liquidated |
17 | | damages may be either a percentage of the value of the |
18 | | products, goods, or services or a specific sum, but neither may |
19 | | be more than 30% of the value of the products, goods, or |
20 | | services subject to the breach. When a specific sum is provided |
21 | | as liquidated damages and the sum exceeds 30% of the value of |
22 | | the products, goods, or services that are the subject of the |
23 | | breach, the contract shall be construed as providing an amount |
24 | | equal to 30%. |
25 | | (d) If any contract authorized by item (1) or (2) of |
26 | | subsection (a) contains an assignment to the association of any |
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1 | | part or all of funds due or to become due the member during the |
2 | | life of the contract for a product produced or to be produced |
3 | | by the member or for a service performed or to be performed in |
4 | | producing a product, a person who accepts or receives the |
5 | | product from the member is bound by the assignment after |
6 | | receiving written notice from the association or the member of |
7 | | the amount and duration of the assignment. However, as to any |
8 | | seasonal crop, if no funds are paid or become payable by a |
9 | | person under such an assignment for a period of 2 consecutive |
10 | | years during the life of the contract, the assignment |
11 | | thereafter shall not be binding upon any person who receives or |
12 | | accepts the product from the member until the assignment is |
13 | | reaffirmed by the member in writing and written notice thereof |
14 | | is given by the association or the member. A reaffirmation |
15 | | shall continue to be effective during the life of the contract |
16 | | until another lapse of 2 consecutive years shall occur. |
17 | | Section 180. Relief against breach or threatened breach. |
18 | | (a) In the event of a breach or threatened breach of a |
19 | | contract authorized by Section 175 by a member, the association |
20 | | shall be entitled to an injunction to prevent the breach or any |
21 | | further breach thereof and to a decree of specific performance. |
22 | | Upon filing of a verified complaint showing a breach or |
23 | | threatened breach and upon filing a sufficient bond, the |
24 | | association shall be entitled to a temporary restraining order |
25 | | against the member. |
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1 | | (b) A person, with actual or constructive notice that a |
2 | | contract exists, who induces or attempts to induce any member |
3 | | to breach or repudiate the member's contract with the |
4 | | association or who in any manner aids a breach of the contract |
5 | | is liable to the aggrieved party for damages caused by such |
6 | | interference. The association is also entitled to an injunction |
7 | | to prevent any interference or further interference with the |
8 | | contract. |
9 | | Section 185. Apportionment and distribution of proceeds. |
10 | | (a) At least once annually the directors shall determine |
11 | | and distribute net proceeds as provided in this Section. |
12 | | (b) There shall be deducted from the total proceeds the |
13 | | following: |
14 | | (1) all operating expenses and costs; |
15 | | (2) the cost of supplies, commodities, equipment, and |
16 | | other property or services procured or sold for patrons; |
17 | | (3) the cost of services performed for patrons; |
18 | | (4) all taxes and all other expenses; and |
19 | | (5) reasonable and necessary reserves for |
20 | | depreciation, depletion, and obsolescence of physical |
21 | | property, doubtful accounts, and other valuation reserves, |
22 | | all of which shall be established in accordance with usual |
23 | | and customary accounting practices. |
24 | | (c) The remainder of the total proceeds are net proceeds |
25 | | and shall be distributed and paid as follows: |
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1 | | (1) An amount not to exceed 5% thereof may be set aside |
2 | | as an educational fund to be used in teaching or promoting |
3 | | cooperative organization or principles. The funds shall |
4 | | for all purposes except the computation of net proceeds be |
5 | | deemed an expense of operation of the cooperative. |
6 | | (2) A share of the net proceeds may be set aside for or |
7 | | paid to officers or employees, or both. The amount shall |
8 | | for all purposes except the computation of net proceeds be |
9 | | deemed an expense of operation of the cooperative. |
10 | | (3) In a cooperative organized with capital stock such |
11 | | dividend may be paid upon capital stock as is authorized by |
12 | | the articles. No dividend may be paid if the capital is |
13 | | impaired or if payment of the dividend would result in an |
14 | | impairment of capital. |
15 | | (d) Unless the articles or bylaws otherwise expressly |
