1.1 A bill for an act
1.2 relating to cooperatives; authorizing businesses to
1.3 organize as cooperative associations; providing
1.4 penalties; amending Minnesota Statutes 2002, sections
1.5 80A.14, subdivision 17; 80A.15, subdivision 2;
1.6 322B.70, subdivision 1; proposing coding for new law
1.7 in Minnesota Statutes, chapter 322B; proposing coding
1.8 for new law as Minnesota Statutes, chapter 308B.
1.9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 ARTICLE 1
1.11 MINNESOTA COOPERATIVE ASSOCIATIONS ACT
1.12 Section 1. [308B.001] [CITATION.]
1.13 This chapter may be cited as the "Minnesota Cooperative
1.14 Associations Act."
1.15 Sec. 2. [308B.005] [DEFINITIONS.]
1.16 Subdivision 1. [SCOPE.] The definitions in this section
1.17 apply to this chapter.
1.18 Subd. 2. [ADDRESS.] "Address" means mailing address,
1.19 including a zip code. In the case of a registered address, the
1.20 term means the mailing address and the actual office location,
1.21 which may not be a post office box.
1.22 Subd. 3. [ALTERNATIVE BALLOT.] "Alternative ballot" means
1.23 a method of voting on a candidate or issue prescribed by the
1.24 board of directors in advance of the vote, and may include
1.25 voting by electronic, telephonic, Internet, or other means that
1.26 reasonably allow members the opportunity to vote.
1.27 Subd. 4. [ARTICLES.] "Articles" means the articles of
2.1 organization of a cooperative as originally filed and
2.2 subsequently amended.
2.3 Subd. 5. [ASSOCIATION.] "Association" means an
2.4 organization conducting business on a cooperative plan under the
2.5 laws of this state or another state that is chartered to conduct
2.6 business under other laws of this state or another state.
2.7 Subd. 6. [BOARD.] "Board" means the board of directors of
2.8 a cooperative.
2.9 Subd. 7. [BUSINESS ENTITY.] "Business entity" means a
2.10 company, limited liability company, limited liability
2.11 partnership, or other legal entity, whether domestic or foreign,
2.12 association, or body vested with the power or function of a
2.13 legal entity.
2.14 Subd. 8. [CHAPTER.] "Chapter" means sections 308B.001 to
2.15 308B.975.
2.16 Subd. 9. [COOPERATIVE.] "Cooperative" means an association
2.17 organized under this chapter conducting business on a
2.18 cooperative plan as provided under this chapter.
2.19 Subd. 10. [DOMESTIC BUSINESS ENTITY.] "Domestic business
2.20 entity" means a business entity organized under the laws of this
2.21 state.
2.22 Subd. 11. [DOMESTIC COOPERATIVE.] "Domestic cooperative"
2.23 means a cooperative organized under this chapter or chapter 308A.
2.24 Subd. 12. [FILED WITH THE SECRETARY OF STATE.] "Filed with
2.25 the secretary of state" means that a document meeting the
2.26 applicable requirements of this chapter, signed and accompanied
2.27 by the required filing fee, has been delivered to the secretary
2.28 of state. The secretary of state shall endorse on the document
2.29 the word "filed" or a similar word determined by the secretary
2.30 of state and the month, day, and year of filing, record the
2.31 document in the office of the secretary of state, and return a
2.32 document to the person or entity who delivered it for filing.
2.33 Subd. 13. [FOREIGN BUSINESS ENTITY.] "Foreign business
2.34 entity" means a business entity that is not a domestic business
2.35 entity.
2.36 Subd. 14. [FOREIGN COOPERATIVE.] "Foreign cooperative"
3.1 means a foreign business entity organized to conduct business on
3.2 a cooperative plan consistent with this chapter or chapter 308A.
3.3 Subd. 15. [MEMBER.] "Member" means a person or entity
3.4 reflected on the books of the cooperative as the owner of
3.5 governance rights of a membership interest of the cooperative
3.6 and includes patron and nonpatron members.
3.7 Subd. 16. [MEMBERSHIP INTEREST.] "Membership interest"
3.8 means a member's interest in a cooperative consisting of a
3.9 member's financial rights, a member's right to assign financial
3.10 rights, a member's governance rights, and a member's right to
3.11 assign governance rights. Membership interest includes patron
3.12 membership interests and nonpatron membership interests.
3.13 Subd. 17. [MEMBERS' MEETING.] "Members' meeting" means a
3.14 regular or special members' meeting.
3.15 Subd. 18. [MINNESOTA LIMITED LIABILITY COMPANY.]
3.16 "Minnesota limited liability company" means a limited liability
3.17 company governed by chapter 322B.
3.18 Subd. 19. [NONPATRON MEMBERSHIP INTEREST.] "Nonpatron
3.19 membership interest" means a membership interest that does not
3.20 require the holder to conduct patronage business for or with the
3.21 cooperative to receive financial rights or distributions.
3.22 Subd. 20. [PATRON.] "Patron" means a person or entity who
3.23 conducts patronage business with the cooperative.
3.24 Subd. 21. [PATRONAGE.] "Patronage" means business,
3.25 transactions, or services done for or with the cooperative as
3.26 defined by the cooperative.
3.27 Subd. 22. [PATRON MEMBER.] "Patron member" means a member
3.28 holding a patron membership interest.
3.29 Subd. 23. [PATRON MEMBERSHIP INTEREST.] "Patron membership
3.30 interest" means the membership interest requiring the holder to
3.31 conduct patronage business for or with the cooperative, as
3.32 specified by the cooperative to receive financial rights or
3.33 distributions.
3.34 Subd. 24. [SIGNED.] "Signed" means that the signature of a
3.35 person has been written on a document, and with respect to a
3.36 document required by this chapter to be filed with the secretary
4.1 of state, means that the document has been signed by a person
4.2 authorized to do so by this chapter, the articles or bylaws, or
4.3 by a resolution approved by the directors or the members. A
4.4 signature on a document may be a facsimile affixed, engraved,
4.5 printed, placed, stamped with indelible ink, transmitted by
4.6 facsimile or electronically, or in any other manner reproduced
4.7 on the document.
4.8 GENERAL PROVISIONS
4.9 Sec. 3. [308B.101] [RESERVATION OF RIGHT.]
4.10 The state reserves the right to amend or repeal the
4.11 provisions of this chapter by law. A cooperative organized or
4.12 governed by this chapter is subject to this reserved right.
4.13 Sec. 4. [308B.111] [FILING FEES.]
4.14 Unless otherwise provided, the filing fee for documents
4.15 filed under this chapter with the secretary of state is $35.
4.16 Sec. 5. [308B.115] [REGISTERED OFFICE AND AGENT.]
4.17 Subdivision 1. [REGISTERED OFFICE AND AGENT.] A
4.18 cooperative must establish and continuously maintain in this
4.19 state:
4.20 (1) a registered office that may be, but need not be, the
4.21 same as its place of business; and
4.22 (2) a registered agent, which agent may be either an
4.23 individual resident in this state whose business office is
4.24 identical with the registered office, or a domestic business
4.25 entity, or a foreign business entity authorized to transact
4.26 business in this state, having an office identical with the
4.27 registered office.
4.28 Subd. 2. [CHANGE OF OFFICE AND AGENT.] A cooperative may
4.29 designate or change its registered office or agent, or both,
4.30 upon filing in the office of the secretary of state a statement
4.31 setting forth:
4.32 (1) the name of the cooperative;
4.33 (2) the address of its then registered office;
4.34 (3) if the address of its registered office is to be
4.35 changed, the address to which the registered office is to be
4.36 changed;
5.1 (4) the name of its then registered agent;
5.2 (5) if its registered agent is to be changed, the name of
5.3 its successor registered agent;
5.4 (6) that the address of its registered office and the
5.5 address of the business office of its registered agent, as
5.6 changed, will be identical; and
5.7 (7) that the change was authorized by affirmative vote of a
5.8 majority of the board of the cooperative.
5.9 Subd. 3. [FILING.] The statement shall be signed and
5.10 delivered to the secretary of state. If the secretary of state
5.11 finds that the statement conforms to the provisions of this
5.12 section, the secretary of state shall file the statement, and
5.13 upon filing the change of address of the registered office or
5.14 the appointment of a new registered agent or both, as the case
5.15 may be, is effective.
5.16 Subd. 4. [RESIGNATION OF AGENT.] Any registered agent of a
5.17 cooperative may resign as agent upon filing a written notice
5.18 resignation, signed with one original and one exact or conformed
5.19 copy, with the secretary of state, who shall mail a copy to the
5.20 cooperative at its principal mailing address as defined and
5.21 prescribed by the secretary of state. The appointment of the
5.22 agent shall terminate upon the expiration of 30 days after
5.23 receipt of notice by the secretary of state.
5.24 Subd. 5. [CHANGE OF ADDRESS OR NAME OF AGENT.] If the
5.25 address or name of a registered agent changes, the agent must
5.26 change the address of the registered office or the name of the
5.27 registered agent of the cooperative represented by the agent by
5.28 filing with the secretary of state the statement required in
5.29 subdivision 2, except that the statement need only be signed by
5.30 the registered agent, need not be responsive to subdivision 2,
5.31 clause (5), but must state that a copy of the statement has been
5.32 mailed to the cooperative or to the legal representative of the
5.33 cooperative.
5.34 Sec. 6. [308B.121] [PERIODIC REGISTRATION.]
5.35 Subdivision 1. [PERIODIC REGISTRATION IN CERTAIN
5.36 YEARS.] Each cooperative governed by this chapter and each
6.1 foreign cooperative registered under section 308B.151, must file
6.2 a periodic registration with the secretary of state with the
6.3 initial articles and any amendment of the articles in each
6.4 odd-numbered year. In these years, the secretary of state must
6.5 mail by first class mail a registration form to the registered
6.6 office of each cooperative and registered foreign cooperative as
6.7 shown in the records of the secretary of state, or if no such
6.8 address is in the records, to the location of the principal
6.9 place of business shown in the records of the secretary of
6.10 state. For a cooperative, the form must include the following
6.11 notice:
6.12 "NOTICE: Failure to file this form by December 31 of this
6.13 year will result in the dissolution of this cooperative without
6.14 further notice from the secretary of state, under Minnesota
6.15 Statutes, section 308B.121, subdivision 4, paragraph (b)."
6.16 For a foreign cooperative, the form must contain the
6.17 following notice:
6.18 "NOTICE: Failure to file this form by December 31 of this
6.19 year will result in the loss of good standing and the authority
6.20 to do business in Minnesota."
6.21 Subd. 2. [REGISTRATION FORM.] In each calendar year in
6.22 which a registration is to be filed, a cooperative must file
6.23 with the secretary of state a registration by December 31 of
6.24 that calendar year containing:
6.25 (1) the name of the cooperative;
6.26 (2) the address of its registered office;
6.27 (3) the address of its principal place of business, if
6.28 different from the registered office address; and
6.29 (4) the name and business address of the officer or other
6.30 person exercising the principal functions of the chief executive
6.31 officer of the cooperative.
6.32 Subd. 3. [INFORMATION PUBLIC.] The information required by
6.33 subdivision 2 is public data.
6.34 Subd. 4. [PENALTY; DISSOLUTION.] (a) A cooperative that
6.35 has failed to file a registration under the requirements of this
6.36 section must be dissolved by the secretary of state as described
7.1 in paragraph (b).
7.2 (b) If the cooperative has not filed the registration by
7.3 December 31 of that calendar year, the secretary of state must
7.4 issue a certificate of involuntary dissolution and the
7.5 certificate must be filed in the office of the secretary of
7.6 state. The secretary of state must annually inform the attorney
7.7 general and the commissioner of revenue of the methods by which
7.8 the names of cooperatives dissolved under this section during
7.9 the preceding year may be determined. The secretary of state
7.10 must also make available in an electronic format the names of
7.11 the dissolved cooperatives. A cooperative dissolved in this
7.12 manner is not entitled to the benefits of section 308B.971.
7.13 Subd. 5. [REINSTATEMENT.] A cooperative may, within one
7.14 year of the date of dissolution under this section,
7.15 retroactively reinstate its existence by filing a single annual
7.16 registration and paying a $25 fee. Filing the annual
7.17 registration with the secretary of state:
7.18 (1) returns the cooperative to active status as of the date
7.19 of the dissolution;
7.20 (2) validates contracts or other acts within the authority
7.21 of the articles and the cooperative is liable for those
7.22 contracts or acts; and
7.23 (3) restores to the cooperative all assets and rights of
7.24 the cooperative and its shareholders or members to the extent
7.25 they were held by the cooperative and its shareholders or
7.26 members before the dissolution occurred, except to the extent
7.27 that assets or rights were affected by acts occurring after the
7.28 dissolution or sold or otherwise distributed after that time.
7.29 Sec. 7. [308B.125] [LEGAL RECOGNITION OF ELECTRONIC
7.30 RECORDS AND SIGNATURES.]
7.31 Subdivision 1. [DEFINITIONS.] (a) The definitions in this
7.32 subdivision apply to this section.
7.33 (b) "Electronic" means relating to technology having
7.34 electrical, digital, magnetic, wireless, optical,
7.35 electromagnetic, or similar capabilities.
7.36 (c) "Electronic record" means a record created, generated,
8.1 sent, communicated, received, or stored by electronic means.
8.2 (d) "Electronic signature" means an electronic sound,
8.3 symbol, or process attached to or logically associated with a
8.4 record and executed or adopted by a person with the intent to
8.5 sign the record.
8.6 (e) "Record" means information that is inscribed on a
8.7 tangible medium or that is stored in an electronic or other
8.8 medium and is retrievable in perceivable form.
8.9 Subd. 2. [ELECTRONIC RECORDS AND SIGNATURES.] For purposes
8.10 of this chapter:
8.11 (1) a record or signature may not be denied legal effect or
8.12 enforceability solely because it is in electronic form;
8.13 (2) a contract may not be denied legal effect or
8.14 enforceability solely because an electronic record was used in
8.15 its formation;
8.16 (3) if a provision requires a record to be in writing, an
8.17 electronic record satisfies the requirement; and
8.18 (4) if a provision requires a signature, an electronic
8.19 signature satisfies the requirement.
8.20 Sec. 8. [308B.151] [FOREIGN COOPERATIVES.]
8.21 Subdivision 1. [AUTHORITY.] (a) Subject to the
8.22 constitution of this state, the laws of the jurisdiction under
8.23 which a foreign cooperative is organized govern its organization
8.24 and internal affairs and the liability of its members. A
8.25 foreign cooperative may not be denied a certificate of authority
8.26 to transact business in this state by reason of any difference
8.27 between those laws and the laws of this state.
8.28 (b) A foreign cooperative holding a valid certificate of
8.29 authority in this state has no greater rights and privileges
8.30 than a domestic cooperative. The certificate of authority does
8.31 not authorize the foreign cooperative to exercise any of its
8.32 powers or purposes that a domestic cooperative is forbidden by
8.33 law to exercise in this state.
8.34 (c) A foreign cooperative may apply for a certificate of
8.35 authority under any name that would be available to a
8.36 cooperative, whether or not the name is the name under which it
9.1 is authorized in its jurisdiction of organization.
9.2 Subd. 2. [CERTIFICATE OF AUTHORITY.] (a) Before
9.3 transacting business in this state, a foreign cooperative shall
9.4 obtain a certificate of authority. An applicant for the
9.5 certificate shall file with the secretary of state a certificate
9.6 of status from the filing office in the jurisdiction in which
9.7 the business entity is organized and an application executed by
9.8 an authorized person and setting forth:
9.9 (1) the name of the foreign cooperative and, if different,
9.10 the name under which it proposes to transact business in this
9.11 state;
9.12 (2) the jurisdiction of its organization;
9.13 (3) the name and business address of the proposed
9.14 registered agent in this state, which agent shall be an
9.15 individual resident of this state, a domestic business entity,
9.16 or a foreign cooperative having a place of business in, and
9.17 authorized to do business in, this state;
9.18 (4) the address of the office required to be maintained in
9.19 the jurisdiction of its organization by the laws of that
9.20 jurisdiction or, if not so required, of the principal place of
9.21 business of the foreign cooperative; and
9.22 (5) the date the foreign cooperative expires in the
9.23 jurisdiction of its organization.
9.24 (b) The application must be accompanied by payment of $185,
9.25 which includes a $150 initial license fee in addition to the $35
9.26 filing fee required by section 308B.111.
9.27 (c) If the secretary of state finds that an application for
9.28 a certificate of authority conforms to law and all fees have
9.29 been paid, the secretary of state shall:
9.30 (1) endorse on the application the word "Filed" and the
9.31 date of filing the application;
9.32 (2) file the original application; and
9.33 (3) return the original application to the person who filed
9.34 it with a certificate of authority issued by the secretary of
9.35 state.
9.36 (d) A certificate of authority issued under this section is
10.1 effective from the date the application is filed with the
10.2 secretary of state accompanied by the payment of the requisite
10.3 fees.
10.4 (e) If any statement in the application for a certificate
10.5 of authority by a foreign cooperative was false when made or any
10.6 arrangements or other facts described have changed, making the
10.7 application inaccurate in any respect, the foreign cooperative
10.8 shall promptly file with the secretary of state:
10.9 (1) in the case of a change in its name, a termination, or
10.10 a merger, a certificate to that effect authenticated by the
10.11 proper officer of the state or country under the laws of which
10.12 the foreign cooperative is organized; or
10.13 (2) in the case of a change in the name or address of the
10.14 registered agent required to be maintained by section 308B.121,
10.15 an amendment to the certificate of authority signed by an
10.16 authorized person.
10.17 The fee for filing the document is the same as for filing
10.18 an amendment.
10.19 Subd. 3. [REGISTERED AGENT AND CERTAIN REPORTS.] A foreign
10.20 cooperative authorized to transact business in this state shall:
10.21 (1) appoint and continuously maintain a registered agent in
10.22 the same manner as provided in section 308B.121; or
10.23 (2) file a report upon any change in the name or business
10.24 address of its registered agent in the same manner as provided
10.25 in section 308B.121.
10.26 Subd. 4. [BIENNIAL REGISTRATION.] (a) A foreign
10.27 cooperative must file a periodic registration with the secretary
10.28 of state in each odd-numbered year containing:
10.29 (1) the name of the foreign cooperative;
10.30 (2) the alternate name, if any, the foreign cooperative has
10.31 adopted for use in this state;
10.32 (3) the address of its registered office;
10.33 (4) the name of its registered agent, if any;
10.34 (5) the jurisdiction in which the foreign cooperative is
10.35 organized; and
10.36 (6) the name and business address of the manager or other
11.1 person exercising the principal functions of the chief manager
11.2 of the foreign cooperative.
11.3 (b) The secretary of state shall mail a registration form
11.4 to each foreign cooperative not less than 90 days before the
11.5 registration is due. The registration form must be sent to the
11.6 last registered office address filed with the secretary of
11.7 state. A foreign cooperative that needs to amend its name,
11.8 registered office address, or registered agent may make these
11.9 amendments on the biennial registration form. If an amendment
11.10 is made on the biennial registration form, it must be signed by
11.11 an authorized person. The fee listed in section 308B.121
11.12 applies to these amendments.
11.13 (c) A foreign cooperative that fails to file a registration
11.14 under the requirements of this subdivision loses its good
11.15 standing in this state. The business entity may regain its good
11.16 standing in this state by filing a registration and paying a $50
11.17 fee.
11.18 (d) If a foreign cooperative has not filed a registration
11.19 during a reporting period, the secretary of state shall notify
11.20 the business entity that its authority to do business in this
11.21 state will be revoked if the biennial registration is not filed
11.22 by the due date of the next registration. This notice must be
11.23 sent to the foreign cooperative at its registered office address
11.24 of record as part of the registration form. If the foreign
11.25 cooperative does not file the biennial registration by the due
11.26 date, the secretary of state shall revoke the authority of the
11.27 foreign cooperative to do business in this state. The secretary
11.28 of state shall issue a certificate of revocation, which shall be
11.29 sent to the foreign cooperative at its registered office
11.30 address. A copy of the certificate must be filed with the
11.31 secretary of state.
11.32 (e) If a foreign cooperative has its authority to do
11.33 business in this state revoked, it may retroactively reinstate
11.34 its authority to do business by filing a single biennial
11.35 registration and paying a $50 fee but only within one year of
11.36 the date of termination or revocation.
12.1 (f) A foreign cooperative filing the biennial registration
12.2 restores the foreign cooperative's ability to do business in
12.3 this state and the rights and privileges that accompany that
12.4 authority.
12.5 Subd. 5. [CERTIFICATE OF WITHDRAWAL.] (a) A foreign
12.6 cooperative authorized to transact business in this state may
12.7 withdraw from this state upon procuring from the secretary of
12.8 state a certificate of withdrawal. In order to procure the
12.9 certificate, the foreign cooperative shall file with the
12.10 secretary of state an application for withdrawal which must set
12.11 forth:
12.12 (1) the name of the foreign cooperative and the state or
12.13 country under the laws of which it is organized;
12.14 (2) that the foreign cooperative is not transacting
12.15 business in this state;
12.16 (3) that the foreign cooperative surrenders its authority
12.17 to transact business in this state;
12.18 (4) that the foreign cooperative revokes the authority of
12.19 its registered agent in this state to accept service of process
12.20 and consents to that service of process in any action, suit, or
12.21 proceeding based upon any cause of action arising in this state
12.22 during the time the business entity was authorized to transact
12.23 business in this state. Service may be made on the business
12.24 entity by service upon the secretary of state; and
12.25 (5) a post office address to which a person may mail a copy
12.26 of any process against the business entity.
12.27 (b) The filing with the secretary of state of a certificate
12.28 of termination or a certificate of merger if the foreign
12.29 cooperative is not the surviving organization from the proper
12.30 officer of the state or country under the laws of which the
12.31 business entity is organized constitutes a valid application of
12.32 withdrawal and the authority of the business entity to transact
12.33 business in this state shall cease upon filing of the
12.34 certificate.
12.35 (c) The certificate of authority of a foreign cooperative
12.36 to transact business in this state may be revoked by the
13.1 secretary of state upon the occurrence of any of these events:
13.2 (1) the foreign cooperative has failed to appoint and
13.3 maintain a registered agent as required by this chapter, file a
13.4 report upon any change in the name or business address of the
13.5 registered agent, or file in the office of the secretary of
13.6 state any amendment to its application for a certificate of
13.7 authority as specified in section 308B.121; or
13.8 (2) a misrepresentation has been made of any material
13.9 matter in any application, report, affidavit, or other document
13.10 submitted by the foreign cooperative under this chapter.
13.11 (d) No certificate of authority of a foreign cooperative
13.12 shall be revoked by the secretary of state unless:
13.13 (1) the secretary of state has given the foreign
13.14 cooperative not less than 60 days' notice by mail addressed to
13.15 its registered office in this state or, if the foreign
13.16 cooperative fails to appoint and maintain a registered agent in
13.17 this state, addressed to the office address in the jurisdiction
13.18 of organization; and
13.19 (2) during the 60-day period, the foreign cooperative has
13.20 failed to file the report of change regarding the registered
13.21 agent, to file any amendment, or to correct the
13.22 misrepresentation.
13.23 (e) Sixty days after the mailing of the notice, the
13.24 authority of the foreign cooperative to transact business in
13.25 this state ceases. The secretary of state shall issue a
13.26 certificate of revocation and shall mail the certificate to the
13.27 address of the principal place of business or the office
13.28 required to be maintained in the jurisdiction of organization of
13.29 the foreign cooperative.
13.30 Subd. 6. [TRANSACTION OF BUSINESS WITHOUT CERTIFICATE OF
13.31 AUTHORITY.] (a) A foreign cooperative transacting business in
13.32 this state may not maintain any action, suit, or proceeding in
13.33 any court of this state until it possesses a certificate of
13.34 authority.
13.35 (b) The failure of a foreign cooperative to obtain a
13.36 certificate of authority does not impair the validity of any
14.1 contract or act of the foreign cooperative or prevent the
14.2 foreign cooperative from defending any action, suit, or
14.3 proceeding in any court of this state.
14.4 (c) A foreign cooperative, by transacting business in this
14.5 state without a certificate of authority, appoints the secretary
14.6 of state as its agent upon whom any notice, process, or demand
14.7 may be served.
14.8 (d) A foreign cooperative that transacts business in this
14.9 state without a valid certificate of authority is liable to the
14.10 state for the years or parts of years during which it transacted
14.11 business in this state without the certificate in any amount
14.12 equal to all fees that would have been imposed by this chapter
14.13 upon that business entity had it duly obtained the certificate,
14.14 filed all reports required by this chapter, and paid all
14.15 penalties imposed by this chapter. The attorney general shall
14.16 bring proceedings to recover all amounts due this state under
14.17 the provisions of this section.
14.18 (e) A foreign cooperative that transacts business in this
14.19 state without a valid certificate of authority is subject to a
14.20 civil penalty, payable to the state, not to exceed $5,000. Each
14.21 director or, in the absence of directors, each member or agent
14.22 who authorizes, directs, or participates in the transaction of
14.23 business in this state on behalf of a foreign cooperative that
14.24 does not have a certificate is subject to a civil penalty,
14.25 payable to the state, not to exceed $1,000.
14.26 (f) The civil penalties set forth in paragraph (e) may be
14.27 recovered in an action brought in the district court for Ramsey
14.28 county by the attorney general. Upon a finding by the court
14.29 that a foreign cooperative or any of its members, directors, or
14.30 agents have transacted business in this state in violation of
14.31 this chapter, the court shall issue, in addition to the
14.32 imposition of a civil penalty, an injunction restraining the
14.33 further transaction of the business of the foreign cooperative
14.34 and the further exercise of any business entity's rights and
14.35 privileges in this state. The foreign cooperation must be
14.36 enjoined from transacting business in this state until all civil
15.1 penalties plus any interest and court costs that the court may
15.2 assess have been paid and until the foreign cooperative has
15.3 otherwise complied with the provisions of this chapter.
15.4 (g) A member of a foreign cooperative is not liable for the
15.5 debts and obligations of the foreign cooperative solely by
15.6 reason of the business entity's having transacted business in
15.7 this state without a valid certificate of authority.
15.8 Subd. 7. [TRANSACTIONS NOT CONSTITUTING TRANSACTING
15.9 BUSINESS.] (a) The following activities of a foreign
15.10 cooperative, among others, do not constitute transacting
15.11 business within the meaning of this section:
15.12 (1) maintaining, defending, or settling any proceeding;
15.13 (2) holding meetings of its members or carrying on any
15.14 other activities concerning its internal affairs;
15.15 (3) maintaining bank accounts;
15.16 (4) maintaining offices or agencies for the transfer,
15.17 exchange, and registration of the foreign cooperative's own
15.18 securities or maintaining trustees or depositories with respect
15.19 to those securities;
15.20 (5) selling through independent contractors;
15.21 (6) soliciting or obtaining orders, whether by mail or
15.22 through employees or agents or otherwise, if the orders require
15.23 acceptance outside this state before they become contracts;
15.24 (7) creating or acquiring indebtedness, mortgages, and
15.25 security interests in real or personal property;
15.26 (8) securing or collecting debts or enforcing mortgages,
15.27 and security interests in property securing the debts;
15.28 (9) holding, protecting, renting, maintaining, and
15.29 operating real or personal property in this state;
15.30 (10) selling or transferring title to property in this
15.31 state to any person; or
15.32 (11) conducting an isolated transaction that is completed
15.33 within 30 days and that is not one in the course of repeated
15.34 transactions of a like manner.
15.35 (b) The term "transacting business" as used in this section
15.36 has no effect on personal jurisdiction under section 543.19.
16.1 (c) For purposes of this section, any foreign cooperative
16.2 that owns income-producing real or tangible personal property in
16.3 this state, other than property exempted under paragraph (a), is
16.4 considered to be transacting business in this state.
16.5 (d) The list of activities in paragraph (a) is not
16.6 exhaustive. This subdivision does not apply in determining the
16.7 contracts or activities that may subject a foreign cooperative
16.8 to service of process or taxation in this state or to regulation
16.9 under any other law of this state.
16.10 Subd. 8. [ACTION TO RESTRAIN FOREIGN COOPERATIVE.] The
16.11 attorney general may bring an action to restrain a foreign
16.12 cooperative from transacting business in this state in violation
16.13 of this chapter, chapter 308A, or other laws of this state.
16.14 Subd 9. [SERVICE OF PROCESS.] Service of process on a
16.15 foreign cooperative must be as provided under section 5.25.
16.16 ORGANIZATION
16.17 Sec. 9. [308B.201] [ORGANIZATIONAL PURPOSE.]
16.18 A cooperative may be formed and organized on a cooperative
16.19 plan for any lawful purpose, including:
16.20 (1) to market, process, or otherwise change the form or
16.21 marketability of products, including crops, livestock, and other
16.22 agricultural products, the manufacturing and further processing
16.23 of those products, other purposes that are necessary or
16.24 convenient to facilitate the production or marketing of products
16.25 by patron members and others, and other purposes that are
16.26 related to the business of the cooperative;
16.27 (2) to provide products, supplies, and services to its
16.28 members; and
16.29 (3) for any other purposes that cooperatives are authorized
16.30 by law.
16.31 Sec. 10. [308B.205] [ORGANIZERS.]
16.32 Subdivision 1. [QUALIFICATION.] A cooperative may be
16.33 organized by one or more organizers who shall be adult natural
16.34 persons, and who may act for themselves as individuals or as the
16.35 agents of other entities. The organizers forming the
16.36 cooperative need not be members of the cooperative.
17.1 Subd. 2. [ROLE OF ORGANIZERS.] If the first board is not
17.2 named in the articles of organization, the organizers may elect
17.3 the first board or may act as directors with all of the powers,
17.4 rights, duties, and liabilities of directors, until directors
17.5 are elected or until a contribution is accepted, whichever
17.6 occurs first.
17.7 Subd. 3. [MEETING.] After the filing of articles of
17.8 organization, the organizers or the directors named in the
17.9 articles of organization shall either hold an organizational
17.10 meeting at the call of a majority of the organizers or of the
17.11 directors named in the articles, or take written action for the
17.12 purposes of transacting business and taking actions necessary or
17.13 appropriate to complete the organization of the cooperative,
17.14 including, without limitations, amending the articles, electing
17.15 directors; adopting bylaws, adopting banking resolutions,
17.16 authorizing or ratifying the purchase, lease, or other
17.17 acquisition of suitable space, furniture, furnishings, supplies,
17.18 and materials; adopting a fiscal year for the cooperative;
17.19 contracting to receive and accept contributions; and making any
17.20 appropriate tax elections. If a meeting is held, the person or
17.21 persons calling the meeting shall give at least three days'
17.22 notice of the meeting to each organizer or director named,
17.23 stating the date, time, and place of the meeting. Organizers
17.24 and directors may waive notice of an organizational meeting in
17.25 the same manner that a director may waive notice of meetings of
17.26 the board.
17.27 Sec. 11. [308B.211] [COOPERATIVE NAME.]
17.28 Subdivision 1. [DISTINGUISHED NAME.] The name of a
17.29 cooperative shall distinguish the cooperative upon the records
17.30 in the office of the secretary of state from the name of a
17.31 domestic business entity or a foreign business entity,
17.32 authorized or registered to do business in this state, or a name
17.33 the right to which is, at the time of organization, reserved or
17.34 provided for by law.
17.35 Subd. 2. [RESERVATION; CONTEST OF NAME.] The cooperative
17.36 name shall be reserved for the cooperative during its
18.1 existence. A person doing business in this state may contest
18.2 the registration of a name with the secretary of state under
18.3 section 5.22.
18.4 Sec. 12. [308B.215] [ARTICLES OF ORGANIZATION.]
18.5 Subdivision 1. [REQUIREMENTS.] (a) The articles of the
18.6 cooperative shall include:
18.7 (1) the name of the cooperative;
18.8 (2) the purpose of the cooperative;
18.9 (3) the name and address of each organizer; and
18.10 (4) the period of duration for the cooperative, if the
18.11 duration is not to be perpetual.
18.12 (b) The articles may contain any other lawful provision.
18.13 (c) The articles shall be signed by the organizers.
18.14 Subd. 2. [FILING.] The original articles and a designation
18.15 of the cooperative's registered office and agent, including a
18.16 registration form under section 308B.121, shall be filed with
18.17 the secretary of state. The fee for filing the articles with
18.18 the secretary of state is $60.
18.19 Subd. 3. [EFFECT OF FILING.] When the articles, the
18.20 registration form under section 308B.121, and the designation of
18.21 the cooperative's registered office and agent have been filed
18.22 with the secretary of state and the required fee has been paid
18.23 to the secretary of state, it shall be presumed that:
18.24 (1) all conditions precedent that are required to be
18.25 performed by the organizers have been complied with;
18.26 (2) the organization of the cooperative has been chartered
18.27 by the state as a separate legal entity; and
18.28 (3) the secretary of state shall issue a certificate of
18.29 organization to the cooperative.
18.30 Sec. 13. [308B.221] [AMENDMENT OF ARTICLES.]
18.31 Subdivision 1. [PROCEDURE.] (a) The articles of a
18.32 cooperative shall be amended as follows:
18.33 (1) the board, by majority vote, shall pass a resolution
18.34 stating the text of the proposed amendment. The text of the
18.35 proposed amendment and an attached mail or alternative ballot,
18.36 if the board has provided for a mail or alternative ballot in
19.1 the resolution or alternative method approved by the board and
19.2 stated in the resolution, shall be mailed or otherwise
19.3 distributed with a regular or special meeting notice to each
19.4 member. The notice shall designate the time and place of the
19.5 meeting for the proposed amendment to be considered and voted
19.6 on;
19.7 (2) if a quorum of the members is registered as being
19.8 present or represented by alternative vote at the meeting, the
19.9 proposed amendment is adopted:
19.10 (i) if approved by a majority of the votes cast; or
19.11 (ii) for a cooperative with articles or bylaws requiring
19.12 more than majority approval or other conditions for approval,
19.13 the amendment is approved by a proportion of the votes cast or a
19.14 number of total members as required by the articles or bylaws
19.15 and the conditions for approval in the articles or bylaws have
19.16 been satisfied.
19.17 (b) After an amendment has been adopted by the members, the
19.18 amendment shall be signed by the chair, vice chair, records
19.19 officer, or assistant records officer and a copy of the
19.20 amendment filed in the office of the secretary of state.
19.21 Subd. 2. [CERTIFICATE.] (a) A certificate shall be
19.22 prepared stating:
19.23 (1) the vote and meeting of the board adopting a resolution
19.24 of the proposed amendment;
19.25 (2) the notice given to members of the meeting at which the
19.26 amendment was adopted;
19.27 (3) the quorum registered at the meeting; and
19.28 (4) the vote cast adopting the amendment.
19.29 (b) The certificate shall be signed by the chair, vice
19.30 chair, records officer, or financial officer and filed with the
19.31 records of the cooperative.
19.32 Subd. 3. [AMENDMENT BY DIRECTORS.] A majority of directors
19.33 may amend the articles if the cooperative does not have any
19.34 members with voting rights.
19.35 Subd. 4. [FILING.] An amendment of the articles shall be
19.36 filed with the secretary of state with a registration statement
20.1 under section 308B.121, and the amendment is effective upon
20.2 filing or the date specified in the resolution adopting the
20.3 amendment.
20.4 Sec. 14. [308B.225] [AMENDMENT OF ORGANIZATIONAL DOCUMENTS
20.5 TO BE GOVERNED BY THIS CHAPTER.]
20.6 Subdivision 1. [AUTHORITY.] (a) A cooperative organized
20.7 under chapter 308A may convert and become subject to this
20.8 chapter by amending its organizational documents to conform to
20.9 the requirements of this chapter.
20.10 (b) A cooperative organized under chapter 308A that becomes
20.11 subject to this chapter must provide its members with a
20.12 disclosure statement of the rights and obligations of the
20.13 members and the capital structure of the cooperative before
20.14 becoming subject to this chapter. A cooperative organized under
20.15 chapter 308A, upon distribution of the disclosure required in
20.16 this subdivision and approval of its members as necessary for
20.17 amending its articles under chapter 308A, may amend its articles
20.18 to comply with this chapter.
20.19 (c) A cooperative organized under chapter 308A that is
20.20 converting to be subject to this chapter must prepare a
20.21 certificate stating:
20.22 (1) the date on which the entity was first organized;
20.23 (2) the name of the chapter 308A cooperative and, if the
20.24 name is changed, the name of the cooperative to be governed
20.25 under this chapter; and
20.26 (3) the future effective date and time, which must be a
20.27 date and time certain, that it will be governed by this chapter,
20.28 if the effective date and time is not to be the date and time of
20.29 filing.
20.30 (d) Upon filing with the secretary of state of the articles
20.31 for compliance with this chapter and the certificate required
20.32 under paragraph (c), a cooperative organized under chapter 308A
20.33 is converted and governed by this chapter unless a later date
20.34 and time is specified in the certificate under paragraph (c).
20.35 (e) In connection with a conversion under which a
20.36 cooperative becomes governed by this chapter, the rights,
21.1 securities, or interests in the chapter 308A cooperative may be
21.2 exchanged or converted into rights, property, securities, or
21.3 interests in the cooperative as governed by this chapter.
21.4 Subd. 2. [EFFECT OF BEING GOVERNED BY THIS CHAPTER.] The
21.5 conversion of a cooperative organized under chapter 308A to a
21.6 cooperative governed by this chapter does not affect any
21.7 obligations or liabilities of the cooperative before the
21.8 conversion or the personal liability of any person incurred
21.9 before the conversion. When the conversion is effective, the
21.10 rights, privileges, and powers of the cooperative, real and
21.11 personal property of the cooperative, debts due to the
21.12 cooperative, and causes of action belonging to the cooperative,
21.13 remain vested in the cooperative and are the property of the
21.14 cooperative as converted and governed by this chapter. Title to
21.15 real property vested by deed or otherwise in the cooperative
21.16 organized under chapter 308A does not revert and is not impaired
21.17 by reason of the cooperative being converted and governed by
21.18 this chapter. Rights of creditors and liens upon property of
21.19 the cooperative under chapter 308A are preserved unimpaired, and
21.20 debts, liabilities, and duties of the cooperative under chapter
21.21 308A remain attached to the cooperative as converted and
21.22 governed by this chapter and may be enforced against the
21.23 cooperative to the same extent as if the debts, liabilities, and
21.24 duties had originally been incurred or contracted by the
21.25 cooperative as organized under this chapter. The rights,
21.26 privileges, powers, and interests in property of the cooperative
21.27 under chapter 308A, as well as the debts, liabilities, and
21.28 duties of the cooperative are not deemed, as a consequence of
21.29 the conversion, to have been transferred for any purpose of the
21.30 laws of this state.
21.31 Sec. 15. [308B.231] [CURATIVE FILING.]
21.32 If the secretary of state determines that a filing has been
21.33 made in error by the cooperative, the secretary of state may
21.34 revoke and expunge the erroneous filing and authorize a curative
21.35 document to be filed. A filing fee of $500 shall be charged for
21.36 any such revocation or expungement and subsequent curative
22.1 filing.
22.2 Sec. 16. [308B.235] [EXISTENCE.]
22.3 Subdivision 1. [COMMENCEMENT UPON FILING.] The existence
22.4 of a cooperative shall commence when the articles are filed with
22.5 the secretary of state.
22.6 Subd. 2. [DURATION.] A cooperative shall have a perpetual
22.7 duration unless the cooperative provides for a limited period of
22.8 duration in the articles.
22.9 Sec. 17. [308B.241] [BYLAWS.]
22.10 Subdivision 1. [REQUIRED.] A cooperative shall have bylaws
22.11 governing the cooperative's business affairs, structure, the
22.12 qualifications, classification, rights and obligations of
22.13 members, and the classifications, allocations, and distributions
22.14 of membership interests, which are not otherwise provided in the
22.15 articles or by this chapter.
22.16 Subd. 2. [CONTENTS.] (a) If not stated in the articles,
22.17 the bylaws must state:
22.18 (1) the purpose of the cooperative;
22.19 (2) the capital structure of the cooperative to the extent
22.20 not stated in the articles, including a statement of the classes
22.21 and relative rights, preferences, and restrictions granted to or
22.22 imposed upon each class of member interests, the rights to share
22.23 in profits or distributions of the cooperative, and the
22.24 authority to issue membership interests, which may be designated
22.25 to be determined by the board;
22.26 (3) a provision designating the voting and governance
22.27 rights, to the extent not stated in the articles, including
22.28 which membership interests have voting power and any limitations
22.29 or restrictions on the voting power, which shall be in
22.30 accordance with the provisions of this chapter;
22.31 (4) a statement that patron membership interests with
22.32 voting power shall be restricted to one vote for each member
22.33 regardless of the amount of patron membership interests held in
22.34 the affairs of the cooperative or a statement describing the
22.35 allocation of voting power allocated as prescribed in this
22.36 chapter;
23.1 (5) a statement that membership interests held by a member
23.2 are transferable only with the approval of the board or as
23.3 provided in the bylaws; and
23.4 (6) if nonpatron membership interests are authorized, a
23.5 statement as to how profits and losses will be allocated and
23.6 cash will be distributed between patron membership interests
23.7 collectively and nonpatron membership interests collectively to
23.8 the extent not stated in the articles, a statement that net
23.9 income allocated to a patron membership interest as determined
23.10 by the board in excess of dividends and additions to reserves
23.11 shall be distributed on the basis of patronage, and a statement
23.12 that the records of the cooperative shall include patron
23.13 membership interests and, if authorized, nonpatron membership
23.14 interests, which may be further described in the bylaws of any
23.15 classes and in the reserves.
23.16 (b) The bylaws may contain any provision relating to the
23.17 management or regulation of the affairs of the cooperative that
23.18 are not inconsistent with law or the articles, and shall include
23.19 the following:
23.20 (1) the number of directors and the qualifications, manner
23.21 of election, powers, duties, and compensation, if any, of
23.22 directors;
23.23 (2) the qualifications of members and any limitations on
23.24 their number;
23.25 (3) the manner of admission, withdrawal, suspensions, and
23.26 expulsion of members;
23.27 (4) generally, the governance rights, financial rights,
23.28 assignability of governance and financial rights, and other
23.29 rights, privileges, and obligations of members and their
23.30 membership interests, which may be further described in member
23.31 control agreements; and
23.32 (5) any provisions required by the articles to be in the
23.33 bylaws.