16 | | provide, none of the remainder of the net proceeds shall |
17 | | constitute income of the cooperative, but all thereof shall be |
18 | | distributed and paid to patrons, whether members or not, as |
19 | | follows: |
20 | | (1) Reasonable reserves for necessary purposes may be |
21 | | created, which shall be credited to patrons in accordance |
22 | | with the ratio which their patronage bears to total |
23 | | patronage. |
24 | | (2) The remainder of the net proceeds shall be |
25 | | distributed and paid to patrons in accordance with the |
26 | | ratio that their patronage bears to total patronage. |
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1 | | (3) There shall be no distinction between the persons |
2 | | entitled thereto, but the reserves and distributions may be |
3 | | based upon business done with particular departments or in |
4 | | particular commodities, supplies, or services, or upon |
5 | | classification of business according to the type or nature |
6 | | thereof. |
7 | | (e) If the articles or bylaws so provide: |
8 | | (1) Any of the net proceeds may be credited to |
9 | | allocated or unallocated surplus or reserves of the |
10 | | cooperative. |
11 | | (2) None of the remainder shall constitute income to |
12 | | the cooperative, but all of it shall be distributed and |
13 | | paid in accordance with the ratio that individual patronage |
14 | | bears to total patronage, either to member patrons only, to |
15 | | member patrons only with one or more classes receiving a |
16 | | lower proportion than others, or to all patrons with |
17 | | nonmembers receiving a lower proportion than members, as |
18 | | the bylaws provide. There shall be no other distinction |
19 | | between members and nonmembers, but distribution may be |
20 | | based on business done with particular departments, or in |
21 | | particular commodities, supplies, or services, or upon |
22 | | classification of business according to type or nature. |
23 | | (f) The distribution and payment of net proceeds under |
24 | | subsection (d) or (e) may be in cash, credits, stock, |
25 | | certificates of interest, revolving fund certificates, letters |
26 | | of advice, or other certificates or securities of the |
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1 | | cooperative or of other associations, limited liability |
2 | | companies, or corporations, in other property, or in any |
3 | | combination thereof. |
4 | | (g) All or any part of the net proceeds may be applied to |
5 | | losses incurred in prior years, and the bylaws may also include |
6 | | any reasonable provisions for the apportionment of losses. |
7 | | Section 190. Books and records; penalty for refusal to |
8 | | produce.
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9 | | (a) A cooperative shall keep correct and complete books and |
10 | | records of account and shall also keep minutes of the |
11 | | proceedings of meetings of its members, board, and executive |
12 | | committee. The cooperative shall keep at its principal office |
13 | | records of the names and addresses of all members and |
14 | | stockholders with the amount of stock held by each and of |
15 | | ownership of equity interests. At any reasonable time, any |
16 | | member or stockholder, or his or her agent or attorney, upon |
17 | | written notice stating the purposes thereof, delivered or sent |
18 | | to the cooperative at least one week in advance, may examine |
19 | | for a proper purpose any books or records pertinent to the |
20 | | purpose specified in the notice. The board may deny a request |
21 | | to examine books and records if the board determines that the |
22 | | purpose is not directly related to the business or affairs of |
23 | | the cooperative and is contrary to the best interests of the |
24 | | cooperative. |
25 | | (b) In any proceeding or upon petition for such purpose, |
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1 | | any court of record may, upon notice and after hearing at which |
2 | | proper cause is shown and upon suitable terms, order any of the |
3 | | cooperative's books or records and any other pertinent |
4 | | documents in its possession, or duly authenticated copies |
5 | | thereof, to be brought within this State. The documents shall |
6 | | be kept at such place and for such time and purposes as the |
7 | | order designates. A cooperative failing to comply with the |
8 | | order is subject to dissolution and its directors and officers |
9 | | are liable for contempt of court. |
10 | | (c) Subject to the time, notice, and purpose requirements |
11 | | of subsection (a), a member or stockholder of a cooperative may |
12 | | examine the books and records of any other cooperative or other |
13 | | person that is a wholly owned subsidiary of the cooperative or |
14 | | in which the cooperative owns a controlling interest. |
15 | | Section 195. Annual reports; filing.