23.34 Subd. 3. [ADOPTION.] (a) Bylaws shall be adopted before
23.35 any distributions to members, but if the articles or bylaws
23.36 provide that rights of contributors to a class of membership
24.1 interest will be determined in the bylaws, then the bylaws must
24.2 be adopted before the acceptance of any contributions to that
24.3 class.
24.4 (b) Subject to subdivisions 4, 5, and 6, the bylaws of a
24.5 cooperative may be adopted or amended by the directors, or the
24.6 members may adopt or amend bylaws at a regular or special
24.7 members' meeting if:
24.8 (1) the notice of the regular or special meeting contains a
24.9 statement that the bylaws or restated bylaws will be voted upon
24.10 and copies are included with the notice, or copies are available
24.11 upon request from the cooperative and summary statement of the
24.12 proposed bylaws or amendment is included with the notice;
24.13 (2) a quorum is registered as being present or represented
24.14 by mail or alternative voting method if the mail or alternative
24.15 voting method is authorized by the board; and
24.16 (3) the bylaws or amendment is approved by a majority vote
24.17 cast, or for a cooperative with articles or bylaws requiring
24.18 more than majority approval or other conditions for approval,
24.19 the bylaws or amendment is approved by a proportion of the vote
24.20 cast or a number of the total members are required by the
24.21 articles or bylaws and the conditions for approval in the
24.22 articles or bylaws have been satisfied.
24.23 (c) Until the next annual or special members' meeting, the
24.24 majority of directors may adopt and amend bylaws for the
24.25 cooperative that are consistent with subdivisions 4 to 6, which
24.26 may be further amended or repealed by the members at an annual
24.27 or special members' meeting.
24.28 Subd. 4. [AMENDMENT OF BYLAWS BY BOARD OR MEMBERS.] (a)
24.29 The board may amend the bylaws at any time to add, change, or
24.30 delete a provision, unless:
24.31 (1) this chapter, the articles, or the bylaws reserve the
24.32 power exclusively to the members in whole or in part; or
24.33 (2) a particular bylaw expressly prohibits the board from
24.34 doing so.
24.35 (b) Any amendment of the bylaws by the board must be
24.36 distributed to the members no later than ten days after adoption
25.1 and the notice of the annual meeting of the members must contain
25.2 a notice and summary or the actual amendments to the bylaws
25.3 adopted by the board.
25.4 (c) The members may amend the bylaws even though the bylaws
25.5 may also be amended by the board.
25.6 Subd. 5. [BYLAW CHANGING QUORUM OR VOTING REQUIREMENT FOR
25.7 MEMBERS.] (a) The members may amend the bylaws to fix a greater
25.8 quorum or voting requirement for members, or voting groups of
25.9 members, than is required under this chapter. An amendment to
25.10 the bylaws to add, change, or delete a greater quorum or voting
25.11 requirement for members shall meet the same quorum requirement
25.12 and be adopted by the same vote and voting groups required to
25.13 take action under the quorum and voting requirements then in
25.14 effect or proposed to be adopted, whichever is greater.
25.15 (b) A bylaw that fixes a greater quorum or voting
25.16 requirement for members under paragraph (a) may not be adopted
25.17 and shall not be amended by the board.
25.18 Subd. 6. [BYLAW CHANGING QUORUM OR VOTING REQUIREMENT FOR
25.19 DIRECTORS.] (a) A bylaw that fixes a greater quorum or voting
25.20 requirement for the board may be amended:
25.21 (1) if adopted by the members, only by the members; or
25.22 (2) if adopted by the board, either by the members or by
25.23 the board.
25.24 (b) A bylaw adopted or amended by the members that fixes a
25.25 greater quorum or voting requirement for the board may provide
25.26 that it may be amended only by a specified vote of either the
25.27 members or the board, but if the bylaw is to be amended by a
25.28 specified vote of the members, the bylaw must be adopted by the
25.29 same specified vote of the members.
25.30 (c) Action by the board under paragraph (a), clause (2), to
25.31 adopt or amend a bylaw that changes the quorum or voting
25.32 requirement for the board shall meet the same quorum requirement
25.33 and be adopted by the same vote required to take action under
25.34 the quorum and voting requirement then in effect or proposed to
25.35 be adopted, whichever is greater.
25.36 Subd. 7. [EMERGENCY BYLAWS.] (a) Unless otherwise provided
26.1 in the articles or bylaws, the board may adopt bylaws to be
26.2 effective only in an emergency as defined in paragraph (d). The
26.3 emergency bylaws, which are subject to amendment or repeal by
26.4 the members, may include all provisions necessary for managing
26.5 the cooperative during the emergency, including:
26.6 (1) procedures for calling a meeting of the board;
26.7 (2) quorum requirements for the meeting; and
26.8 (3) designation of additional or substitute directors.
26.9 (b) All provisions of the regular bylaws consistent with
26.10 the emergency bylaws shall remain in effect during the
26.11 emergency. The emergency bylaws shall not be effective after
26.12 the emergency ends.
26.13 (c) Action taken in good faith in accordance with the
26.14 emergency bylaws:
26.15 (1) binds the cooperative; and
26.16 (2) may not be the basis for imposition of liability on any
26.17 director, officer, employee, or agent of the cooperative on the
26.18 grounds that the action was not authorized cooperative action.
26.19 (d) An emergency exists for the purposes of this section,
26.20 if a quorum of the directors cannot readily be obtained because
26.21 of some catastrophic event.
26.22 Sec. 18. [308B.245] [COOPERATIVE RECORDS.]
26.23 (a) A cooperative shall keep as permanent records minutes
26.24 of all meetings of its members and of the board, a record of all
26.25 actions taken by the members or the board without a meeting by a
26.26 written unanimous consent in lieu of a meeting, and a record of
26.27 all waivers of notices of meetings of the members and of the
26.28 board.
26.29 (b) A cooperative shall maintain appropriate accounting
26.30 records.
26.31 (c) A cooperative shall maintain its records in written
26.32 form or in another form capable of conversion into written form
26.33 within a reasonable time.
26.34 (d) A cooperative shall keep a copy of each of the
26.35 following records at its principal office:
26.36 (1) its articles and other governing instruments;
27.1 (2) its bylaws or other similar instruments;
27.2 (3) a record of the names and addresses of its members, in
27.3 a form that allows preparation of an alphabetical list of
27.4 members with each member's address;
27.5 (4) the minutes of members' meetings, and records of all
27.6 actions taken by members without a meeting by unanimous written
27.7 consent in lieu of a meeting, for the past three years;
27.8 (5) all written communications within the past three years
27.9 to members as a group or to any class of members as a group;
27.10 (6) a list of the names and business addresses of its
27.11 current board members and officers;
27.12 (7) a copy of its most recent periodic registration
27.13 delivered to the secretary of state under section 308B.121; and
27.14 (8) all financial statements prepared for periods ending
27.15 during the last fiscal year.
27.16 (e) Except as otherwise limited by this chapter, the board
27.17 of a cooperative shall have discretion to determine what records
27.18 are appropriate for the purposes of the cooperative, the length
27.19 of time records are to be retained, and policies relating to the
27.20 confidentiality, disclosure, inspection, and copying of the
27.21 records of the cooperative.
27.22 Sec. 19. [308B.301] [POWERS.]
27.23 Subdivision 1. [GENERALLY.] (a) In addition to other
27.24 powers, a cooperative as an agent or otherwise:
27.25 (1) may perform every act necessary or proper to the
27.26 conduct of the cooperative's business or the accomplishment of
27.27 the purposes of the cooperative;
27.28 (2) has other rights, powers, or privileges granted by the
27.29 laws of this state to other cooperatives, except those that are
27.30 inconsistent with the express provisions of this chapter; and
27.31 (3) has the powers given in section 308A.201 and in this
27.32 section.
27.33 (b) This section does not give a cooperative the power or
27.34 authority to exercise the powers of a credit union under chapter
27.35 52, a bank under chapter 48, or a savings association under
27.36 chapter 51A.
28.1 Subd. 2. [DEALING IN PRODUCTS.] A cooperative may buy,
28.2 sell, or deal in its own products; the products of its
28.3 individual members, patrons, or nonmembers; the products of
28.4 another cooperative association or of its members or patrons; or
28.5 the products of another person or entity. A cooperative may
28.6 negotiate the price at which its products may be sold.
28.7 Subd. 3. [CONTRACTS WITH MEMBERS.] A cooperative may enter
28.8 into or become a party to a contract or agreement for the
28.9 cooperative or for the cooperative's individual members or
28.10 patrons or between the cooperative and its members.
28.11 Subd. 4. [HOLDING AND TRANSACTIONS OF REAL AND PERSONAL
28.12 PROPERTY.] (a) A cooperative may purchase and hold, lease,
28.13 mortgage, encumber, sell, exchange, and convey as a legal entity
28.14 real, personal, and intellectual property, including real
28.15 estate, buildings, personal property, patents, and copyrights as
28.16 the business of the cooperative may require, including the sale
28.17 or other disposition of assets required by the business of the
28.18 cooperative as determined by the board.
28.19 (b) A cooperative may take, receive, and hold real and
28.20 personal property, including the principal and interest of money
28.21 or other funds and rights in a contract, in trust for any
28.22 purpose not inconsistent with the purposes of the cooperative in
28.23 its articles or bylaws and may exercise fiduciary powers in
28.24 relation to taking, receiving, and holding the real and personal
28.25 property.
28.26 Subd. 5. [BUILDINGS.] A cooperative may erect buildings or
28.27 other structures or facilities on the cooperative's owned or
28.28 leased property or on a right-of-way legally acquired by the
28.29 cooperative.
28.30 Subd. 6. [DEBT INSTRUMENTS.] A cooperative may issue
28.31 bonds, debentures, or other evidence of indebtedness and may
28.32 borrow money, may secure any of its obligations by mortgage of
28.33 or creation of a security interest in or other encumbrances or
28.34 assignment of all or any of its property, franchises, or income,
28.35 and may issue guarantees for any legal purpose. The cooperative
28.36 may form special purpose business entities to secure assets of
29.1 the cooperative.
29.2 Subd. 7. [ADVANCES TO PATRONS.] A cooperative may make
29.3 advances to its members or patrons on products delivered by the
29.4 members or patrons to the cooperative.
29.5 Subd. 8. [DEPOSITS.] A cooperative may accept donations or
29.6 deposits of money or real personal property from other
29.7 cooperatives or associations from which it is constituted.
29.8 Subd. 9. [LENDING, BORROWING, INVESTING.] A cooperative
29.9 may loan or borrow money to or from individual members,
29.10 cooperatives, or associations from which it is constituted with
29.11 security that it considers sufficient. A cooperative may invest
29.12 and reinvest its funds.
29.13 Subd. 10. [PENSIONS AND BENEFITS.] A cooperative may pay
29.14 pensions, retirement allowances, and compensation for past
29.15 services to and for the benefit of; and establish, maintain,
29.16 continue, and carry out, wholly or partially at the expense of
29.17 the cooperative, employee or incentive benefit plans, trust, and
29.18 provisions to or for the benefit of any or all of its and its
29.19 related organizations' officers, managers, directors, governors,
29.20 employees, and agents; and in the case of a related organization
29.21 that is a cooperative, members who provide services to the
29.22 cooperative, and any of their families, dependents, and
29.23 beneficiaries. It may indemnify and purchase and maintain
29.24 insurance for and on behalf of a fiduciary of any of these
29.25 employee benefit and incentive plans, trusts, and provisions.
29.26 Subd. 11. [INSURANCE.] A cooperative may provide for its
29.27 benefit life insurance and other insurance with respect to the
29.28 services of any or all of its members, managers, directors,
29.29 employees, and agents, or on the life of a member for the
29.30 purpose of acquiring at the death of the member any or all
29.31 membership interests in the cooperative owned by the member.
29.32 Subd. 12. [OWNERSHIP INTERESTS IN OTHER ENTITIES.] (a) A
29.33 cooperative may purchase, acquire, hold, or dispose of the
29.34 ownership interests of another business entity or organize
29.35 business entities whether organized under the laws of this state
29.36 or another state or the United States and assume all rights,
30.1 interests, privileges, responsibilities, and obligations arising
30.2 out of the ownership interests, including a business entity
30.3 organized:
30.4 (1) as a federation of associations;
30.5 (2) for the purpose of forming a district, state, or
30.6 national marketing sales or service agency; or
30.7 (3) for the purpose of acquiring marketing facilities at
30.8 terminal or other markets in this state or other states.
30.9 (b) A cooperative may purchase, own, and hold ownership
30.10 interests, including stock and other equity interests,
30.11 memberships, interests in nonstock capital, and evidences of
30.12 indebtedness of any domestic business entity or foreign business
30.13 entity.
30.14 Subd. 13. [FIDUCIARY POWERS.] A cooperative may exercise
30.15 any and all fiduciary powers in relations with members,
30.16 cooperatives, associations, or business entities from which it
30.17 is constituted.
30.18 Sec. 20. [308B.305] [EMERGENCY POWERS.]
30.19 (a) In anticipation of or during an emergency defined in
30.20 paragraph (d), the board may:
30.21 (1) modify lines of succession to accommodate the
30.22 incapacity of any director, officer, employee, or agent; and
30.23 (2) relocate the principal office, designate alternative
30.24 principal offices or regional offices, or authorize the officers
30.25 to do so.
30.26 (b) During an emergency as contemplated in paragraph (d),
30.27 unless emergency bylaws provide otherwise:
30.28 (1) notice of a meeting of the board need be given only to
30.29 those directors to whom it is practicable to reach and may be
30.30 given in any practicable manner, including by publication or
30.31 radio; and
30.32 (2) one of more officers of the cooperative present at a
30.33 meeting of the board may be deemed to be directors for the
30.34 meeting, in order of rank and within the same rank in order of
30.35 seniority, as necessary to achieve a quorum.
30.36 (c) Cooperative action taken in good faith during an
31.1 emergency under this section to further the ordinary business
31.2 affairs of the cooperative:
31.3 (1) binds the cooperative; and
31.4 (2) may not be the basis for the imposition of liability on
31.5 any director, officer, employee, or agent of the cooperative on
31.6 the grounds that the action was not an authorized cooperative
31.7 action.
31.8 (d) An emergency exists for purposes of this section if a
31.9 quorum of the directors cannot readily be obtained because of a
31.10 catastrophic event.
31.11 Sec. 21. [308B.311] [AGRICULTURAL PRODUCT MARKETING
31.12 CONTRACTS.]
31.13 Subdivision 1. [AUTHORITY.] A cooperative and its patron
31.14 member or patron may make and execute a marketing contract,
31.15 requiring the patron member or patron to sell a specified
31.16 portion of the patron member's or patron's agricultural product
31.17 or specified commodity produced from a certain area exclusively
31.18 to or through the cooperative or facility established by the
31.19 cooperative.
31.20 Subd. 2. [TITLE TO PRODUCTS.] If a sale is contracted to
31.21 the cooperative, the sale shall transfer title to the product
31.22 absolutely, except for a recorded lien or security interest
31.23 against the agricultural products of the patron member or patron
31.24 in the state central notification system and liens granted
31.25 against farm products under federal law, to the cooperative on
31.26 delivery of the product or at another specified time if
31.27 expressly provided in the contract. The contract may allow the
31.28 cooperative to sell or resell the product of its patron member
31.29 or patron with or without taking title to the product, and pay
31.30 the resale price to the patron member or patron, after deducting
31.31 all necessary selling, overhead, and other costs and expenses,
31.32 including other proper reserves and interest.
31.33 Subd. 3. [TERM OF CONTRACT.] A single term of a marketing
31.34 contract shall not exceed ten years, but a marketing contract
31.35 may be made self-renewing for periods not exceeding five years
31.36 each, subject to the right of either party to terminate by
32.1 giving written notice of the termination during a period of the
32.2 current term as specified in the contract.
32.3 Subd. 4. [DAMAGES FOR BREACH OF CONTRACT.] The bylaws or
32.4 the marketing contract, or both, may set a specific sum as
32.5 liquidated damages to be paid by the patron member or patron to
32.6 the cooperative for breach of any provision of the marketing
32.7 contract regarding the sale or delivery or withholding of a
32.8 product and may provide that the member or patron shall pay the
32.9 costs, premiums for bonds, expenses, and fees if an action is
32.10 brought on the contract by the cooperative. The remedies for
32.11 breach of contract are valid and enforceable in the courts of
32.12 this state. The provisions shall be enforced as liquidated
32.13 damages and are not considered a penalty.
32.14 Subd. 5. [INJUNCTION AGAINST BREACH OF CONTRACT.] If there
32.15 is a breach or threatened breach of a marketing contract by a
32.16 patron member or patron, the cooperative is entitled to an
32.17 injunction to prevent the further breach of the contract and to
32.18 a decree of specific performance of the contract. Pending the
32.19 adjudication of the action after filing a complaint showing the
32.20 breach or threatened breach and filing a sufficient bond, the
32.21 cooperative is entitled to a temporary restraining order and
32.22 preliminary injunction against the patron member or patron.
32.23 Subd. 6. [PENALTIES FOR CONTRACT INTERFERENCE AND FALSE
32.24 REPORTS.] Any person who knowingly induces or attempts to induce
32.25 any member or patron of a cooperative organized under this
32.26 chapter to breach a marketing contract with the cooperative, or
32.27 who maliciously and knowingly spreads false reports about the
32.28 cooperative's finances or management, is guilty of a misdemeanor
32.29 and subject to a fine of not less than $100, and not more than
32.30 $1,000, for each such offense.
32.31 Subd. 7. [CIVIL DAMAGES FOR CONTRACT INTERFERENCE AND
32.32 FALSE REPORTS.] In addition to the penalty provided in
32.33 subdivision 6, the person may be liable to the cooperative for
32.34 civil damages for any violation of subdivision 6. Each
32.35 violation shall constitute a separate offense.
32.36 DIRECTORS AND OFFICERS
33.1 Sec. 22. [308B.401] [BOARD GOVERNS COOPERATIVE.]
33.2 A cooperative shall be governed by its board, which shall
33.3 take all action for and on behalf of the cooperative, except
33.4 those actions reserved or granted to members. Board action
33.5 shall be by the affirmative vote of a majority of the directors
33.6 voting at a duly called meeting unless a greater majority is
33.7 required by the articles or bylaws. A director individually or
33.8 collectively with other directors does not have authority to act
33.9 for or on behalf of the cooperative unless authorized by the
33.10 board. A director may advocate interests of members or member
33.11 groups to the board, but the fiduciary duty of each director is
33.12 to represent the best interests of the cooperative and all
33.13 members collectively.
33.14 Sec. 23. [308B.405] [NUMBER OF DIRECTORS.]
33.15 The board shall not have less than five directors, except
33.16 that a cooperative with 50 or fewer members may have three or
33.17 more directors as prescribed in the articles or bylaws.
33.18 Sec. 24. [308B.411] [ELECTION OF DIRECTORS.]
33.19 Subdivision 1. [FIRST BOARD.] The organizers shall elect
33.20 and obtain the acknowledgment of the first board to serve until
33.21 directors are elected by members. Until election by members,
33.22 the first board shall appoint directors to fill any vacancies.
33.23 Subd. 2. [GENERALLY.] (a) Directors shall be elected for
33.24 the term, at the time, and in the manner provided in this
33.25 section and the bylaws.
33.26 (b) A majority of the directors shall be members and a
33.27 majority of the directors shall be elected exclusively by the
33.28 members holding patron membership interests unless otherwise
33.29 provided in the articles or bylaws.
33.30 (c) The voting authority of the directors may be allocated
33.31 according to allocation units or equity classifications of the
33.32 cooperative provided that at least one-half of the voting power
33.33 on general matters of the cooperative shall be allocated to the
33.34 directors elected by members holding patron membership
33.35 interests, or in the alternative, the directors elected by the
33.36 members holding patron membership interests shall have an equal
34.1 or shall not have a minority voting power on general matters of
34.2 the cooperative.
34.3 (d) A director holds office for the term the director was
34.4 elected and until a successor is elected and has qualified, or
34.5 until the earlier death, resignation, removal, or
34.6 disqualification of the director.
34.7 (e) The expiration of a director's term with or without
34.8 election of a qualified successor does not make the prior or
34.9 subsequent acts of the director or the board void or voidable.
34.10 (f) Subject to any limitation in the articles or bylaws,
34.11 the board may set the compensation of directors.
34.12 (g) Directors may be divided into or designated and elected
34.13 by class or other distinction as provided in the articles or
34.14 bylaws.
34.15 (h) A director may resign by giving written notice to the
34.16 chair of the board or the board. The resignation is effective
34.17 without acceptance when the notice is given to the chair of the
34.18 board or the board unless a later effective time is specified in
34.19 the notice.
34.20 Subd. 3. [ELECTION AT REGULAR MEETING.] Directors shall be
34.21 elected at the regular members' meeting for the terms of office
34.22 prescribed in the bylaws. Except for directors elected at
34.23 district meetings or special meetings to replace a vacancy, all
34.24 directors shall be elected at the regular members' meeting.