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16 | | (a) A cooperative shall file an annual report signed by a |
17 | | principal officer or the general manager setting forth: |
18 | | (1) its name and complete address; |
19 | | (2) the names and addresses of its directors and |
20 | | principal officers; |
21 | | (3) a statement, by class and par value, of the amount |
22 | | of stock which it has authority to issue, and the amount |
23 | | issued; and |
24 | | (4) a statement as to the general type of business |
25 | | engaged in during the 12 months preceding the date of the |
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1 | | report. |
2 | | (b) The annual report shall be made on forms furnished by |
3 | | the Secretary, and the information therein contained shall be |
4 | | given as of the date of the execution of the report. The |
5 | | Secretary shall forward by first class mail report forms to |
6 | | each cooperative in good standing not later than 60 days prior |
7 | | to the date on which the cooperative is required to file an |
8 | | annual report under this Act. |
9 | | (c) The annual report shall be delivered to the Secretary |
10 | | in each year following the year in which the cooperative's |
11 | | articles are filed by the Secretary, during the calendar year |
12 | | quarter in which the anniversary of the filing occurs. If the |
13 | | report does not conform to requirements, it shall be returned |
14 | | to the cooperative for necessary corrections. The penalties for |
15 | | failure to file the report shall not apply if it is corrected |
16 | | and returned within 30 days after receipt thereof. |
17 | | (d) Any report not filed as required by subsection (c) may |
18 | | be filed only upon payment to the Secretary of $25 or, if the |
19 | | report is filed in paper format, upon payment of such larger |
20 | | fee as the Secretary prescribes by rule. |
21 | | (e) If the report is not filed within one year from the |
22 | | first day of the quarter calendar year in which the report is |
23 | | required under subsection (c) to be delivered, the cooperative |
24 | | is not in good standing. Within the next 6 months the Secretary |
25 | | shall mail to the cooperative a notice that it is no longer in |
26 | | good standing. If a cooperative has been out of good standing |
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1 | | for more than 3 consecutive years, the Secretary shall provide |
2 | | proper notice. Until restored to good standing, the Secretary |
3 | | shall not accept for filing any document respecting the |
4 | | cooperative except those incident to its dissolution. |
5 | | (f) A cooperative may be restored to good standing by |
6 | | delivering to the Secretary a current annual report and by |
7 | | paying the $25 late filing fee plus $15 for each calendar year |
8 | | or part thereof during which it was not in good standing, not |
9 | | exceeding a total of $175. The Secretary, by rule, may specify |
10 | | a larger fee for the filing of an annual report in paper |
11 | | format. |
12 | | Section 200. Income or franchise tax returns. A |
13 | | cooperative association, society, company, corporation, |
14 | | exchange, or union organized under the provisions of this Act |
15 | | shall not be obliged to file a State income or franchise tax |
16 | | return unless the association, society, company, corporation, |
17 | | exchange, or union is at the time subject to a State income or |
18 | | franchise tax. |
19 | | Section 205. Amendments to articles.
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20 | | (a) At any member meeting a cooperative may adopt any |
21 | | amendment to its articles that is lawful under Section 80 if a |
22 | | statement of the nature of the amendment was contained in the |
23 | | notice of the meeting. |
24 | | (b) Unless stockholders are entitled by Section 210 to vote |
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1 | | on an amendment, an amendment is adopted when approved by |
2 | | two-thirds of the member votes cast thereon. |
3 | | Section 210. Stockholder voting on amendments to articles.