34.25 There shall be no cumulative voting for directors except as
34.26 provided in this chapter and the articles or bylaws.
34.27 Subd. 4. [DISTRICT OR LOCAL UNIT ELECTION OF
34.28 DIRECTORS.] For a cooperative with districts or other units,
34.29 members may elect directors on a district or unit basis if
34.30 provided in the bylaws. The directors may be nominated or
34.31 elected at district meetings if provided in the bylaws.
34.32 Directors who are nominated at district meetings shall be
34.33 elected at the annual regular members' meeting by vote of the
34.34 entire membership, unless the bylaws provide that directors who
34.35 are nominated at district meetings are to be elected by vote of
34.36 the members of the district, at the district meeting, or the
35.1 annual regular members' meeting.
35.2 Subd. 5. [VOTE BY MAIL OR ALTERNATIVE BALLOT.] The
35.3 following shall apply to voting by mail or alternative ballot
35.4 voting:
35.5 (1) a member may not vote for a director other than by
35.6 being present at a meeting or by mail ballot or alternative
35.7 ballot authorized by the board;
35.8 (2) the ballot shall be in a form prescribed by the board;
35.9 (3) the member shall mark the ballot for the candidate
35.10 chosen and mail the ballot to the cooperative in a sealed plain
35.11 envelope inside another envelope bearing the member's name, or
35.12 shall vote designating the candidate chosen by alternative
35.13 ballot in the manner prescribed by the board; and
35.14 (4) if the ballot of the member is received by the
35.15 cooperative on or before the date of the regular members'
35.16 meeting or as otherwise prescribed for alternative ballots, the
35.17 ballot shall be accepted and counted as the vote of the absent
35.18 member.
35.19 Subd. 6. [BUSINESS ENTITY MEMBERS MAY NOMINATE PERSONS FOR
35.20 DIRECTOR.] If a member of a cooperative is not a natural person,
35.21 and the bylaws do not provide otherwise, the member may appoint
35.22 or elect one or more natural persons to be eligible for election
35.23 as a director.
35.24 Subd. 7. [TERM.] A director holds office for the term the
35.25 director was elected and until a successor is elected and has
35.26 qualified, or the earlier death, resignation, removal, or
35.27 disqualification of the director.
35.28 Subd. 8. [ACTS NOT VOID OR VOIDABLE.] The expiration of a
35.29 director's term with or without the election of a qualified
35.30 successor does not make prior or subsequent acts of the director
35.31 void or voidable.
35.32 Subd. 9. [COMPENSATION.] Subject to any limitation in the
35.33 articles or bylaws, the board may fix the compensation of the
35.34 directors.
35.35 Subd. 10. [CLASSIFICATION.] Directors may be divided into
35.36 classes as provided in the articles or bylaws.
36.1 Sec. 25. [308B.415] [FILLING VACANCIES.]
36.2 Subdivision 1. [PATRON DIRECTORS.] If a patron member
36.3 director's position becomes vacant or a new director position is
36.4 created for a director that was or is to be elected by patron
36.5 members, the board, in consultation with the directors elected
36.6 by patron members, shall appoint a patron member of the
36.7 cooperative to fill the director's position until the next
36.8 regular or special members' meeting. If there are no directors
36.9 elected by patron members on the board at the time of the
36.10 vacancy, a special patron members' meeting shall be called to
36.11 fill the patron member director vacancy.
36.12 Subd. 2. [NONPATRON DIRECTORS.] If the vacating director
36.13 was not elected by the patron members or a new director position
36.14 is created, unless otherwise provided in the articles or bylaws,
36.15 the board shall appoint a director to fill the vacant position
36.16 by majority vote of the remaining or then serving directors even
36.17 though less than a quorum. At the next regular or special
36.18 members' meeting, the members or patron members shall elect a
36.19 director to fill the unexpired term of the vacant director's
36.20 position.
36.21 Sec. 26. [308B.421] [REMOVAL OF DIRECTORS.]
36.22 Subdivision 1. [MODIFICATION.] The provisions of this
36.23 section apply unless modified by the articles or the bylaws.
36.24 Subd. 2. [REMOVAL OF DIRECTORS.] A director may be removed
36.25 at any time, with or without cause, if:
36.26 (1) the director was named by the board to fill a vacancy;
36.27 (2) the members have not elected directors in the interval
36.28 between the time of the appointment to fill a vacancy and the
36.29 time of the removal; and
36.30 (3) a majority of the remaining directors present
36.31 affirmatively vote to remove the director.
36.32 Subd. 3. [REMOVAL BY MEMBERS.] Any one or all of the
36.33 directors may be removed at any time, with or without cause, by
36.34 the affirmative vote of the holders of a majority of the voting
36.35 power of membership interests entitled to vote at an election of
36.36 directors; provided that if a director has been elected solely
37.1 by the patron members or the holders of a class or series of
37.2 membership interests as stated in the articles or bylaws, then
37.3 that director may be removed only by the affirmative vote of the
37.4 holders of a majority of the voting power of the patron members
37.5 for a director elected by the patron members or of all
37.6 membership interests of that class or series entitled to vote at
37.7 an election of that director.
37.8 Subd. 4. [ELECTION OF REPLACEMENTS.] New directors may be
37.9 elected at a meeting at which directors are removed.
37.10 Sec. 27. [308B.425] [BOARD OF DIRECTORS' MEETINGS.]
37.11 Subdivision 1. [TIME AND PLACE.] Meetings of the board may
37.12 be held from time to time as provided in the articles or bylaws
37.13 at any place within or without the state that the board may
37.14 select or by any means described in subdivision 2. If the board
37.15 fails to select a place for a meeting, the meeting must be held
37.16 at the principal executive office, unless the articles or bylaws
37.17 provide otherwise.
37.18 Subd. 2. [ELECTRONIC COMMUNICATIONS.] (a) A conference
37.19 among directors by any means of communication through which the
37.20 directors may simultaneously hear each other during the
37.21 conference constitutes a board meeting, if the same notice is
37.22 given of the conference as would be required by subdivision 3
37.23 for a meeting, and if the number of directors participating in
37.24 the conference would be sufficient to constitute a quorum at a
37.25 meeting. Participation in a meeting by that means constitutes
37.26 presence in person at the meeting.
37.27 (b) A director may participate in a board meeting not
37.28 described in paragraph (a) by any means of communication through
37.29 which the director, other directors so participating, and all
37.30 directors physically present at the meeting may simultaneously
37.31 hear each other during the meeting. Participation in a meeting
37.32 by that means constitutes presence in person at the meeting.
37.33 Subd. 3. [CALLING MEETINGS AND NOTICE.] Unless the
37.34 articles or bylaws provide for a different time period, a
37.35 director may call a board meeting by giving at least ten days'
37.36 notice or, in the case of organizational meetings, at least
38.1 three days' notice to all directors of the date, time, and place
38.2 of the meeting. The notice need not state the purpose of the
38.3 meeting unless this chapter, the articles, or the bylaws require
38.4 it.
38.5 Subd. 4. [PREVIOUSLY SCHEDULED MEETINGS.] If the day or
38.6 date, time, and place of a board meeting have been provided in
38.7 the articles or bylaws, or announced at a previous meeting of
38.8 the board, no notice is required. Notice of an adjourned
38.9 meeting need not be given other than by announcement at the
38.10 meeting at which adjournment is taken.
38.11 Subd. 5. [WAIVER OF NOTICE.] A director may waive notice
38.12 of a meeting of the board. A waiver of notice by a director
38.13 entitled to notice is effective whether given before, at, or
38.14 after the meeting, and whether given in writing, orally, or by
38.15 attendance. Attendance by a director at a meeting is a waiver
38.16 of notice of that meeting, except where the director objects at
38.17 the beginning of the meeting to the transaction of business
38.18 because the meeting is not lawfully called or convened and does
38.19 not participate in the meeting after the objection.
38.20 Subd. 6. [ABSENT DIRECTORS.] If the articles or bylaws so
38.21 provide, a director may give advance written consent or
38.22 opposition to a proposal to be acted on at a board meeting. If
38.23 the director is not present at the meeting, consent or
38.24 opposition to a proposal does not constitute presence for
38.25 purposes of determining the existence of a quorum, but consent
38.26 or opposition must be counted as the vote of a director present
38.27 at the meeting in favor of or against the proposal and must be
38.28 entered in the minutes or other record of action at the meeting,
38.29 if the proposal acted on at the meeting is substantially the
38.30 same or has substantially the same effect as the proposal to
38.31 which the director has consented or objected.
38.32 Sec. 28. [308B.431] [QUORUM.]
38.33 A majority, or a larger or smaller portion or number
38.34 provided in the articles or bylaws, of the directors currently
38.35 holding office is a quorum for the transaction of business. In
38.36 the absence of a quorum, a majority of the directors present may
39.1 adjourn a meeting from time to time until a quorum is present.
39.2 If a quorum is present when a duly called or held meeting is
39.3 convened, the directors present may continue to transact
39.4 business until adjournment, even though the withdrawal of a
39.5 number of directors originally present leaves less than the
39.6 proportion of number otherwise required for a quorum.
39.7 Sec. 29. [308B.435] [ACT OF BOARD OF DIRECTORS.]
39.8 The board shall take action by the affirmative vote of the
39.9 greater of (1) a majority of directors present at a duly held
39.10 meeting at the time the action is taken, or (2) a majority of
39.11 the minimum proportion or number of directors that would
39.12 constitute a quorum for the transaction of business at the
39.13 meeting, except where this chapter, the articles, or bylaws
39.14 require the affirmative vote of a larger proportion or number.
39.15 If the articles or bylaws require a larger proportion or number
39.16 than is required by this chapter for a particular action, the
39.17 articles or bylaws control.
39.18 Sec. 30. [308B.441] [ACTION WITHOUT A MEETING.]
39.19 Subdivision 1. [METHOD.] An action required or permitted
39.20 to be taken at a board meeting may be taken by written action
39.21 signed by all of the directors. If the articles or bylaws so
39.22 provide, any action, other than an action requiring member
39.23 approval, may be taken by written action signed by the number of
39.24 directors that would be required to take the same action at a
39.25 meeting of the board at which all directors were present.
39.26 Subd. 2. [EFFECTIVE TIME.] The written action is effective
39.27 when signed by the required number of directors, unless a
39.28 different effective time is provided in the written action.
39.29 Subd. 3. [NOTICE AND LIABILITY.] When written action is
39.30 permitted to be taken by less than all directors, all directors
39.31 must be notified immediately of its text and effective date.
39.32 Failure to provide the notice does not invalidate the written
39.33 action. A director who does not sign or consent to the written
39.34 action has no liability for the action or actions taken by the
39.35 written action.
39.36 Sec. 31. [308B.445] [AUDIT COMMITTEE.]
40.1 The board shall establish an audit committee to review the
40.2 financial information and accounting report of the cooperative.
40.3 The cooperative shall have the financial information audited for
40.4 presentation to the members unless the bylaws allow financial
40.5 statements that are not audited and the financial statements
40.6 clearly state that they are not audited and the difference
40.7 between the financial statements and audited financial
40.8 statements that are prepared according to generally accepted
40.9 accounting procedures. The directors shall elect members to the
40.10 audit committee. The audit committee shall ensure an
40.11 independent review of the cooperative's finances and audit.
40.12 Sec. 32. [308B.451] [COMMITTEES.]
40.13 Subdivision 1. [GENERALLY.] A resolution approved by the
40.14 affirmative vote of a majority of the board may establish
40.15 committees having the authority of the board in the management
40.16 of the business of the cooperative only to the extent provided
40.17 in the resolution. Committees may include a special litigation
40.18 committee consisting of one or more independent directors or
40.19 other independent persons to consider legal rights or remedies
40.20 of the cooperative and whether those rights and remedies should
40.21 be pursued. Committees other than special litigation committees
40.22 are subject at all times to the direction and control of the
40.23 board.
40.24 Subd. 2. [MEMBERSHIP.] Committee members must be natural
40.25 persons. Unless the articles or bylaws provide for a different
40.26 membership or manner of appointment, a committee consists of one
40.27 or more persons, who need not be directors, appointed by
40.28 affirmative vote of a majority of the directors present.
40.29 Subd. 3. [PROCEDURE.] The procedures for meetings of the
40.30 board apply to committees and members of committees to the same
40.31 extent as those sections apply to the board and individual
40.32 directors.
40.33 Subd. 4. [MINUTES.] Minutes, if any, of committee meetings
40.34 must be made available upon request to members of the committee
40.35 and to any director.
40.36 Subd. 5. [STANDARD OF CONDUCT.] The establishment of,
41.1 delegation of authority to, and action by a committee does not
41.2 alone constitute compliance by a director with the standard of
41.3 conduct set forth in section 308B.455.
41.4 Subd. 6. [COMMITTEE MEMBERS CONSIDERED DIRECTORS.]
41.5 Committee members are considered to be directors for purposes of
41.6 sections 308B.455, 308B.461, and 308B.471.
41.7 Sec. 33. [308B.455] [STANDARD OF CONDUCT.]
41.8 Subdivision 1. [STANDARD AND LIABILITY.] A director shall
41.9 discharge the duties of the position of director in good faith,
41.10 in a manner the director reasonably believes to be in the best
41.11 interests of the cooperative, and with the care an ordinarily
41.12 prudent person in a like position would exercise under similar
41.13 circumstances. A person who so performs those duties is not
41.14 liable by reason of being or having been a director of the
41.15 cooperative.
41.16 Subd. 2. [RELIANCE.] (a) A director is entitled to rely on
41.17 information, opinions, reports, or statements, including
41.18 financial statements and other financial data, in each case
41.19 prepared or presented by:
41.20 (1) one or more officers or employees of the cooperative
41.21 who the director reasonably believes to be liable and competent
41.22 in the matters presented;
41.23 (2) counsel, public accountants, or other persons as to
41.24 matters that the director reasonably believes are within the
41.25 person's professional or expert competence; or
41.26 (3) a committee of the board upon which the director does
41.27 not serve, duly established by the board, as to matters within
41.28 its designated authority, if the director reasonably believes
41.29 the committee to merit confidence.
41.30 (b) Paragraph (a) does not apply to a director who has
41.31 knowledge concerning the matter in question that makes the
41.32 reliance otherwise permitted by paragraph (a) unwarranted.
41.33 Subd. 3. [PRESUMPTION OF ASSENT AND DISSENT.] A director
41.34 who is present at a meeting of the board when an action is
41.35 approved by the affirmative vote of a majority of the directors
41.36 present is presumed to have assented to the action approved,
42.1 unless the director:
42.2 (1) objects at the beginning of the meeting to the
42.3 transaction of business because the meeting is not lawfully
42.4 called or convened and does not participate in the meeting after
42.5 the objection, in which case the director is not considered to
42.6 be present at the meeting for any purpose of this chapter;
42.7 (2) votes against the action at the meeting; or
42.8 (3) is prohibited by a conflict of interest from voting on
42.9 the action.
42.10 Subd. 4. [CONSIDERATIONS.] In discharging the duties of
42.11 the position of director, a director may, in considering the
42.12 best interests of the cooperative, consider the interests of the
42.13 cooperative's employees, customers, suppliers, and creditors,
42.14 the economy of the state, and long-term as well as short-term
42.15 interests of the cooperative and its patron members, including
42.16 the possibility that these interests may be best served by the
42.17 continued independence of the cooperative.
42.18 Sec. 34. [308B.461] [DIRECTOR CONFLICTS OF INTEREST.]
42.19 Subdivision 1. [CONFLICT AND PROCEDURE WHEN CONFLICT
42.20 ARISES.] (a) A contract or other transaction between a
42.21 cooperative and one or more of its directors, or between a
42.22 cooperative and a business entity in or of which one or more of
42.23 its directors are governors, directors, managers, officers, or
42.24 legal representatives or have a material financial interest, is
42.25 not void or voidable because the director or directors or the
42.26 other business entities are parties or because the director or
42.27 directors are present at the meeting of the members or the board
42.28 or a committee at which the contract or transaction is
42.29 authorized, approved, or ratified, if:
42.30 (1) the contract or transaction was, and the person
42.31 asserting the validity of the contract or transaction sustains
42.32 the burden of establishing that the contract or transaction was,
42.33 fair and reasonable as to the cooperative at the time it was
42.34 authorized, approved, or ratified and:
42.35 (i) the material facts as to the contract or transaction
42.36 and as to the director's or directors' interest are disclosed or
43.1 known to the members; and
43.2 (ii) the material facts as to the contract or transaction
43.3 and as to the director's or directors' interest are fully
43.4 disclosed or known to the board or a committee, and the board or
43.5 committee authorizes, approves, or ratifies the contract or
43.6 transaction in good faith by a majority of the board or
43.7 committee, but the interested director or directors are not
43.8 counted in determining the presence of a quorum and must not
43.9 vote; or
43.10 (2) the contract or transaction is a distribution,
43.11 contract, or transaction that is made available to all members
43.12 or patron members as part of the cooperative's business.
43.13 (b) If a committee is elected or appointed to authorize,
43.14 ratify, or approve a contract or transaction under this section,
43.15 the members of the committee must not have a conflict of
43.16 interest and be charged with representing the best interests of
43.17 the cooperative.
43.18 Subd. 2. [MATERIAL FINANCIAL INTEREST.] For purposes of
43.19 this section:
43.20 (1) a resolution fixing the compensation of a director or
43.21 fixing the compensation of another director as a director,
43.22 officer, employee, or agent of the cooperative, is not void or
43.23 voidable or considered to be a contract or other transaction
43.24 between a cooperative and one or more of its directors for
43.25 purposes of this section even though the director receiving the
43.26 compensation fixed by the resolution is present and voting at
43.27 the meeting of the board or a committee at which the resolution
43.28 is authorized, approved, or ratified or even though other
43.29 directors voting upon the resolution are also receiving
43.30 compensation from the cooperative; and
43.31 (2) a director has a material financial interest in each
43.32 organization in which the director or the spouse; parents;
43.33 children and spouses of children; brothers and sisters and
43.34 spouses of brothers and sisters; and the brothers and sisters of
43.35 the spouse of the director or any combination of them have a
43.36 material financial interest. For purposes of this section, a
44.1 contract or other transaction between a cooperative and the
44.2 spouse; parents; children and spouses of children; brothers and
44.3 sisters and spouses of brothers and sisters; and the brothers
44.4 and sisters of the spouse of a director or any combination of
44.5 them, is considered to be a transaction between the cooperative
44.6 and the director.
44.7 Sec. 35. [308B.465] [LIMITATION OF DIRECTOR'S LIABILITY.]
44.8 Subdivision 1. [ARTICLES MAY LIMIT LIABILITY.] A
44.9 director's personal liability to the cooperative or members for
44.10 monetary damages for breach of fiduciary duty as a director may
44.11 be eliminated or limited in the articles or bylaws except as
44.12 provided in subdivision 2.
44.13 Subd. 2. [RESTRICTIONS ON LIABILITY LIMITATION.] The
44.14 articles or bylaws may not eliminate or limit the liability of a
44.15 director:
44.16 (1) for a breach of the director's duty of loyalty to the
44.17 cooperative or its members;
44.18 (2) for acts or omissions that are not in good faith or
44.19 involve intentional misconduct or a knowing violation of law;
44.20 (3) for knowing violations of securities laws under section
44.21 80A.23 or for illegal distributions;
44.22 (4) for a transaction from which the director derived an
44.23 improper personal benefit; or
44.24 (5) for an act or omission occurring before the date when
44.25 the provision in the articles or bylaws eliminating or limiting
44.26 liability becomes effective.
44.27 Sec. 36. [308B.471] [INDEMNIFICATION.]
44.28 Subdivision 1. [DEFINITIONS.] (a) The definitions in this
44.29 subdivision apply to this section.
44.30 (b) "Cooperative" includes a domestic or foreign
44.31 cooperative that was the predecessor of the cooperative referred
44.32 to in this section in a merger or other transaction in which the
44.33 predecessor's existence ceased upon consummation of the
44.34 transaction.
44.35 (c) "Official capacity" means:
44.36 (1) with respect to a director, the position of director in
45.1 a cooperative;
45.2 (2) with respect to a person other than a director, the
45.3 elective or appointive office or position held by the person,
45.4 member of a committee of the board, the employment relationship
45.5 undertaken by an employee of the cooperative, or the scope of
45.6 the services provided by members of the cooperative who provide
45.7 services to the cooperative; and
45.8 (3) with respect to a director, chief executive officer,
45.9 member, or employee of the cooperative who, while a member,
45.10 director, chief executive officer, or employee of the
45.11 cooperative, is or was serving at the request of the cooperative
45.12 or whose duties in that position involve or involved service as
45.13 a governor, director, manager, officer, member, partner,
45.14 trustee, employee, or agent of another organization or employee
45.15 benefit plan, the position of that person as a governor,
45.16 director, manager, officer, member, partner, trustee, employee,
45.17 or agent, as the case may be, of the other organization or
45.18 employee benefit plan.
45.19 (d) "Proceeding" means a threatened, pending, or completed
45.20 civil, criminal, administrative, arbitration, or investigative
45.21 proceeding, including a proceeding by or in the right of the
45.22 cooperative.
45.23 (e) "Special legal counsel" means counsel who has not
45.24 represented the cooperative or a related organization, or a
45.25 director, manager, member of a committee of the board, or
45.26 employee whose indemnification is in issue.
45.27 Subd. 2. [INDEMNIFICATION.] (a) Subject to the provisions
45.28 of subdivision 4, a cooperative shall indemnify a person made or
45.29 threatened to be made a party to a proceeding by reason of the
45.30 former or present official capacity of the person against
45.31 judgments, penalties, fines, including, without limitation,
45.32 excise taxes assessed against the person with respect to an
45.33 employee benefit plan, settlements, and reasonable expenses,
45.34 including attorney fees and disbursements incurred by the person
45.35 in connection with the proceeding, if, with respect to the acts
45.36 or omissions of the person complained of in the proceeding, the
46.1 person:
46.2 (1) has not been indemnified by another organization or
46.3 employee benefit plan for the same judgments, penalties, fines,
46.4 including, without limitation, excise taxes assessed against the
46.5 person with respect to an employee benefit plan, settlements,
46.6 and reasonable expenses, including attorney fees and
46.7 disbursements incurred by the person in connection with the
46.8 proceeding with respect to the same acts or omissions;
46.9 (2) acted in good faith;
46.10 (3) received no improper personal benefit and the person
46.11 has not committed an act for which liability cannot be
46.12 eliminated or limited under section 308B.465, subdivision 2;
46.13 (4) in the case of a criminal proceeding, had no reasonable
46.14 cause to believe the conduct was unlawful; and
46.15 (5) in the case of acts or omissions occurring in the
46.16 official capacity described in subdivision 1, paragraph (c),
46.17 clause (1) or (2), reasonably believed that the conduct was in
46.18 the best interests of the cooperative, or in the case of acts or
46.19 omissions occurring in the official capacity described in
46.20 subdivision 1, paragraph (c), clause (3), reasonably believed
46.21 that the conduct was not opposed to the best interests of the
46.22 cooperative. If the person's acts or omissions complained of in
46.23 the proceeding relate to conduct at a director, officer,
46.24 trustee, employee, or agent of an employee benefit plan, the
46.25 conduct is not considered to be opposed to the best interests of
46.26 the cooperative if the person reasonably believed that the
46.27 conduct was in the best interests of the participants or
46.28 beneficiaries of the employee benefit plan.
46.29 (b) The termination of a proceeding by judgment, order,
46.30 settlement, conviction, or upon a plea of nolo contendere or its
46.31 equivalent does not, of itself, establish that the person did
46.32 not meet the criteria set forth in this subdivision.
46.33 Subd. 3. [ADVANCES.] Subject to the provisions of
46.34 subdivision 4, if a person is made or threatened to be made a
46.35 party to a proceeding, the person is entitled, upon written
46.36 request to the cooperative, to payment or reimbursement by the
47.1 cooperative of reasonable expenses, including attorney fees and
47.2 disbursements incurred by the person in advance of the final
47.3 disposition of the proceeding:
47.4 (1) upon receipt by the cooperative of a written
47.5 affirmation by the person of a good faith belief that the
47.6 criteria for indemnification set forth in subdivision 2 have
47.7 been satisfied, and a written undertaking by the person to repay
47.8 all amounts paid or reimbursed by the cooperative, if it is
47.9 ultimately determined that the criteria for indemnification have
47.10 not been satisfied; and
47.11 (2) after a determination that the facts then known to
47.12 those making the determination would not preclude
47.13 indemnification under this section.
47.14 The written undertaking required by clause (1) is an
47.15 unlimited general obligation of the person making it, but need
47.16 not be secured and shall be accepted without reference to
47.17 financial ability to make the repayment.
47.18 Subd. 4. [PROHIBITION OR LIMIT ON INDEMNIFICATION OR
47.19 ADVANCES.] The articles or bylaws either may prohibit
47.20 indemnification or advances of expenses otherwise required by
47.21 this section or may impose conditions on indemnification or
47.22 advances of expenses in addition to the conditions contained in
47.23 subdivisions 2 and 3, including, without limitation, monetary
47.24 limits on indemnification or advances of expenses if the
47.25 conditions apply equally to all persons or to all persons within
47.26 a given class. A prohibition or limit on indemnification or
47.27 advances of expenses may not apply to or affect the right of a
47.28 person to indemnification or advances of expenses with respect
47.29 to any acts or omissions of the person occurring before the
47.30 effective date of a provision in the articles or the date of
47.31 adoption of a provision in the bylaws establishing the
47.32 prohibition or limit on indemnification or advances of expenses.
47.33 Subd. 5. [REIMBURSEMENT TO WITNESSES.] This section does
47.34 not require, or limit the ability of a cooperative to reimburse
47.35 expenses, including attorney fees and disbursements incurred by
47.36 a person in connection with an appearance as a witness in a
48.1 proceeding at a time when the person has not been made or
48.2 threatened to be made a party to a proceeding.
48.3 Subd. 6. [DETERMINATION OF ELIGIBILITY.] (a) All
48.4 determinations whether indemnification of a person is required
48.5 because the criteria set forth in subdivision 2 have been
48.6 satisfied and whether a person is entitled to payment or
48.7 reimbursement of expenses in advance of the final disposition of
48.8 a proceeding as provided in subdivision 3 must be made:
48.9 (1) by the board by a majority of a quorum, if the
48.10 directors who are, at the time, parties to the proceeding are
48.11 not counted for determining either a majority or the presence of
48.12 a quorum;
48.13 (2) if a quorum under clause (1) cannot be obtained by a
48.14 majority of a committee of the board consisting solely of two or
48.15 more directors not at the time parties to the proceeding duly
48.16 designated to act in the matter by a majority of the full board,
48.17 including directors who are parties;
48.18 (3) if a determination is not made under clause (1) or (2)
48.19 by special legal counsel selected either by a majority of the
48.20 board or a committee by vote under clause (1) or (2) or if the
48.21 requisite quorum of the full board cannot be obtained and the
48.22 committee cannot be established by a majority of the full board,
48.23 including directors who are parties;
48.24 (4) if a determination is not made under clauses (1) to (3)
48.25 by the affirmative vote of the members, but the membership
48.26 interests held by parties to the proceeding must not be counted
48.27 in determining the presence of a quorum, and are not considered
48.28 to be present and entitled to vote on the determination; or
48.29 (5) if an adverse determination is made under clauses (1)
48.30 to (4) or paragraph (b), or if no determination is made under
48.31 clauses (1) to (4) or paragraph (b) within 60 days after (i) the
48.32 later to occur of the termination of a proceeding or a written
48.33 request for indemnification to the cooperative, or (ii) a
48.34 written request for an advance of expenses, as the case may be,
48.35 by a court in this state, which may be the same court in which
48.36 the proceeding involving the person's liability took place upon
49.1 application of the person and any notice the court requires.
49.2 The person seeking indemnification or payment or reimbursement
49.3 of expenses under this clause has the burden of establishing
49.4 that the person is entitled to indemnification or payment or
49.5 reimbursement of expenses.
49.6 (b) With respect to a person who is not, and was not at the
49.7 time of the acts or omissions complained of in the proceedings,
49.8 a director, chief executive officer, or person possessing,
49.9 directly or indirectly, the power to direct or cause the
49.10 direction of the management or policies of the cooperative, the
49.11 determination whether indemnification of this person is required
49.12 because the criteria set forth in subdivision 2 have been
49.13 satisfied and whether this person is entitled to payment or
49.14 reimbursement of expenses in advance of the final disposition of
49.15 a proceeding as provided in subdivision 3 may be made by an
49.16 annually appointed committee of the board, having at least one
49.17 member who is a director. The committee shall report at least
49.18 annually to the board concerning its actions.
49.19 Subd. 7. [INSURANCE.] A cooperative may purchase and
49.20 maintain insurance on behalf of a person in that person's
49.21 official capacity against any liability asserted against and
49.22 incurred by the person in or arising from that capacity, whether
49.23 or not the cooperative would have been required to indemnify the
49.24 person against the liability under the provisions of this
49.25 section.
49.26 Subd. 8. [DISCLOSURE.] A cooperative that indemnifies or
49.27 advances expenses to a person in accordance with this section in
49.28 connection with a proceeding by or on behalf of the cooperative
49.29 shall report to the members in writing the amount of the
49.30 indemnification or advance and to whom and on whose behalf it
49.31 was paid not later than the next meeting of members.
49.32 Subd. 9. [INDEMNIFICATION OF OTHER PERSONS.] Nothing in
49.33 this section must be construed to limit the power of the
49.34 cooperative to indemnify persons other than a director, chief
49.35 executive officer, member, employee, or member of a committee of
49.36 the board of the cooperative by contract or otherwise.
50.1 Sec. 37. [308B.475] [OFFICERS.]
50.2 Subdivision 1. [REQUIRED OFFICERS.] (a) The board shall
50.3 elect:
50.4 (1) a chair; and
50.5 (2) one or more vice chairs.
50.6 (b) The board shall elect or appoint:
50.7 (1) a records officer; and
50.8 (2) a financial officer.
50.9 (c) The officers, other than the chief executive officer,
50.10 shall not have the authority to bind the cooperative except as
50.11 authorized by the board.
50.12 Subd. 2. [ADDITIONAL OFFICERS.] The board may elect
50.13 additional officers as the articles or bylaws authorize or
50.14 require.
50.15 Subd. 3. [RECORDS OFFICER AND FINANCIAL OFFICER MAY BE
50.16 COMBINED.] The offices of records officer and financial officer
50.17 may be combined.
50.18 Subd. 4. [OFFICERS THAT MUST BE MEMBERS.] The chair and
50.19 first vice chair shall be directors and members. The financial
50.20 officer, records officer, and additional officers need not be
50.21 directors or members.
50.22 Subd. 5. [CHIEF EXECUTIVE OFFICER.] The board may employ a
50.23 chief executive officer to manage the day-to-day affairs and
50.24 business of the cooperative, and if a chief executive officer is
50.25 employed, the chief executive officer shall have the authority
50.26 to implement the functions, duties, and obligations of the
50.27 cooperative except as restricted by the board. The chief
50.28 executive officer shall not exercise authority reserved to the
50.29 board or the members under this chapter, the articles, or the
50.30 bylaws.
50.31 MEMBERS
50.32 Sec. 38. [308B.501] [MEMBERS.]
50.33 Subdivision 1. [REQUIREMENT.] A cooperative shall have one
50.34 or more members.
50.35 Subd. 2. [GROUPING OF MEMBERS.] (a) A cooperative may
50.36 group members and patron members in districts, units, or on
51.1 another basis if and as authorized in its articles or bylaws.
51.2 The articles or bylaws may include authorization for the board
51.3 to determine the groupings.
51.4 (b) The board may implement the use of districts or units,
51.5 including setting the time and place and prescribing the rules
51.6 of conduct for holding meetings by districts or units to elect
51.7 delegates to members' meetings.
51.8 Subd. 3. [MEMBER VIOLATIONS.] (a) A member who knowingly,
51.9 intentionally, or repeatedly violates a provision of the
51.10 articles, bylaws, member control agreement, or marketing
51.11 contract with the cooperative may be required by the board to
51.12 surrender the member's voting power or the financial rights of
51.13 membership interest of any class owned by the member, or both.
51.14 (b) The cooperative shall refund to the member for the
51.15 surrendered financial rights of membership interest the lesser
51.16 of the book value or market value of the financial right of the
51.17 membership interest payable in not more than seven years from
51.18 the date of surrender or the board may transfer all of any
51.19 patron member's financial rights to a class of financial rights
51.20 held by members who are not patron members, or to a certificate
51.21 of interest, which carries liquidation rights on par with
51.22 membership interests and is redeemed within seven years after
51.23 the transfer as provided in the certificate.
51.24 (c) Membership interests required to be surrendered may be
51.25 reissued or be retired and canceled by the board.
51.26 Subd. 4. [INSPECTION OF COOPERATIVE RECORDS BY
51.27 MEMBER.] (a) A member is entitled to inspect and copy, at the
51.28 member's expense, during regular business hours at a reasonable
51.29 location specified by the cooperative, any of the records
51.30 described in section 308B.245 if the member meets the
51.31 requirements of paragraph (b) and gives the cooperative written
51.32 demand at least five business days before the date on which the
51.33 member wishes to inspect and copy the records. Notwithstanding
51.34 the provisions of this subdivision or any provisions of section
51.35 308B.245, no member shall have the right to inspect or copy any
51.36 records of the cooperative relating to the amount of equity
52.1 capital in the cooperative held by any person or any accounts
52.2 receivable or other amounts due the cooperative from any person,
52.3 or any personnel records or employment records of any employee.
52.4 (b) To be entitled to inspect and copy permitted records,
52.5 the member shall meet the following requirements:
52.6 (1) the member has been a member for at least one year
52.7 immediately preceding the demand to inspect or copy or is a
52.8 member holding at least five percent of all of the outstanding
52.9 equity interests in the cooperative as of the date the demand is
52.10 made;
52.11 (2) the demand is made in good faith and for a proper
52.12 cooperative business purpose;
52.13 (3) the member describes with reasonable particularity the
52.14 purpose and the records the member desires to inspect; and
52.15 (4) the records are directly connected with the described
52.16 purpose.
52.17 (c) The right of inspection granted by this subdivision
52.18 shall not be abolished or limited by the articles, bylaws, or
52.19 any actions of the board or the members.
52.20 (d) This subdivision does not affect:
52.21 (1) the right of a member to inspect records to the same
52.22 extent as any other litigant if the member is in litigation with
52.23 the cooperative; or
52.24 (2) the power of a court to compel the production of the
52.25 cooperative's records for examination.
52.26 (e) Notwithstanding any other provision in this
52.27 subdivision, if the records to be inspected or copied are in
52.28 active use or storage and, therefore, not available at the time
52.29 otherwise provided for inspection or copying, the cooperative
52.30 shall notify the member and shall set a date and hour within
52.31 three business days of the date otherwise set in this
52.32 subdivision for the inspection or copying.
52.33 (f) A member's agent or attorney has the same inspection
52.34 and copying rights as the member. The right to copy records
52.35 under this subdivision includes, if reasonable, the right to
52.36 receive copies made by photographic copying, xerographic
53.1 copying, or other means. The cooperative may impose a
53.2 reasonable charge, covering the costs of labor and material, for
53.3 copies of any documents provided to the member. The charge may
53.4 not exceed the estimated cost of production and reproduction of
53.5 the records.
53.6 (g) If a cooperative refuses to allow a member, or the
53.7 member's agent or attorney, who complies with this subdivision
53.8 to inspect or copy any records that the member is entitled to
53.9 inspect or copy within a prescribed time limit or, if none,
53.10 within a reasonable time, the district court of the county in
53.11 this state where the cooperative's principal office is located
53.12 or, if it has no principal office in this state, the district
53.13 court of the county in which its registered office is located
53.14 may, on application of the member, summarily order the
53.15 inspection or copying of the records demanded at the
53.16 cooperative's expense.
53.17 (h) If a court orders inspection or copying of the records
53.18 demanded, unless the cooperative proves that it refused
53.19 inspection or copying in good faith because it had a reasonable
53.20 basis for doubt about the right of the member or the member's
53.21 agent or attorney to inspect or copy the records demanded:
53.22 (1) the court may order the losing party to pay the
53.23 prevailing party's reasonable costs, including reasonable
53.24 attorney fees;
53.25 (2) the court may order the losing party to pay the
53.26 prevailing party for any damages the prevailing party shall have
53.27 incurred by reason of the subject matter of the litigation;
53.28 (3) if inspection or copying is ordered under this
53.29 paragraph, the court may order the cooperative to pay the
53.30 member's inspection and copying expenses;
53.31 (4) the court may grant either party any other remedy
53.32 provided by law; and
53.33 (5) the court may impose reasonable restrictions on the use
53.34 or distribution of the records by the demanding member.
53.35 Sec. 39. [308B.505] [MEMBER NOT LIABLE FOR COOPERATIVE
53.36 DEBTS.]
54.1 A member is not, merely on the account of that status,
54.2 personally liable for the acts, debts, liabilities, or
54.3 obligations of a cooperative. A member is liable for any unpaid
54.4 subscription for the membership interest, unpaid membership
54.5 fees, or a debt for which the member has separately contracted
54.6 with the cooperative.
54.7 Sec. 40. [308B.511] [REGULAR MEMBERS' MEETINGS.]
54.8 Subdivision 1. [ANNUAL MEETING.] Regular members' meetings
54.9 shall be held annually at a time determined by the board, unless
54.10 otherwise provided for in the bylaws.
54.11 Subd. 2. [LOCATION.] The regular members' meeting shall be
54.12 held at the principal place of business of the cooperative or at
54.13 another conveniently located place as determined by the bylaws
54.14 or the board.
54.15 Subd. 3. [BUSINESS AND FISCAL REPORTS.] The officers shall
54.16 submit reports to the members at the regular members' meeting
54.17 covering the business of the cooperative for the previous fiscal
54.18 year that show the condition of the cooperative at the close of
54.19 the fiscal year.
54.20 Subd. 4. [ELECTION OF DIRECTORS.] All directors shall be
54.21 elected at the regular members' meeting for the terms of office
54.22 prescribed in the bylaws, except for directors elected at
54.23 district or unit meetings.
54.24 Subd. 5. [NOTICE.] (a) The cooperative shall give notice
54.25 of regular members' meetings by mailing the regular members'
54.26 meeting notice to each member at the members' last known post
54.27 office address or by other notification approved by the board
54.28 and agreed to by the members. The regular members' meeting
54.29 notice shall be published or otherwise given by approved method
54.30 at least two weeks before the date of the meeting or mailed at
54.31 least 15 days before the date of the meeting.
54.32 (b) The notice shall contain a summary of any bylaw
54.33 amendments adopted by the board since the last annual meeting.
54.34 Subd. 6. [WAIVER AND OBJECTIONS.] A member may waive
54.35 notice of a meeting of members. A waiver of notice by a member
54.36 entitled to notice is effective whether given before, at, or
55.1 after the meeting, and whether given in writing, orally, or by
55.2 attendance. Attendance by a member at a meeting is a waiver of
55.3 notice of that meeting, except where the member objects at the
55.4 beginning of the meeting to the transaction of business because
55.5 the meeting is not lawfully called or convened, or objects
55.6 before a vote on an item of business because the item may not
55.7 lawfully be considered at that meeting and does not participate
55.8 in the consideration of the item at that meeting.
55.9 Sec. 41. [308B.515] [SPECIAL MEMBERS' MEETINGS.]
55.10 Subdivision 1. [CALLING MEETING.] Special members'
55.11 meetings of the members may be called by:
55.12 (1) a majority vote of the board; or
55.13 (2) the written petition of at least 20 percent of the
55.14 patron members and, if authorized, 20 percent of the nonpatron
55.15 members, 20 percent of all members, or members representing 20
55.16 percent of the membership interests collectively are submitted
55.17 to the chair.
55.18 Subd. 2. [NOTICE.] The cooperative shall give notice of a
55.19 special members' meeting by mailing the special members' meeting
55.20 notice to each member personally at the person's last known post
55.21 office address or an alternative method approved by the board
55.22 and the member individually or the members generally. For a
55.23 member that is an entity, notice mailed or delivered by an
55.24 alternative method shall be to an officer of the entity. The
55.25 special members' meeting notice shall state the time, place, and
55.26 purpose of the special members' meeting. The special members'
55.27 meeting notice shall be issued within ten days from and after
55.28 the date of the presentation of a members' petition, and the
55.29 special members' meeting shall be held within 30 days after the
55.30 date of the presentation of the members' petition.
55.31 Subd. 3. [WAIVER AND OBJECTIONS.] A member may waive
55.32 notice of a meeting of members. A waiver of notice by a member
55.33 entitled to notice is effective whether given before, at, or
55.34 after the meeting, and whether given in writing, orally, or by
55.35 attendance. Attendance by a member at a meeting is a waiver of
55.36 notice of that meeting, except where the member objects at the
56.1 beginning of the meeting to the transaction of business because
56.2 the meeting is not lawfully called or convened, or objects
56.3 before a vote on an item of business because the item may not
56.4 lawfully be considered at that meeting and does not participate
56.5 in the consideration of the item at that meeting.
56.6 Sec. 42. [308B.521] [CERTIFICATION OF MEETING NOTICE.]
56.7 Subdivision 1. [CERTIFICATE OF MAILING.] After mailing
56.8 special or regular members' meeting notices or otherwise
56.9 delivering the notices, the cooperative shall execute a
56.10 certificate containing the date of mailing or delivery of the
56.11 notice and a statement that the special or regular members'
56.12 meeting notices were mailed or delivered as prescribed by law.
56.13 Subd. 2. [MATTER OF RECORD.] The certificate shall be made
56.14 a part of the record of the meeting.
56.15 Subd. 3. [FAILURE TO RECEIVE MEETING NOTICE.] Failure of a
56.16 member to receive a special or regular members' meeting notice
56.17 does not invalidate an action taken by the members at a members'
56.18 meeting.
56.19 Sec. 43. [308B.525] [QUORUM.]
56.20 Subdivision 1. [QUORUM.] The quorum for a members' meeting
56.21 to transact business shall be:
56.22 (1) ten percent of the total number of members for a
56.23 cooperative with 500 or fewer members; or
56.24 (2) 50 members for cooperatives with more than 500 members.