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4 | | (a) Whether or not permitted to vote by the articles, a |
5 | | holder of stock other than membership stock who is affected by |
6 | | a proposed amendment to articles shall be entitled to cast one |
7 | | vote on the amendment regardless of the dollar amount of stock, |
8 | | the number of shares, or the number of affected classes of |
9 | | stock he or she holds. A member holding stock affected by a |
10 | | proposed amendment may vote both as a member and as an affected |
11 | | stockholder. |
12 | | (b) For purposes of this Section, a holder of stock is |
13 | | affected as to any class of stock owned by the holder only if |
14 | | an amendment would expressly: |
15 | | (1) decrease the dividends to which that class may be |
16 | | entitled or change the method by which the dividend rate on |
17 | | that class is fixed; |
18 | | (2) restrict rights to transfer that class;
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19 | | (3) give to another existing or any new class of stock |
20 | | or equity interest not previously entitled thereto any |
21 | | preference as to dividends or upon dissolution that is the |
22 | | same or higher than preferences of that class; |
23 | | (4) change the par value of shares of that class or of |
24 | | any other class having the same or higher preferences as to |
25 | | dividends or upon dissolution; |
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1 | | (5) increase the number of authorized shares of any |
2 | | class having a higher preference as to dividends or upon |
3 | | dissolution; or
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4 | | (6) require or permit an exchange of shares of any |
5 | | class with lower preferences as to dividends or upon |
6 | | dissolution for shares of that class or any other class |
7 | | with the same or higher preferences. |
8 | | (c) If stockholders are entitled to vote on an amendment, |
9 | | the amendment is adopted only if all of the following |
10 | | conditions are met: |
11 | | (1) Notice of the meeting, an exact copy of the |
12 | | proposed amendment, and a ballot thereon have been sent to |
13 | | each member and each affected stockholder. |
14 | | (2) Two-thirds of the member votes cast thereon |
15 | | approve. |
16 | | (3) Two-thirds of the votes of affected stockholders |
17 | | cast thereon approve. |
18 | | Section 215. Filing and recording of amendments.
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19 | | (a) Amendments to articles shall be signed by the president |
20 | | or a vice president and the secretary or an assistant |
21 | | secretary, shall be sealed with the cooperative's seal, and |
22 | | shall set forth: |
23 | | (1) the name of the cooperative and the county of the |
24 | | cooperative's principal office or of its registered agent; |
25 | | (2) the amendment and date of adoption; |
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1 | | (3) the number of members; |
2 | | (4) the number of member votes cast for and against the |
3 | | amendment; and |
4 | | (5) if affected stockholders have the right to vote |
5 | | under Section 210, the number of votes of affected |
6 | | stockholders cast for and against the amendment. |
7 | | (b) The amendment shall be filed and recorded as provided |
8 | | in Section 235. The amendment becomes effective upon filing and |
9 | | the Secretary may then issue a certificate of amendment. |
10 | | (c) No amendment may affect any existing cause of action or |
11 | | proceeding to which the cooperative is a party or existing |
12 | | rights of persons other than members or stockholders. |
13 | | (d) No action may be maintained to invalidate any amendment |
14 | | because of the manner of its adoption unless commenced within 2 |
15 | | years after the date of filing.