56.25 Subd. 2. [QUORUM FOR VOTING BY MAIL.] In determining a
56.26 quorum at a meeting, on a question submitted to a vote by mail
56.27 or an alternative method, members present in person or
56.28 represented by mail vote or the alternative voting method shall
56.29 be counted. The attendance of a sufficient number of members to
56.30 constitute a quorum shall be established by a registration of
56.31 the members of the cooperative present at the meeting. The
56.32 registration shall be verified by the chair or the records
56.33 officer of the cooperative and shall be reported in the minutes
56.34 of the meeting.
56.35 Subd. 3. [MEETING ACTION INVALID WITHOUT QUORUM.] An
56.36 action by a cooperative is not valid or legal in the absence of
57.1 a quorum at the meeting at which the action was taken.
57.2 Sec. 44. [308B.531] [REMOTE COMMUNICATIONS FOR MEMBER
57.3 MEETINGS.]
57.4 Subdivision 1. [CONSTRUCTION AND APPLICATION.] This
57.5 section shall be construed and applied to:
57.6 (1) facilitate remote communication consistent with other
57.7 applicable law; and
57.8 (2) be consistent with reasonable practices concerning
57.9 remote communication and with the continued expansion of those
57.10 practices.
57.11 Subd. 2. [MEMBER MEETINGS HELD SOLELY BY MEANS OF REMOTE
57.12 COMMUNICATION.] To the extent authorized in the articles, a
57.13 member control agreement, or the bylaws and determined by the
57.14 board, a regular or special meeting of members may be held
57.15 solely by any combination of means of remote communication
57.16 through which the members may participate in the meeting, if
57.17 notice of the meeting is given to every owner of membership
57.18 interests entitled to vote as would be required by this chapter
57.19 for a meeting, and if the membership interests held by the
57.20 members participating in the meeting would be sufficient to
57.21 constitute a quorum at a meeting. Participation by a member by
57.22 that means constitutes presence at the meeting in person or by
57.23 proxy if all the other requirements of this chapter for the
57.24 meeting are met.
57.25 Subd. 3. [PARTICIPATION IN MEMBER MEETINGS BY MEANS OF
57.26 REMOTE COMMUNICATION.] To the extent authorized in the articles
57.27 or the bylaws and determined by the board, a member not
57.28 physically present in person or by proxy at a regular or special
57.29 meeting of members may, by means of remote communication,
57.30 participate in a meeting of members held at a designated place.
57.31 Participation by a member by that means constitutes presence at
57.32 the meeting in person or by proxy if all the other requirements
57.33 of this chapter for the meeting are met.
57.34 Subd. 4. [REQUIREMENTS FOR MEETINGS HELD SOLELY BY MEANS
57.35 OF REMOTE COMMUNICATION AND FOR PARTICIPATION BY MEANS OF REMOTE
57.36 COMMUNICATION.] In any meeting of members held solely by means
58.1 of remote communication under subdivision 2 or in any meeting of
58.2 members held at a designated place in which one or more members
58.3 participate by means of remote communication under subdivision 3:
58.4 (1) the cooperative shall implement reasonable measures to
58.5 verify that each person deemed present and entitled to vote at
58.6 the meeting by means of remote communication is a member; and
58.7 (2) the cooperative shall implement reasonable measures to
58.8 provide each member participating by means of remote
58.9 communication with a reasonable opportunity to participate in
58.10 the meeting, including an opportunity to:
58.11 (i) read or hear the proceedings of the meeting
58.12 substantially concurrently with those proceedings;
58.13 (ii) if allowed by the procedures governing the meeting,
58.14 have the member's remarks heard or read by other participants in
58.15 the meeting substantially concurrently with the making of those
58.16 remarks; and
58.17 (iii) if otherwise entitled, vote on matters submitted to
58.18 the members.
58.19 Subd. 5. [NOTICE TO MEMBERS.] (a) Any notice to members
58.20 given by the cooperative under any provision of this chapter,
58.21 the articles, or the bylaws by a form of electronic
58.22 communication consented to by the member to whom the notice is
58.23 given, is effective when given. The notice is deemed given:
58.24 (1) if by facsimile communication, when directed to a
58.25 telephone number at which the member has consented to receive
58.26 notice;
58.27 (2) if by electronic mail, when directed to an electronic
58.28 mail address at which the member has consented to receive
58.29 notice;
58.30 (3) if by a posting on an electronic network on which the
58.31 member has consented to receive notice, together with separate
58.32 notice to the member of the specific posting, upon the later of:
58.33 (i) the posting; and
58.34 (ii) the giving of the separate notice; and
58.35 (4) if by any other form of electronic communication by
58.36 which the member has consented to receive notice, when directed
59.1 to the member.
59.2 (b) An affidavit of the secretary, other authorized
59.3 officer, or authorized agent of the cooperative that the notice
59.4 has been given by a form of electronic communication is, in the
59.5 absence of fraud, prima facie evidence of the facts stated in
59.6 the affidavit.
59.7 (c) Consent by a member to notice given by electronic
59.8 communication may be given in writing or by authenticated
59.9 electronic communication. The cooperative is entitled to rely
59.10 on any consent so given until revoked by the member, provided
59.11 that no revocation affects the validity of any notice given
59.12 before receipt by the cooperative of revocation of the consent.
59.13 Subd. 6. [REVOCATION.] Any ballot, vote, authorization, or
59.14 consent submitted by electronic communication under this chapter
59.15 may be revoked by the member submitting the ballot, vote,
59.16 authorization, or consent so long as the revocation is received
59.17 by a director or the chief executive officer of the cooperative
59.18 at or before the meeting or before an action without a meeting
59.19 is effective.
59.20 Subd. 7. [WAIVER.] Waiver of notice by a member of a
59.21 meeting by means of authenticated electronic communication may
59.22 be given in the manner provided for the regular or special
59.23 meeting. Participation in a meeting by means of remote
59.24 communication described in subdivisions 2 and 3 is a waiver of
59.25 notice of that meeting, except where the member objects at the
59.26 beginning of the meeting to the transaction of business because
59.27 the meeting is not lawfully called or convened, or objects
59.28 before a vote on an item of business because the item may not
59.29 lawfully be considered at the meeting and does not participate
59.30 in the consideration of the item at that meeting.
59.31 Sec. 45. [308B.535] [ACT OF MEMBERS.]
59.32 Subdivision 1. [ACTION BY AFFIRMATIVE VOTE OF MEMBERS.] (a)
59.33 The members shall take action by the affirmative vote of the
59.34 members of the greater of:
59.35 (1) a majority of the voting power of the membership
59.36 interests present and entitled to vote on that item of business;
60.1 or
60.2 (2) a majority of the voting power that would constitute a
60.3 quorum for the transaction of business at the meeting, except
60.4 where this chapter, the articles or bylaws, or a member control
60.5 agreement require a larger proportion.
60.6 (b) If the articles, bylaws, or a member control agreement
60.7 require a larger proportion than is required by this chapter for
60.8 a particular action, the articles, bylaws, or the member control
60.9 agreement shall have control over the provisions of this chapter.
60.10 Subd. 2. [CLASS OR SERIES OF MEMBERSHIP INTERESTS.] In any
60.11 case where a class or series of membership interests is entitled
60.12 by this chapter, the articles, bylaws, a member control
60.13 agreement, or the terms of the membership interests to vote as a
60.14 class or series, the matter being voted upon must also receive
60.15 the affirmative vote of the owners of the same proportion of the
60.16 membership interests present of that class or series; or of the
60.17 total outstanding membership interests of that class or series,
60.18 as the proportion required under subdivision 1, unless the
60.19 articles, bylaws, or the member control agreement require a
60.20 larger proportion. Unless otherwise stated in the articles,
60.21 bylaws, or a member control agreement, in the case of voting as
60.22 a class or series, the minimum percentage of the total voting
60.23 power of membership interests of the class or series that must
60.24 be present is equal to the minimum percentage of all membership
60.25 interests entitled to vote required to be present under section
60.26 308B.525.
60.27 Subd. 3. [GREATER QUORUM OR VOTING REQUIREMENTS.] (a) The
60.28 articles or bylaws adopted by the members may provide for a
60.29 greater quorum or voting requirement for members or voting
60.30 groups than is provided for by this chapter.
60.31 (b) An amendment to the articles or bylaws that adds,
60.32 changes, or deletes a greater quorum or voting requirement shall
60.33 meet the same quorum requirement and be adopted by the same vote
60.34 and voting groups required to take action under the quorum and
60.35 voting requirements then in effect or proposed to be adopted,
60.36 whichever is greater.
61.1 Sec. 46. [308B.541] [ACTION WITHOUT A MEETING.]
61.2 Subdivision 1. [METHOD.] An action required or permitted
61.3 to be taken at a meeting of the members may be taken by written
61.4 action signed, or consented to by authenticated electronic
61.5 communication, by all of the members. If the articles, bylaws,
61.6 or a member control agreement so provide, any action may be
61.7 taken by written action signed, or consented to by authenticated
61.8 electronic communication, by the members who own voting power
61.9 equal to the voting power that would be required to take the
61.10 same action at a meeting of the members at which all members
61.11 were present.
61.12 Subd. 2. [EFFECTIVE TIME.] The written action is effective
61.13 when signed or consented to by authenticated electronic
61.14 communication by the required members, unless a different
61.15 effective time is provided in the written action.
61.16 Subd. 3. [NOTICE AND LIABILITY.] When written action is
61.17 permitted to be taken by less than all members, all members must
61.18 be notified immediately of its text and effective date. Failure
61.19 to provide the notice does not invalidate the written action. A
61.20 member who does not sign or consent to the written action has no
61.21 liability for the action or actions taken by the written action.
61.22 Sec. 47. [308B.545] [MEMBER VOTING RIGHTS.]
61.23 Subdivision 1. [MEMBER HAS ONE VOTE; OR PATRONAGE VOTING.]
61.24 A patron member of a cooperative is only entitled to one vote on
61.25 an issue to be voted upon by members holding patron membership
61.26 interests, except that if authorized in the articles or bylaws a
61.27 patron member may be entitled to additional votes based on
61.28 patronage criteria in section 308B.551. On any matter of the
61.29 cooperative, the entire patron members voting power shall be
61.30 voted collectively based upon the vote of the majority of patron
61.31 members voting on the issue and the collective vote of the
61.32 patron members shall be a majority of the vote cast unless
61.33 otherwise provided in the bylaws. The bylaws may not reduce the
61.34 collective patron member vote to less than 15 percent of the
61.35 total vote on matters of the cooperative. A nonpatron member
61.36 has the voting rights in accordance to his nonpatron membership
62.1 interests as granted in the bylaws, subject to the provisions of
62.2 this chapter.
62.3 Subd. 2. [RIGHT TO VOTE AT MEETING.] A member or delegate
62.4 may exercise voting rights on any matter that is before the
62.5 members as prescribed in the articles or bylaws at a members'
62.6 meeting from the time the member or delegate arrives at the
62.7 members' meeting, unless the articles or bylaws specify an
62.8 earlier and specific time for closing the right to vote.
62.9 Subd. 3. [VOTING METHOD.] A member's vote at a members'
62.10 meeting shall be in person or by mail if a mail vote is
62.11 authorized by the board or by alternative method if authorized
62.12 by the board and not by proxy, except as provided in subdivision
62.13 4.
62.14 Subd. 4. [MEMBERS REPRESENTED BY DELEGATES.] (a) The
62.15 provisions of this subdivision apply to members represented by
62.16 delegates.
62.17 (b) A cooperative may provide in the articles or bylaws
62.18 that units or districts of members are entitled to be
62.19 represented at members' meetings by delegates chosen by the
62.20 members of the unit or district. The delegates may vote on
62.21 matters at the members' meeting in the same manner as a member.
62.22 The delegates may only exercise the voting rights on a basis and
62.23 with the number of votes as prescribed in the articles or bylaws.
62.24 (c) If the approval of a certain portion of the members is
62.25 required for adoption of amendments, a dissolution, a merger, a
62.26 consolidation, or a sale of assets, the votes of delegates shall
62.27 be counted as votes by the members represented by the delegate.
62.28 (d) Patron members may be represented by the proxy of other
62.29 patron members.
62.30 (e) Nonpatron members may be represented by proxy if
62.31 authorized in the bylaws.
62.32 Subd. 5. [ABSENTEE BALLOTS.] (a) The provisions of this
62.33 subdivision apply to absentee ballots.
62.34 (b) A member who is or will be absent from a members'
62.35 meeting may vote by mail or by an approved alternative method on
62.36 the ballot prescribed in this subdivision on any motion,
63.1 resolution, or amendment that the board submits for vote by mail
63.2 or alternative method to the members.
63.3 (c) The ballot shall be in the form prescribed by the board
63.4 and contain:
63.5 (1) the exact text of the proposed motion, resolution, or
63.6 amendment to be acted on at the meeting; and
63.7 (2) the text of the motion, resolution, or amendment for
63.8 which the member may indicate an affirmative or negative vote.
63.9 (d) The member shall express a choice by marking an
63.10 appropriate choice on the ballot and mail, deliver, or otherwise
63.11 submit the ballot to the cooperative in a plain, sealed envelope
63.12 inside another envelope bearing the member's name or by an
63.13 alternative method approved by the board.
63.14 (e) A properly executed ballot shall be accepted by the
63.15 board and counted as the vote of the absent member at the
63.16 meeting.
63.17 Sec. 48. [308B.551] [PATRON MEMBER VOTING BASED ON
63.18 PATRONAGE.]
63.19 Subdivision 1. [PATRON MEMBERS TO HAVE AN ADDITIONAL
63.20 VOTE.] A cooperative may authorize by the articles or the bylaws
63.21 for patron members to have an additional vote for:
63.22 (1) a stipulated amount of business transacted between the
63.23 patron member and cooperative;
63.24 (2) a stipulated number of patron members in a member
63.25 cooperative;
63.26 (3) a certain stipulated amount of equity allocated to or
63.27 held by a patron member cooperative in the cooperative's central
63.28 organization; or
63.29 (4) a combination of methods in clauses (1) to (3).
63.30 Subd. 2. [DELEGATES ELECTED BY PATRONS TO HAVE AN
63.31 ADDITIONAL VOTE.] A cooperative that is organized into units or
63.32 districts of patron members may, by the articles or the bylaws,
63.33 authorize the delegates elected by its patron members or have an
63.34 additional vote for:
63.35 (1) a stipulated amount of business transacted between the
63.36 patron members in the units or districts and the cooperative;
64.1 (2) a certain stipulated amount of equity allocated to or
64.2 held by the patron members of the units or districts of the
64.3 cooperative; or
64.4 (3) a combination of methods in clauses (1) and (2).
64.5 Sec. 49. [308B.555] [VOTING RIGHTS.]
64.6 Subdivision 1. [DETERMINATION.] The board may fix a date
64.7 not more than 60 days, or a shorter time period provided in the
64.8 articles or bylaws, before the date of a meeting of members as
64.9 the date for the determination of the owners of membership
64.10 interests entitled to notice of and entitled to vote at the
64.11 meeting. When a date is so fixed, only members on that date are
64.12 entitled to notice of and permitted to vote at that meeting of
64.13 members.
64.14 Subd. 2. [VOTING POWER.] Unless otherwise provided in the
64.15 articles, bylaws, or a member control agreement, members have
64.16 voting power as provided in section 308B.545.
64.17 Subd. 3. [NONMEMBERS.] The articles or bylaws may give or
64.18 prescribe the manner of giving a creditor, security holder, or
64.19 other person a right to vote on patron membership interests
64.20 under this section.
64.21 Subd. 4. [JOINTLY OWNED MEMBERSHIP INTERESTS.] Membership
64.22 interests owned by two or more members may be voted by any one
64.23 of them unless the cooperative receives written notice from any
64.24 one of them denying the authority of that person to vote those
64.25 membership interests.
64.26 Subd. 5. [MANNER OF VOTING AND PRESUMPTION.] Except as
64.27 provided in subdivision 4, an owner of a nonpatron membership
64.28 interest or a patron membership interest with more than one vote
64.29 that is entitled to vote may vote any portion of the membership
64.30 interest in any way the member chooses. If a member votes
64.31 without designating the proportion voted in a particular way,
64.32 the member is considered to have voted all of the membership
64.33 interest in that way.
64.34 Sec. 50. [308B.561] [VOTING BY ORGANIZATIONS AND LEGAL
64.35 REPRESENTATIVES.]
64.36 Subdivision 1. [MEMBERSHIP INTERESTS HELD BY ANOTHER
65.1 ORGANIZATION.] Membership interests of a cooperative reflected
65.2 in the required records as being owned by another domestic or
65.3 foreign business entity may be voted by the chair, chief
65.4 executive officer, or another legal representative of that
65.5 organization.
65.6 Subd. 2. [MEMBERSHIP INTERESTS HELD BY SUBSIDIARY.] Except
65.7 as provided in subdivision 3, membership interests of a
65.8 cooperative reflected in the required records as being owned by
65.9 a subsidiary are not entitled to be voted on any matter.
65.10 Subd. 3. [MEMBERSHIP INTERESTS CONTROLLED IN A FIDUCIARY
65.11 CAPACITY.] Membership interests of a cooperative in the name of,
65.12 or under the control of, the cooperative or a subsidiary in a
65.13 fiduciary capacity are not entitled to be voted on any matter,
65.14 except to the extent that the settlor or beneficiary possesses
65.15 and exercises a right to vote or gives the cooperative or, with
65.16 respect to membership interests in the name of or under control
65.17 of a subsidiary, the subsidiary, binding instructions on how to
65.18 vote the membership interests.
65.19 Subd. 4. [VOTING BY CERTAIN REPRESENTATIVES.] Subject to
65.20 section 308B.545, membership interests under the control of a
65.21 person in a capacity as a personal representative, an
65.22 administrator, executor, guardian, conservator, or the like may
65.23 be voted by the person, either in person or by proxy, without
65.24 reflecting in the required records those membership interests in
65.25 the name of the person.
65.26 Subd. 5. [VOTING BY TRUSTEES IN BANKRUPTCY OR
65.27 RECEIVER.] Membership interests reflected in the required
65.28 records in the name of a trustee in bankruptcy or a receiver may
65.29 be voted by the trustee or receiver either in person or by
65.30 proxy. Membership interests under the control of a trustee in
65.31 bankruptcy or a receiver may be voted by the trustee or receiver
65.32 without reflecting in the required records the name of the
65.33 trustee or receiver, if authority to do so is contained in an
65.34 appropriate order of the court by which the trustee or receiver
65.35 was appointed. The right to vote of trustees in bankruptcy and
65.36 receivers is subject to section 308B.545.
66.1 Subd. 6. [MEMBERSHIP INTERESTS HELD BY OTHER
66.2 ORGANIZATIONS.] Membership interests reflected in the required
66.3 records in the name of a business entity not described in
66.4 subdivisions 1 to 5 may be voted either in person or by proxy by
66.5 the legal representative of that business entity.
66.6 Subd. 7. [GRANT OF SECURITY INTEREST.] The grant of a
66.7 security interest in a membership interest does not entitle the
66.8 holders of the security interest to vote.
66.9 Sec. 51. [308B.565] [PROXIES.]
66.10 Subdivision 1. [AUTHORIZATION.] (a) A patron member may
66.11 only grant a proxy to vote to another patron member.
66.12 (b) A member may cast or authorize the casting of a vote by:
66.13 (1) filing a written appointment of a proxy with the board
66.14 at or before the meeting at which the appointment is to be
66.15 effective; or
66.16 (2) telephonic transmission or authenticated electronic
66.17 communication, whether or not accompanied by written
66.18 instructions of the member, of an appointment of a proxy with
66.19 the cooperative or the cooperative's duly authorized agent at or
66.20 before the meeting at which the appointment is to be effective.
66.21 (c) The telephonic transmission or authenticated electronic
66.22 communication must set forth or be submitted with information
66.23 from which it can be determined that the appointment was
66.24 authorized by the member. If it is reasonably concluded that
66.25 the telephonic transmission or authenticated electronic
66.26 communication is valid, the inspectors of election or, if there
66.27 are not inspectors, the other persons making that determination
66.28 shall specify the information upon which they relied to make
66.29 that determination. A proxy so appointed may vote on behalf of
66.30 the member, or otherwise participate, in a meeting by remote
66.31 communication under section 308B.531, to the extent the member
66.32 appointing the proxy would have been entitled to participate by
66.33 remote communication if the member did not appoint the proxy.
66.34 (d) A copy, facsimile, telecommunication, or other
66.35 reproduction of the original writing or transmission may be
66.36 substituted or used in lieu of the original writing or
67.1 transmission for any purpose for which the original transmission
67.2 could be used, if the copy, facsimile, telecommunication, or
67.3 other reproduction is a complete and legible reproduction of the
67.4 entire original writing or transmission.
67.5 (e) An appointment of a proxy for membership interests
67.6 owned jointly by two or more members is valid if signed or
67.7 consented to by authenticated electronic communication, by any
67.8 one of them, unless the cooperative receives from any one of
67.9 those members written notice or an authenticated electronic
67.10 communication either denying the authority of that person to
67.11 appoint a proxy or appointing a different proxy.
67.12 Subd. 2. [DURATION.] The appointment of a proxy is valid
67.13 for 11 months unless a longer period is expressly provided in
67.14 the appointment. No appointment is irrevocable unless the
67.15 appointment is coupled with an interest in the membership
67.16 interests or the cooperative.
67.17 Subd. 3. [TERMINATION.] An appointment may be terminated
67.18 at will unless the appointment is coupled with an interest, in
67.19 which case it shall not be terminated except in accordance with
67.20 the terms of an agreement, if any, between the parties to the
67.21 appointment. Termination may be made by filing written notice
67.22 of the termination of the appointment with a manager of the
67.23 cooperative or by filing a new written appointment of a proxy
67.24 with a manager of the cooperative. Termination in either manner
67.25 revokes all prior proxy appointments and is effective when filed
67.26 with a manager of the cooperative.
67.27 Subd. 4. [REVOCATION BY DEATH OR INCAPACITY.] The death or
67.28 incapacity of a person appointing a proxy does not revoke the
67.29 authority of the proxy, unless written notice of the death or
67.30 incapacity is received by a manager of the cooperative before
67.31 the proxy exercises the authority under that appointment.
67.32 Subd. 5. [MULTIPLE PROXIES.] Unless the appointment
67.33 specifically provides otherwise, if two or more persons are
67.34 appointed as proxies for a member:
67.35 (1) any one of them may vote the membership interests on
67.36 each item of business in accordance with specific instructions
68.1 contained in the appointment; and
68.2 (2) if no specific instructions are contained in the
68.3 appointment with respect to voting the membership interests on a
68.4 particular item of business, the membership interests must be
68.5 voted as a majority of the proxies determine. If the proxies
68.6 are equally divided, the membership interests must not be voted.
68.7 Subd. 6. [VOTE OF PROXY ACCEPTED AND LIABILITY.] Unless
68.8 the appointment of a proxy contains a restriction, limitation,
68.9 or specific reservation of authority, the cooperative may accept
68.10 a vote or action taken by a person named in the appointment.
68.11 The vote of a proxy is final, binding, and not subject to
68.12 challenge, but the proxy is liable to the member for damages
68.13 resulting from a failure to exercise the proxy or from an
68.14 exercise of the proxy in violation of the authority granted in
68.15 the appointment.
68.16 Subd. 7. [LIMITED AUTHORITY.] If a proxy is given
68.17 authority by a member to vote on less than all items of business
68.18 considered at a meeting of members, the member is considered to
68.19 be present and entitled to vote by the proxy only with respect
68.20 to those items of business for which the proxy has authority to
68.21 vote. A proxy who is given authority by a member who abstains
68.22 with respect to an item of business is considered to have
68.23 authority to vote on the item of business for purposes of this
68.24 subdivision.
68.25 Sec. 52. [308B.571] [SALE OF PROPERTY AND ASSETS.]
68.26 Subdivision 1. [MEMBER APPROVAL NOT REQUIRED.] A
68.27 cooperative may, by affirmative vote of a majority of the board
68.28 present, upon those terms and conditions and for those
68.29 considerations, which may be money, securities, or other
68.30 instruments for the payment of money or other property, as the
68.31 board considers expedient and without member approval:
68.32 (1) sell, lease, transfer, or otherwise dispose of all or
68.33 substantially all of its property and assets in the usual and
68.34 regular course of its business;
68.35 (2) sell, lease, transfer, or otherwise dispose of all or
68.36 substantially all of its property and assets not in the usual
69.1 and regular course of its business if:
69.2 (i) the cooperative's accountant has given an opinion that
69.3 the cooperative cannot continue as an ongoing business and the
69.4 cooperative is under financial duress;
69.5 (ii) the cooperative has given notice to the members of the
69.6 impending or potential disposition prior to the disposition; and
69.7 (iii) the board has determined that failure to proceed with
69.8 the disposition would be adverse to the interests of the members
69.9 and the cooperative;
69.10 (3) grant a security interest in all or substantially all
69.11 of its property and assets whether or not in the usual and
69.12 regular course of its business;
69.13 (4) transfer any or all of its property to a business
69.14 entity all the ownership interests of which are owned by the
69.15 cooperative; or
69.16 (5) for purposes of debt financing, transfer any or all of
69.17 its property to a special purpose entity owned or controlled by
69.18 the cooperative for an asset securitization.
69.19 Subd. 2. [MEMBER APPROVAL REQUIRED.] Except as provided in
69.20 subdivision 1, a cooperative, by affirmative vote of a majority
69.21 of the board present, may sell, lease, transfer, or otherwise
69.22 dispose of all or substantially all of its property and assets,
69.23 including its good will, not in the usual and regular course of
69.24 its business, upon those terms and conditions and for those
69.25 considerations, which may be money, securities, or other
69.26 instruments for the payment of money or other property, as the
69.27 board considers expedient, when approved at a regular or special
69.28 meeting of the members by the affirmative vote of the owners of
69.29 a majority of the voting power of the interests entitled to
69.30 vote. Written notice of the meeting must be given to all
69.31 members whether or not they are entitled to vote at the
69.32 meeting. The written notice must state that a purpose of the
69.33 meeting is to consider the sale, lease, transfer, or other
69.34 disposition of all or substantially all of the property and
69.35 assets of the cooperative.
69.36 Subd. 3. [CONFIRMATORY DOCUMENTS.] Confirmatory deeds,
70.1 assignments, or similar instruments to evidence a sale, lease,
70.2 transfer, or other disposition may be signed and delivered at
70.3 any time in the name of the transferor by its current chair of
70.4 the board or authorized agents.
70.5 Subd. 4. [LIABILITY OF TRANSFEREE.] The transferee is
70.6 liable for the debts, obligations, and liabilities of the
70.7 transferor only to the extent provided in the contract or
70.8 agreement between the transferee and the transferor or to the
70.9 extent provided by law.
70.10 Sec. 53. [308B.575] [VOTE OF OWNERSHIP INTERESTS HELD BY
70.11 COOPERATIVE.]
70.12 A cooperative that holds ownership interests of another
70.13 business entity may, by direction of the cooperative's board,
70.14 elect or appoint a person to represent the cooperative at a
70.15 meeting of the business entity. The representative has
70.16 authority to represent the cooperative and may cast the
70.17 cooperative's vote at the business entity's meeting.
70.18 MEMBERSHIP INTERESTS
70.19 Sec. 54. [308B.601] [MEMBERSHIP INTERESTS.]
70.20 Subdivision 1. [AMOUNTS AND DIVISIONS OF MEMBERSHIP
70.21 INTERESTS.] The authorized amount and divisions of patron
70.22 membership interests and, if authorized, nonpatron membership
70.23 interests may be increased, decreased, established, or altered,
70.24 in accordance with the restrictions in this chapter by amending
70.25 the articles or bylaws at a regular members' meeting or at a
70.26 special members' meeting called for the purpose of the amendment.
70.27 Subd. 2. [ISSUANCE OF MEMBERSHIP INTERESTS.] Authorized
70.28 membership interests may be issued on terms and conditions
70.29 prescribed in the articles, bylaws, or if authorized in the
70.30 articles or bylaws as determined by the board. The cooperative
70.31 shall disclose to any person or entity acquiring membership
70.32 interests to be issued by the cooperative, the organization,
70.33 capital structure, and known business prospects and risks of the
70.34 cooperative, the nature of the governance and financial rights
70.35 of the membership interest being acquired and of other classes
70.36 of membership and membership interests. The cooperative shall
71.1 notify all members of the membership interests being issued by
71.2 the cooperative. A membership interest may not be issued until
71.3 the subscription price of the membership interest has been paid
71.4 for in money or property with the value of the property to be
71.5 contributed approved by the board.
71.6 Subd. 3. [PATRON MEMBERSHIP INTERESTS.] The patron
71.7 membership interests collectively shall have not less than 60
71.8 percent of the cooperative's financial rights to profit
71.9 allocations and distributions. If authorized in the original
71.10 articles as filed, or articles or bylaws adopted by an
71.11 affirmative vote of the patron members, or the articles or
71.12 bylaws are amended by the affirmative vote of patron members,
71.13 then the cooperative's financial rights to profit allocations
71.14 and distributions to patron members collectively may be not less
71.15 than 15 percent.
71.16 Subd. 4. [TRANSFERRING OR SELLING MEMBERSHIP
71.17 INTERESTS.] After issuance by the cooperative, membership
71.18 interests in a cooperative may only be sold or transferred with
71.19 the approval of the board. The board may adopt resolutions
71.20 prescribing procedures to prospectively approve transfers.
71.21 Subd. 5. [NONPATRON MEMBERSHIP INTERESTS.] If authorized
71.22 by the articles, the cooperative may solicit and issue nonpatron
71.23 membership interests on terms and conditions determined by the
71.24 board and disclosed in the articles, bylaws, or by separate
71.25 disclosure to the members. Each member acquiring nonpatron
71.26 membership interests shall sign a member control agreement or
71.27 agree to the conditions of the bylaws, either of which shall
71.28 describe the rights and obligations of the member as it relates
71.29 to the nonpatron membership interests, the financial and
71.30 governance rights, the transferability of the nonpatron
71.31 membership interests, the division and allocations of profits
71.32 and losses among the membership interests and membership
71.33 classes, and financial rights upon liquidation. If the articles
71.34 or bylaws do not otherwise provide for the allocation of the
71.35 profits and losses between patron membership interests and
71.36 nonpatron membership interests, then the allocation of profits
72.1 and losses among nonpatron membership interests individually and
72.2 patron membership interests collectively shall be allocated on
72.3 the basis of the value of contributions to capital made
72.4 according to the patron membership interests collectively and
72.5 the nonpatron membership interests individually to the extent
72.6 the contributions have been accepted by the cooperative.
72.7 Distributions of cash or other assets of the cooperative shall
72.8 be allocated among the membership interests as provided in the
72.9 articles and bylaws, subject to the provisions of this chapter.
72.10 If not otherwise provided in the articles or bylaws,
72.11 distributions shall be made on the basis of value of the capital
72.12 contributions of the patron membership interests collectively
72.13 and the nonpatron membership interests to the extent the
72.14 contributions have been accepted by the cooperative.
72.15 Subd. 6. [COOPERATIVE FIRST RIGHT TO PURCHASE MEMBERSHIP
72.16 INTERESTS.] The articles or bylaws may provide that the
72.17 cooperative or the patron members, individually or collectively,
72.18 have the first privilege of purchasing the membership interests
72.19 of any class of membership interests offered for sale. The
72.20 first privilege to purchase membership interests may be
72.21 satisfied by notice to other members that the membership
72.22 interests are for sale and a procedure by which members may
72.23 proceed to attempt to purchase and acquire the membership
72.24 interests. A membership interest acquired by the cooperative
72.25 may be held to be reissued or may be retired and canceled.
72.26 Subd. 7. [PAYMENT FOR NONPATRON MEMBERSHIP
72.27 INTERESTS.] Subject to the provisions in the articles and
72.28 bylaws, a member may dissent from and obtain payment for the
72.29 fair value of the member's nonpatron membership interests in the
72.30 cooperative if the articles or bylaws are amended in a manner
72.31 that materially and adversely affects the rights and preferences
72.32 of the nonpatron membership interests of the dissenting member.
72.33 The dissenting member shall file a notice of intent to demand
72.34 fair value of the membership interest with the records officer
72.35 of the cooperative within 30 days after the amendment of the
72.36 bylaws and notice of the amendment to members, otherwise the
73.1 right of the dissenting member to demand payment of fair value
73.2 for the membership interest is waived. If a proposed amendment
73.3 of the articles or bylaws must be approved by the members, a
73.4 member who is entitled to dissent and who wishes to exercise
73.5 dissenter's rights shall file a notice to demand fair value of
73.6 the membership interest with the records officer of the
73.7 cooperative before the vote on the proposed action and shall not
73.8 vote in favor of the proposed action, otherwise the right to
73.9 demand fair value for the membership interest by the dissenting
73.10 member is waived. After receipt of the dissenting member's
73.11 demand notice and approval of the amendment, the cooperative has
73.12 60 days to rescind the amendment or otherwise the cooperative
73.13 shall remit the fair value for the member's interest to the
73.14 dissenting member by 180 days after receipt of the notice. Upon
73.15 receipt of the fair value for the membership interest, the
73.16 member has no further member rights in the cooperative.
73.17 Sec. 55. [308B.605] [ASSIGNMENT OF FINANCIAL RIGHTS.]
73.18 Subdivision 1. [ASSIGNMENT OF FINANCIAL RIGHTS PERMITTED.]
73.19 Except as provided in subdivision 3, a member's financial rights
73.20 are transferable in whole or in part.
73.21 Subd. 2. [EFFECT OF ASSIGNMENT OF FINANCIAL RIGHTS.] An
73.22 assignment of a member's financial rights entitles the assignee
73.23 to receive, to the extent assigned, only the share of profits
73.24 and losses and the distributions to which the assignor would
73.25 otherwise be entitled. An assignment of a member's financial
73.26 rights does not dissolve the cooperative and does not entitle or
73.27 empower the assignee to become a member, to exercise any
73.28 governance rights, to receive any notices from the cooperative,
73.29 or to cause dissolution. The assignment shall not allow the
73.30 assignee to control the member's exercise of governance or
73.31 voting rights.
73.32 Subd. 3. [RESTRICTIONS OF ASSIGNMENT OF FINANCIAL
73.33 RIGHTS.] (a) A restriction on the assignment of financial rights
73.34 may be imposed in the articles, in the bylaws, in a member
73.35 control agreement, by a resolution adopted by the members, by an
73.36 agreement among or other written action by the members, or by an
74.1 agreement among or other written action by the members and the
74.2 cooperative. A restriction is not binding with respect to
74.3 financial rights reflected in the required records before the
74.4 adoption of the restriction, unless the owners of those
74.5 financial rights are parties to the agreement or voted in favor
74.6 of the restriction.
74.7 (b) Subject to paragraph (c), a written restriction on the
74.8 assignment of financial rights that is not manifestly
74.9 unreasonable under the circumstances and is noted conspicuously
74.10 in the required records may be enforced against the owner of the
74.11 restricted financial rights or a successor or transferee of the
74.12 owner, including a pledgee or a legal representative. Unless
74.13 noted conspicuously in the required records, a restriction, even
74.14 though permitted by this section, is ineffective against a
74.15 person without knowledge of the restriction.
74.16 (c) With regard to restrictions on the assignment of
74.17 financial rights, a would-be assignee of financial rights is
74.18 entitled to rely on a statement of membership interest issued by
74.19 the cooperative under section 308B.611. A restriction on the
74.20 assignment of financial rights, which is otherwise valid and in
74.21 effect at the time of the issuance of a statement of membership
74.22 interest but which is not reflected in that statement, is
74.23 ineffective against an assignee who takes an assignment in
74.24 reliance on the statement.
74.25 (d) Notwithstanding any provision of law, articles, bylaws,
74.26 member control agreement, other agreement, resolution, or action
74.27 to the contrary, a security interest in a member's financial
74.28 rights may be foreclosed and otherwise enforced, and a secured
74.29 party may assign a member's financial rights in accordance with
74.30 chapter 336, without the consent or approval of the member whose
74.31 financial rights are subject to the security interest.
74.32 Sec. 56. [308B.611] [NATURE OF A MEMBERSHIP INTEREST AND
74.33 STATEMENT OF INTEREST OWNED.]
74.34 Subdivision 1. [GENERALLY.] A membership interest is
74.35 personal property. A member has no interest in specific
74.36 cooperative property. All property of the cooperative is
75.1 property of the cooperative itself.
75.2 Subd. 2. [STATEMENT OF MEMBERSHIP INTEREST.] At the
75.3 request of any member, the cooperative shall state in writing
75.4 the particular membership interest owned by that member as of
75.5 the date the cooperative makes the statement. The statement
75.6 must describe the member's rights to vote, if any, to share in
75.7 profits and losses, and to share in distributions, restrictions
75.8 on assignments of financial rights under section 308B.605,
75.9 subdivision 3, or voting rights under section 308B.555 then in
75.10 effect, as well as any assignment of the member's rights then in
75.11 effect other than a security interest.
75.12 Subd. 3. [TERMS OF MEMBERSHIP INTERESTS.] All the
75.13 membership interests of a cooperative must:
75.14 (1) be of one class, without series, unless the articles or
75.15 bylaws establish or authorize the board to establish more than
75.16 one class or series within classes;
75.17 (2) be ordinary patron membership interests and if
75.18 authorized nonpatron membership interest subject to this chapter
75.19 entitled to vote as provided in section 308B.555, and have equal
75.20 rights and preferences in all matters not otherwise provided for
75.21 by the board and to the extent that the articles or bylaws have
75.22 fixed the relative rights and preferences of different classes
75.23 and series; and
75.24 (3) share profits and losses and are entitled to
75.25 distributions as provided in sections 308B.721 and 308B.725.
75.26 Subd. 4. [RIGHTS OF JUDGMENT CREDITOR.] On application to
75.27 a court of competent jurisdiction by any judgment creditor of a
75.28 member, the court may charge a member's or an assignee's
75.29 financial rights with payment of the unsatisfied amount of the
75.30 judgment with interest. To the extent so charged, the judgment
75.31 creditor has only the rights of an assignee of a member's
75.32 financial rights under section 308B.605. This chapter does not
75.33 deprive any member or assignee of financial rights of the
75.34 benefit of any exemption laws applicable to the membership
75.35 interest. This section is the sole and exclusive remedy of a
75.36 judgment creditor with respect to the judgment debtor's
76.1 membership interest.
76.2 Subd. 5. [PROCEDURE FOR FIXING TERMS.] (a) Subject to any
76.3 restrictions in the articles or bylaws, the power granted in
76.4 this subdivision may be exercised by a resolution or resolutions
76.5 establishing a class or series, setting forth the designation of
76.6 the class or series, and fixing the relative rights and
76.7 preferences of the class or series. Any of the rights and
76.8 preferences of a class or series established in the articles,
76.9 bylaws, or by resolution of the board:
76.10 (1) may be made dependent upon facts ascertainable outside
76.11 the articles or bylaws or outside the resolution or resolutions
76.12 establishing the class or series, if the manner in which the
76.13 facts operate upon the rights and preferences of the class or
76.14 series is clearly and expressly set forth in the articles or
76.15 bylaws or in the resolution or resolutions establishing the
76.16 class or series; and
76.17 (2) may include by reference some or all of the terms of
76.18 any agreements, contracts, or other arrangements entered into by
76.19 the cooperative in connection with the establishment of the
76.20 class or series if the cooperative retains at its principal
76.21 executive office a copy of the agreements, contracts, or other
76.22 arrangements or the portions will be included by reference.
76.23 (b) A statement setting forth the name of the cooperative
76.24 and the text of the resolution and certifying the adoption of
76.25 the resolution and the date of adoption must be given to the
76.26 members before the acceptance of any contributions for which the
76.27 resolution creates rights or preferences not set forth in the
76.28 articles or bylaws. Where the members have received notice of
76.29 the creation of membership interests with rights or preferences
76.30 not set forth in the articles or bylaws before the acceptance of
76.31 the contributions with respect to the membership interests, the
76.32 statement may be filed any time within one year after the
76.33 acceptance of the contributions. The resolution is effective
76.34 three days after delivery to the members is deemed effective by
76.35 the board, or, if the statement is not required to be given to
76.36 the members before the acceptance of contributions, on the date
77.1 of its adoption by the directors.
77.2 Subd. 6. [SPECIFIC TERMS.] Without limiting the authority
77.3 granted in this section, a cooperative may have membership
77.4 interests of a class or series:
77.5 (1) subject to the right of the cooperative to redeem any
77.6 of those membership interests at the price fixed for their
77.7 redemption by the articles or bylaws or by the board;
77.8 (2) entitling the members to cumulative, partially
77.9 cumulative, or noncumulative distributions;
77.10 (3) having preference over any class or series of
77.11 membership interests for the payment of distributions of any or
77.12 all kinds;
77.13 (4) convertible into membership interests of any other
77.14 class or any series of the same or another class; or
77.15 (5) having full, partial, or no voting rights, except as
77.16 provided in section 308B.555.
77.17 Subd. 7. [GRANT OF A SECURITY INTEREST.] For the purpose
77.18 of any law relating to security interests, membership interests,
77.19 governance or voting rights, and financial rights are each to be
77.20 characterized as provided in section 336.8-103, paragraph (c).
77.21 Subd. 8. [POWERS OF ESTATE OF A DECEASED OR INCOMPETENT
77.22 MEMBER.] (a) If a member who is an individual dies or a court of
77.23 competent jurisdiction adjudges the member to be incompetent to
77.24 manage the member's person or property, or an order for relief
77.25 under the bankruptcy code is entered with respect to the member,
77.26 the member's executor, administrator, guardian, conservator,
77.27 trustee, or other legal representative may exercise all of the
77.28 member's rights for the purpose of settling the estate or
77.29 administering the member's property. If a member is a business
77.30 entity, trust, or other entity and is dissolved, terminated, or
77.31 placed by a court in receivership or bankruptcy, the powers of
77.32 that member may be exercised by its legal representative or
77.33 successor.