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16 | | Section 220. Voluntary dissolution. |
17 | | (a) At any member meeting, whether or not a quorum is |
18 | | present, a cooperative may dissolve if: |
19 | | (1) notice that a resolution for dissolution will be |
20 | | considered and acted upon has been included in the notice |
21 | | of meeting; and |
22 | | (2) the resolution is approved by three-fourths of the |
23 | | member votes cast thereon. |
24 | | The articles may permit stockholders to vote on the |
25 | | resolution for dissolution. |
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1 | | (b) When the resolution is adopted, either a committee |
2 | | designated by the resolution or the board shall liquidate all |
3 | | assets and pay the net proceeds of the liquidation available |
4 | | for distribution to all persons entitled to them by law, the |
5 | | articles, and the bylaws. |
6 | | (c) Any net proceeds of liquidation not subject to valid |
7 | | claims or owed to persons under subsection (b) shall be |
8 | | distributed to one or more organizations that are either: |
9 | | (1) cooperatives with articles containing limitations |
10 | | on distribution of assets or payment of proceeds of |
11 | | liquidation equivalent to limitations in the articles of |
12 | | the liquidating cooperative; or |
13 | | (2) organizations exempt from federal income taxation |
14 | | under 26 U.S.C. 501(c)(3). |
15 | | (d) Articles of dissolution shall be signed by a majority |
16 | | of directors or of committee members and shall be sealed with |
17 | | the cooperative's seal. They shall set forth: |
18 | | (1) the name of the cooperative and the county of the |
19 | | cooperative's principal office or of its registered agent; |
20 | | (2) the name and address of each director or committee |
21 | | member; |
22 | | (3) the date of adoption of the resolution of |
23 | | dissolution; and |
24 | | (4) a statement that all liquidation activities have |
25 | | been completed in compliance with law, the articles, and |
26 | | the bylaws. |
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1 | | (e) The articles of dissolution shall be filed and recorded |
2 | | as provided in Section 235. Upon the filing of the articles the |
3 | | existence of the cooperative ceases. |
4 | | (f) Within 7 years after the date of filing under |
5 | | subsection (e), an action may be brought against any person to |
6 | | whom proceeds were distributed under subsection (b) in |
7 | | violation of law, the articles, or the bylaws to recover the |
8 | | proceeds by any person entitled to the funds by law, the |
9 | | articles, or the bylaws in the circuit court of the county |
10 | | where the last principal office of the cooperative was located. |
11 | | Section 225. Recording change of principal office or |
12 | | registered agent.
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13 | | (a) If a document submitted to the Secretary for filing |
14 | | under this Act changes the county of the principal office or of |
15 | | the registered agent:
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16 | | (1) an original of the document or a duplicate original |
17 | | endorsed by the Secretary shall be recorded in each county; |
18 | | (2) the document shall specify the new county when: |
19 | | (A) the county of the principal office or |
20 | | registered agent is changed; or |
21 | | (B) the document makes a change from a principal |
22 | | office in one county to a registered agent's address in |
23 | | another county or vice versa. |
24 | | (b) A certificate of the Secretary listing the type and |
25 | | date of filing of recordable documents previously filed by the |
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1 | | cooperative shall be recorded in the county of the new |
2 | | principal office or of the registered agent. |
3 | | Section 230. Procedure on filing and recording of |
4 | | documents.
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5 | | (a) If a document is required to be filed and recorded |
6 | | under this Act, all of the following shall be included when the |
7 | | document is submitted for filing: |
8 | | (1) Separate originals of the document for the |
9 | | Secretary and for the recorder of deeds of each county in |
10 | | which the document is required to be recorded. |
11 | | (2) A check payable to the Secretary in the amount of |
12 | | the filing fee prescribed under Section 235. |
13 | | (b) Unless the document does not conform to law, the |
14 | | Secretary shall endorse on each original "Filed" and the date |
15 | | of filing and shall file one original. A recorder of deeds |
16 | | receiving a check and document forwarded shall record the |
17 | | document. If the document is not articles, the recorder of |
18 | | deeds shall note on the margin of the record of the articles |
19 | | the volume and page where the document is recorded. |
20 | | (c) Each week the Secretary shall forward to each recorder |
21 | | of deeds a listing of all documents received during the |
22 | | preceding week for filing and recording as required under this |
23 | | Act. For each document, the listing shall specify the type of |
24 | | document, the name of the cooperative, the name of the county |
25 | | of the cooperative's principal office or registered agent, and |
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1 | | the date of filing. |
2 | | (d) A document required to be filed and recorded under this |
3 | | Act is effective on filing with the Secretary. An error or |
4 | | omission in recording the document or a certificate with a |
5 | | recorder of deeds does not affect its effectiveness. |
6 | | Section 235. Fees for filing.
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7 | | (a) Except as provided under subsection (b), the Secretary |
8 | | shall charge and collect for: |
9 | | (1) Filing articles for a new cooperative, $1.25 for |
10 | | each $1,000 of authorized stock, but in no case less than |
11 | | $25. A cooperative organized without capital stock shall |
12 | | pay a fee of $25. |
13 | | (2) Filing an amendment to or restatement of the |
14 | | articles or articles of consolidation or division, $10, |
15 | | plus $1.25 for each $1,000 of authorized stock not |
16 | | authorized at the time of the amendment, restatement, |
17 | | consolidation, or division, except that no fee may be |
18 | | collected for any of the following: |
19 | | (A) an amendment showing only a change of address |
20 | | resulting from the action of a governmental agency if |
21 | | there is no corresponding change in physical location |
22 | | and if 2 copies of the notice of the action are |
23 | | submitted to the Secretary; or |
24 | | (B) an amendment filed to reflect only a change in |
25 | | the name of a registered agent. |
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1 | | (3) Filing articles or decree of dissolution, $5. |
2 | | (4) Filing an annual report of a cooperative, $15. |
3 | | (5) Filing a report of names and addresses of officers |
4 | | or directors, $3. |
5 | | (b) The Secretary, by rule, may specify a larger fee for |
6 | | filing documents described in subsection (c) in paper format. |
7 | | (c) No document may be filed or recorded until all fees |
8 | | therefor have been paid. |
9 | | Section 240. Member or stockholder derivative actions.
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10 | | (a) No action may be instituted or maintained in the right |
11 | | of any association by a member or stockholder unless the member |
12 | | or stockholder: |
13 | | (1) alleges in the complaint that the member or |
14 | | stockholder was a member or registered stockholder when any |
15 | | part of the transaction of which the member or stockholder |
16 | | complains took place or that the member's or stockholder's |
17 | | stock thereafter devolved upon the member or stockholder by |
18 | | operation of law from a stockholder at such time; |
19 | | (2) alleges in the complaint with particularity his or |
20 | | her efforts to secure from the board the action he or she |
21 | | desires and further alleges that he or she has either |
22 | | informed the association or board in writing of the |
23 | | ultimate facts of each cause of action against each |
24 | | director or that he or she has delivered to the association |
25 | | or board a copy of the complaint no fewer than 60 days |
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1 | | prior to filing the complaint; and |
2 | | (3) files the complaint in such action within 20 days |
3 | | after the action is commenced. |
4 | | (b) The action shall not be dismissed or compromised |
5 | | without the approval of the court. |
6 | | (c) If anything is recovered or obtained as the result of |
7 | | the action, whether by means of a compromise and settlement or |
8 | | by a judgment, the court may, out of the proceeds of the |
9 | | action, award the plaintiff the reasonable expenses of |
10 | | maintaining the action, including reasonable attorney fees, |
11 | | and may direct the plaintiff to account to the association for |
12 | | the remainder of such proceeds. |
13 | | (d) In any action brought in the right of an association by |
14 | | less than 3% of the members or by holders of less than 3% of any |
15 | | class of stock outstanding, the defendants may require the |
16 | | plaintiff to give security for the reasonable expenses of |
17 | | defending such action, including attorney fees. The amount of |
18 | | such security may thereafter be increased or decreased in the |
19 | | discretion of the court upon showing that the security provided |
20 | | is or may be inadequate or is excessive.
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21 | | Section 245. Disposition of assets; right to secure debts.
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22 | | (a) Except as authorized by members, the board may not |
23 | | dispose of all or substantially all of a cooperative's fixed |
24 | | assets. At a meeting, the members may authorize the disposition |
25 | | of all or substantially all of a cooperative's fixed assets if: |
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1 | | (1) notice that the disposition will be considered at |
2 | | the meeting has been given to all persons entitled to vote |
3 | | upon the issue; and |
4 | | (2) the disposition is approved by two-thirds of those |
5 | | entitled to vote upon the issue at the meeting. |
6 | | (b) Unless the bylaws provide otherwise, the board may |
7 | | secure payment of a cooperative's debts by mortgaging the |
8 | | cooperative's rights, privileges, authority and franchises, |
9 | | revenues, and other property. |
10 | | Section 250. Division of a cooperative.
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11 | | (a) Any cooperative may divide itself into 2 or more |
12 | | cooperatives under this Act. A written plan of division shall |
13 | | be prepared by the board or by a committee selected by the |
14 | | board for that purpose. The plan shall set forth all the terms |
15 | | of the division and the proposed effect thereof on all members |
16 | | and stockholders of the cooperative. The plan shall also |
17 | | contain the articles of each new cooperative being formed and |
18 | | any amendments to the articles of the remaining cooperative. |
19 | | (b) The members and the stockholders entitled to vote |
20 | | thereon shall approve the plan in the manner provided in |
21 | | Section 210 for amendments to articles. |
22 | | (c) Articles of division shall set forth the approved plan |
23 | | and other information required by Section 215 and shall be |
24 | | filed and recorded as an amendment to the articles. Each part |
25 | | of the plan that contains the articles of a new cooperative |
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1 | | shall be separately filed and recorded as articles for the new |
2 | | cooperative. |
3 | | Section 255. Admission of foreign cooperatives. A foreign |
4 | | cooperative is entitled to all rights, exemptions, and |
5 | | privileges of a cooperative organized under this Act if it is |
6 | | authorized to do business in this State. A foreign cooperative |
7 | | may qualify for admission under this Act whether or not formed |
8 | | for profit and whether or not formed with stock. A foreign |
9 | | cooperative may be required to furnish the Secretary with such |
10 | | facts as the Secretary deems necessary to establish the foreign |
11 | | cooperative's rights under this Act. |
12 | | Section 260. Worker cooperative.
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13 | | (a) As used in this Section: |
14 | | "Patronage" means the amount of work performed as a member |
15 | | of a worker cooperative. |
16 | | "Worker cooperative" means a cooperative organized under |
17 | | the provisions of this Act and in which membership is |
18 | | restricted to individuals who work at the cooperative. |
19 | | (b) All members of a worker cooperative must work for the |
20 | | cooperative on a regular full-time or part-time basis. |
21 | | (c) A worker cooperative shall issue a class of voting |
22 | | stock designated as membership shares. The shares shall be |
23 | | issued only to a person eligible to become a member and only |
24 | | when the person satisfies other requisites for membership. A |
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1 | | member may own only one membership share.
Membership shares |
2 | | shall be issued for a fee according to the rules set forth in |
3 | | the bylaws or as determined by the board. A worker cooperative |
4 | | may allow for payment of the fee by payroll deduction, |
5 | | installments, or similar methods. A membership share may be |
6 | | issued to a person upon acceptance for membership regardless of |
7 | | whether the membership fee is fully paid. |
8 | | (d) A worker cooperative may establish through its articles |
9 | | or bylaws a system of allocated equity accounts to reflect the |
10 | | book value and redemption price of membership shares, written |
11 | | notices of allocation, and any other credit reflected in the |
12 | | bylaws. The articles or bylaws may provide for the worker |
13 | | cooperative to pay or credit interest on the balance in each |
14 | | member's allocated equity account. |
15 | | A worker cooperative may establish through its articles or |
16 | | bylaws a collective reserve account to reflect retained |
17 | | earnings and other cooperative equity. The articles or bylaws |
18 | | may authorize the board to assign of a portion of annual |
19 | | earnings to the collective reserve account. Earnings assigned |
20 | | to the collective account may be used for any and all corporate |
21 | | purposes as determined by the board. |
22 | | A worker cooperative may designate a portion of its |
23 | | collective reserve account as an indivisible reserve account |
24 | | that shall, in a manner determined by the bylaws or board, be |
25 | | used as capital for the cooperative or distributed to one or |
26 | | more organizations that are either: |