77.34 (b) If an event referred to in paragraph (a) causes the
77.35 termination of a member's membership interest and the
77.36 termination does not result in dissolution, then subject to the
78.1 articles and bylaws:
78.2 (1) as provided in section 308B.605, the terminated
78.3 member's interest will be considered to be merely that of an
78.4 assignee of the financial rights owned before the termination of
78.5 membership; and
78.6 (2) the rights to be exercised by the legal representative
78.7 of the terminated member will be limited accordingly.
78.8 Subd. 9. [LIABILITY OF SUBSCRIBERS AND MEMBERS WITH
78.9 RESPECT TO MEMBERSHIP INTERESTS.] A subscriber for membership
78.10 interests or a member of a cooperative is under no obligation to
78.11 the cooperative or its creditors with respect to the membership
78.12 interests subscribed for or owned, except to pay to the
78.13 cooperative the full consideration for which the membership
78.14 interests are issued or to be issued.
78.15 Sec. 57. [308B.615] [CERTIFICATED MEMBERSHIP INTERESTS.]
78.16 Subdivision 1. [CERTIFICATED; UNCERTIFICATED.] The
78.17 membership interests of a cooperative shall be either
78.18 certificated or uncertificated. Each holder of certificated
78.19 membership interests issued is entitled to a certificate of
78.20 membership interest.
78.21 Subd. 2. [SIGNATURE REQUIRED.] Certificates shall be
78.22 signed by an agent or officer authorized in the articles or
78.23 bylaws to sign share certificates or, in the absence of an
78.24 authorization, by the chair or records officer of the
78.25 cooperative.
78.26 Subd. 3. [SIGNATURE VALID.] If a person signs or has a
78.27 facsimile signature placed upon a certificate while the chair,
78.28 an officer, transfer agent, or records officer of a cooperative,
78.29 the certificate may be issued by the cooperative, even if the
78.30 person has ceased to have that capacity before the certificate
78.31 is issued, with the same effect as if the person had that
78.32 capacity at the date of its issue.
78.33 Subd. 4. [FORM OF CERTIFICATE.] A certificate representing
78.34 membership interests of a cooperative shall contain on its face:
78.35 (1) the name of the cooperative;
78.36 (2) a statement that the cooperative is organized under the
79.1 laws of this state and this chapter;
79.2 (3) the name of the person to whom the certificate is
79.3 issued;
79.4 (4) the number and class of membership interests, and the
79.5 designation of the series, if any, that the certificate
79.6 represents;
79.7 (5) a statement that the membership interests in the
79.8 cooperative are subject to the articles and bylaws of the
79.9 cooperative; and
79.10 (6) any restrictions on transfer, including approval of the
79.11 board, if applicable, first rights of purchase by the
79.12 cooperative, and other restrictions on transfer, which may be
79.13 stated by reference to the back of the certificate or to another
79.14 document.
79.15 Subd. 5. [LIMITATIONS SET FORTH.] A certificate
79.16 representing membership interest issued by a cooperative
79.17 authorized to issue membership interests of more than one class
79.18 or series shall set forth upon the face or back of the
79.19 certificate, or shall state that the cooperative will furnish to
79.20 any member upon request and without charge, a full statement of
79.21 the designations, preferences, limitations, and relative rights
79.22 of the membership interests of each class or series authorized
79.23 to be issued, so far as they have been determined, and the
79.24 authority of the board to determine the relative rights and
79.25 preferences of subsequent classes or series.
79.26 Subd. 6. [PRIMA FACIE EVIDENCE.] A certificate signed as
79.27 provided in subdivision 2 is prima facie evidence of the
79.28 ownership of the membership interests referred to in the
79.29 certificate.
79.30 Subd. 7. [UNCERTIFICATED MEMBERSHIP INTERESTS.] Unless
79.31 uncertificated membership interests are prohibited by the
79.32 articles or bylaws, a resolution approved by the affirmative
79.33 vote of a majority of the directors present may provide that
79.34 some or all of any or all classes and series of its membership
79.35 interests will be uncertificated membership interests. The
79.36 resolution does not apply to membership interests represented by
80.1 a certificate until the certificate is surrendered to the
80.2 cooperative. Within a reasonable time after the issuance or
80.3 transfer of uncertificated membership interests, the cooperative
80.4 shall send to the new member the information required by this
80.5 section to be stated on certificates. This information is not
80.6 required to be sent to the new holder by a publicly held
80.7 cooperative that has adopted a system of issuance, recordation,
80.8 and transfer of its membership interests by electronic or other
80.9 means not involving an issuance of certificates if the system
80.10 complies with section 17A of the Securities Exchange Act of
80.11 1934. Except as otherwise expressly provided by statute, the
80.12 rights and obligations of the holders of certificated and
80.13 uncertificated membership interests of the same class and series
80.14 are identical.
80.15 Sec. 58. [308B.621] [LOST CERTIFICATES; REPLACEMENT.]
80.16 Subdivision 1. [ISSUANCE.] A new membership interest
80.17 certificate may be issued under section 336.8-405 in place of
80.18 one that is alleged to have been lost, stolen, or destroyed.
80.19 Subd. 2. [NOT OVERISSUE.] The issuance of a new
80.20 certificate under this section does not constitute an overissue
80.21 of the membership interests it represents.
80.22 Sec. 59. [308B.625] [RESTRICTION ON TRANSFER OR
80.23 REGISTRATION OF MEMBERSHIP INTERESTS.]
80.24 Subdivision 1. [HOW IMPOSED.] A restriction on the
80.25 transfer or registration of transfer of membership interests of
80.26 a cooperative may be imposed in the articles, in the bylaws, by
80.27 a resolution adopted by the members, or by an agreement among or
80.28 other written action by a number of members or holders of other
80.29 membership interests or among them and the cooperative. A
80.30 restriction is not binding with respect to membership interests
80.31 issued prior to the adoption of the restriction, unless the
80.32 holders of those membership interests are parties to the
80.33 agreement or voted in favor of the restriction.
80.34 Subd. 2. [RESTRICTIONS PERMITTED.] A written restriction
80.35 on the transfer or registration of transfer of membership
80.36 interests of a cooperative that is not manifestly unreasonable
81.1 under the circumstances may be enforced against the holder of
81.2 the restricted membership interests or a successor or transferee
81.3 of the holder, including a pledgee or a legal representative, if
81.4 the restriction is either:
81.5 (1) noted conspicuously on the face or back of the
81.6 certificate;
81.7 (2) included in this chapter or the articles or bylaws; or
81.8 (3) included in information sent to the holders of
81.9 uncertificated membership interests.
81.10 Unless a restriction is in this chapter, the articles, bylaws,
81.11 noted conspicuously on the face or back of the certificate, or
81.12 included in information sent to the holders of uncertificated
81.13 membership interests, a restriction, even though permitted by
81.14 this section, is ineffective against a person without knowledge
81.15 of the restriction. A restriction under this section is deemed
81.16 to be noted conspicuously and is effective if the existence of
81.17 the restriction is stated on the certificate and reference is
81.18 made to a separate document creating or describing the
81.19 restriction.
81.20 CONTRIBUTIONS, ALLOCATIONS, AND DISTRIBUTIONS
81.21 Sec. 60. [308B.701] [AUTHORIZATION, FORM, AND ACCEPTANCE
81.22 OF CONTRIBUTIONS.]
81.23 Subdivision 1. [BOARD OF DIRECTORS MAY AUTHORIZE.] Subject
81.24 to any restrictions in this chapter regarding patron and
81.25 nonpatron membership interests or in the articles or bylaws, and
81.26 only when authorized by the board, a cooperative may accept
81.27 contributions, which may be patron or nonpatron membership
81.28 contributions as determined by the board under subdivisions 2
81.29 and 3, make contribution agreements under section 308B.711, and
81.30 make contribution allowance agreements under section 308B.715.
81.31 Subd. 2. [PERMISSIBLE FORMS.] A person may make a
81.32 contribution to a cooperative:
81.33 (1) by paying money or transferring the ownership of an
81.34 interest in property to the cooperative or rendering services to
81.35 or for the benefit of the cooperative; or
81.36 (2) through a written obligation signed by the person to
82.1 pay money or transfer ownership of an interest in property to
82.2 the cooperative or to perform services to or for the benefit of
82.3 the cooperative.
82.4 Subd. 3. [ACCEPTANCE OF CONTRIBUTIONS.] No purported
82.5 contribution is to be treated or considered as a contribution,
82.6 unless:
82.7 (1) the board accepts the contribution on behalf of the
82.8 cooperative and in that acceptance describes the contribution,
82.9 including terms of future performance, if any, and states the
82.10 value being accorded to the contribution; and
82.11 (2) the fact of contribution and the contribution's
82.12 accorded value are both reflected in the required records of the
82.13 cooperative.
82.14 Subd. 4. [VALUATION.] The determinations of the board as
82.15 to the amount or fair value or the fairness to the cooperative
82.16 of the contribution accepted or to be accepted by the
82.17 cooperative or the terms of payment or performance, including
82.18 under a contribution agreement in section 308B.711, and a
82.19 contribution allowance agreement in section 308B.715, are
82.20 presumed to be proper if they are made in good faith and on the
82.21 basis of accounting methods, or a fair valuation or other
82.22 method, reasonable in the circumstances. Directors who are
82.23 present and entitled to vote, and who, intentionally or without
82.24 reasonable investigation, fail to vote against approving a
82.25 consideration that is unfair to the cooperative, or overvalue
82.26 property or services received or to be received by the
82.27 cooperative as a contribution, are jointly and severally liable
82.28 to the cooperative for the benefit of the then members who did
82.29 not consent to and are damaged by the action, to the extent of
82.30 the damages of those members. A director against whom a claim
82.31 is asserted under this subdivision, except in case of knowing
82.32 participation in a deliberate fraud, is entitled to contribution
82.33 on an equitable basis from other directors who are liable under
82.34 this subdivision.
82.35 Sec. 61. [308B.705] [RESTATEMENT OF VALUE OF PREVIOUS
82.36 CONTRIBUTIONS.]
83.1 Subdivision 1. [DEFINITION.] As used in this section, an
83.2 "old contribution" is a contribution reflected in the required
83.3 records of a cooperative before the time the cooperative accepts
83.4 a new contribution.
83.5 Subd. 2. [RESTATEMENT REQUIRED.] Whenever a cooperative
83.6 accepts a new contribution, the board shall restate, as required
83.7 by this section, the value of all old contributions.
83.8 Subd. 3. [RESTATEMENT AS TO PARTICULAR SERIES OR CLASS TO
83.9 WHICH NEW CONTRIBUTION PERTAINS.] (a) Unless otherwise provided
83.10 in the articles or bylaws, this subdivision sets forth the
83.11 method of restating the value of old contributions that pertain
83.12 to the same series or class to which the new contribution
83.13 pertains. To restate the value:
83.14 (1) state the value the cooperative has accorded to the new
83.15 contribution under section 308B.701, subdivision 3, clause (1);
83.16 (2) determine what percentage the value stated under clause
83.17 (1) will constitute, after the restatement required by this
83.18 subdivision, of the total value of all contributions that
83.19 pertain to the particular series or class to which the new
83.20 contribution pertains;
83.21 (3) divide the value stated under clause (1) by the
83.22 percentage determined under clause (2), yielding the total
83.23 value, after the restatement required by this subdivision, of
83.24 all contributions pertaining to the particular series or class;
83.25 (4) subtract the value stated under clause (1) from the
83.26 value determined under clause (3), yielding the total value,
83.27 after the restatement required by this subdivision, of all the
83.28 old contributions pertaining to the particular series or class;
83.29 (5) subtract the value, as reflected in the required
83.30 records before the restatement required by this subdivision, of
83.31 the old contributions from the value determined under clause
83.32 (4), yielding the value to be allocated among and added to the
83.33 old contributions pertaining to the particular series or class;
83.34 and
83.35 (6) allocate the value determined under clause (5)
83.36 proportionally among the old contributions pertaining to the
84.1 particular series or class, add the allocated values to those
84.2 old contributions, and change the required records accordingly.
84.3 (b) The values determined under clause (5) and allocated
84.4 and added under clause (6) may be positive, negative, or zero.
84.5 Subd. 4. [RESTATEMENT METHOD FOR OTHER SERIES OR CLASS.]
84.6 Unless otherwise provided in the articles or bylaws, this
84.7 subdivision sets forth the method of restating the value of old
84.8 contributions that do not pertain to the same series or class to
84.9 which the new contribution pertains. To restate the value:
84.10 (1) determine the percentage by which the restatement under
84.11 subdivision 3 has changed the total contribution value reflected
84.12 in the required records for the series or class to which the new
84.13 contribution pertains; and
84.14 (2) as to each old contribution that does not pertain to
84.15 the same series or class to which the new contribution pertains,
84.16 change the value reflected in the required records by the
84.17 percentage determined under clause (1). The percentage
84.18 determined under clause (1) may be positive, negative, or zero.
84.19 Subd. 5. [NEW CONTRIBUTIONS MAY BE AGGREGATED.] If a
84.20 cooperative accepts more than one contribution pertaining to the
84.21 same series or class at the same time, then for the purpose of
84.22 the restatement required by this section, the cooperative may
84.23 consider all the new contributions a single contribution.
84.24 Sec. 62. [308B.711] [CONTRIBUTION AGREEMENTS.]
84.25 Subdivision 1. [SIGNED WRITING.] A contribution agreement,
84.26 whether made before or after the formation of the cooperative,
84.27 is not enforceable against the would-be contributor unless it is
84.28 in writing and signed by the would-be contributor.
84.29 Subd. 2. [IRREVOCABLE PERIOD.] Unless otherwise provided
84.30 in the contribution agreement, or unless all of the would-be
84.31 contributors and, if in existence, the cooperative, consent to a
84.32 shorter or longer period, a contribution agreement is
84.33 irrevocable for a period of six months.
84.34 Subd. 3. [CURRENT AND DEFERRED PAYMENT.] A contribution
84.35 agreement, whether made before or after the formation of a
84.36 cooperative, must be paid or performed in full at the time or
85.1 times, or in the installments, if any, specified in the
85.2 contribution agreement. In the absence of a provision in the
85.3 contribution agreement specifying the time at which the
85.4 contribution is to be paid or performed, the contribution must
85.5 be paid or performed at the time or times determined by the
85.6 board, but a call made by the board for payment or performance
85.7 on contributions must be uniform for all membership interests of
85.8 the same class or for all membership interests of the same
85.9 series.
85.10 Subd. 4. [FAILURE TO PAY REMEDIES.] (a) Unless otherwise
85.11 provided in the contribution agreement, in the event of default
85.12 in the payment or performance of an installment or call when
85.13 due, the cooperative may proceed to collect the amount due in
85.14 the same manner as a debt due the cooperative. If a would-be
85.15 contributor does not make a required contribution of property or
85.16 services, the cooperative shall require the would-be contributor
85.17 to contribute cash equal to that portion of the value, as stated
85.18 in the cooperative required records, of the contribution that
85.19 has not been made.
85.20 (b) If the amount due under a contribution agreement
85.21 remains unpaid for a period of 20 days after written notice of
85.22 demand for payment has been given to the delinquent would-be
85.23 contributor, the membership interests that were subject to the
85.24 contribution agreement may be offered for sale by the
85.25 cooperative for a price in money equaling or exceeding the sum
85.26 of the full balance owed by the delinquent would-be contributor
85.27 plus the expenses incidental to the sale.
85.28 If the membership interests that were subject to the
85.29 contribution agreement are sold according to this paragraph, the
85.30 cooperative shall pay to the delinquent would-be contributor or
85.31 to the delinquent would-be contributor's legal representative
85.32 the lesser of:
85.33 (1) the excess of net proceeds realized by the cooperative
85.34 over the sum of the amount owed by the delinquent would-be
85.35 contributor plus the expenses incidental to the sale, less any
85.36 penalty stated in the contribution agreement, which may include
86.1 forfeiture of the partial contribution; and
86.2 (2) the amount actually paid by the delinquent would-be
86.3 contributor.
86.4 If the membership interests that were subject to the
86.5 contribution agreement are not sold according to this paragraph,
86.6 the cooperative may collect the amount due in the same manner as
86.7 a debt due the cooperative or cancel the contribution agreement
86.8 according to paragraph (c).
86.9 (c) If the amount due under a contribution agreement
86.10 remains unpaid for a period of 20 days after written notice of
86.11 demand for payment has been given to the delinquent would-be
86.12 contributor and the membership interests that were subject to
86.13 the defaulted contribution agreement have not been sold
86.14 according to paragraph (b), the cooperative may cancel the
86.15 contribution agreement, the cooperative may retain any portion
86.16 of the contribution agreement price actually paid as provided in
86.17 the contribution agreement, and the cooperative shall refund to
86.18 the delinquent would-be contributor or the delinquent would-be
86.19 contributor's legal representatives any portion of the
86.20 contribution agreement price as provided in the contribution
86.21 agreement.
86.22 Subd. 5. [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise
86.23 provided in the articles or bylaws, a would-be contributor's
86.24 rights under a contribution agreement may not be assigned, in
86.25 whole or in part, to a person who was not a member at the time
86.26 of the assignment, unless all the members approve the assignment
86.27 by unanimous written consent.
86.28 Sec. 63. [308B.715] [CONTRIBUTION RIGHTS AGREEMENTS.]
86.29 Subdivision 1. [AGREEMENTS PERMITTED.] Subject to any
86.30 restrictions in the articles or bylaws, a cooperative may enter
86.31 into contribution rights agreements under the terms, provisions,
86.32 and conditions fixed by the board.
86.33 Subd. 2. [WRITING REQUIRED AND TERMS TO BE STATED.] Any
86.34 contribution rights agreement must be in writing and the writing
86.35 must state in full, summarize, or include by reference all the
86.36 agreement's terms, provisions, and conditions of the rights to
87.1 make contributions.
87.2 Subd. 3. [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise
87.3 provided in the articles or bylaws, a would-be contributor's
87.4 rights under a contribution rights agreement may not be
87.5 assigned, in whole or in part, to a person who was not a member
87.6 at the time of the assignment, unless all the members approve
87.7 the assignment by unanimous written consent.
87.8 Sec. 64. [308B.721] [ALLOCATIONS AND DISTRIBUTIONS TO
87.9 MEMBERS.]
87.10 Subdivision 1. [ALLOCATION OF PROFITS AND LOSSES.] The
87.11 bylaws shall prescribe the allocation of profits and losses
87.12 between patron membership interests collectively and any other
87.13 membership interests. If the bylaws do not otherwise provide,
87.14 the profits and losses between patron membership interests
87.15 collectively and other membership interests shall be allocated
87.16 on the basis of the value of contributions to capital made by
87.17 the patron membership interests collectively and other
87.18 membership interests and accepted by the cooperative. The
87.19 allocation of profits to the patron membership interests
87.20 collectively shall not be less than 50 percent of the total
87.21 profits in any fiscal year, except that if authorized in the
87.22 original articles as filed or in articles or bylaws that are
87.23 adopted by an affirmative vote of the patron members or the
87.24 articles or bylaws are amended by the affirmative vote of the
87.25 patron members, the allocation of profits to the patron
87.26 membership interests collectively may not be less than 15
87.27 percent of the total profits in any fiscal year.
87.28 Subd. 2. [DISTRIBUTION OF CASH OR OTHER ASSETS.] The
87.29 bylaws shall prescribe the distribution of cash or other assets
87.30 of the cooperative among the membership interests of the
87.31 cooperative. If not otherwise provided in the bylaws,
87.32 distribution shall be made to the patron membership interests
87.33 collectively and other members on the basis of the value of
87.34 contributions to capital made and accepted by the cooperative,
87.35 by the patron membership interests collectively, and other
87.36 membership interests. The distributions to patron membership
88.1 interests collectively shall not be less than 50 percent of the
88.2 total distributions in any fiscal year, except that if
88.3 authorized in the articles or bylaws adopted by the affirmative
88.4 vote of the patron members, or the articles or bylaws are
88.5 amended by the affirmative vote of the patron members, the
88.6 distributions to patron membership interests collectively shall
88.7 not be less than 15 percent of the total distributions in any
88.8 year.
88.9 Sec. 65. [308B.725] [ALLOCATIONS AND DISTRIBUTIONS TO
88.10 PATRON MEMBERS.]
88.11 Subdivision 1. [DISTRIBUTION OF NET INCOME.] A cooperative
88.12 may set aside a portion of net income allocated to the patron
88.13 membership interests as the board determines advisable to create
88.14 or maintain a capital reserve.
88.15 Subd. 2. [RESERVES.] In addition to a capital reserve, the
88.16 board may, for patron membership interests:
88.17 (1) set aside an amount not to exceed five percent of the
88.18 annual net income of the cooperative for promoting and
88.19 encouraging cooperative organization; and
88.20 (2) establish and accumulate reserves for new buildings,
88.21 machinery and equipment, depreciation, losses, and other proper
88.22 purposes.
88.23 Subd. 3. [PATRONAGE DISTRIBUTIONS.] Net income allocated
88.24 to patron members in excess of dividends on equity and additions
88.25 to reserves shall be distributed to patron members on the basis
88.26 of patronage. A cooperative may establish allocation units,
88.27 whether the units are functional, divisional, departmental,
88.28 geographic, or otherwise and pooling arrangements and may
88.29 account for and distribute net income to patrons on the basis of
88.30 allocation units and pooling arrangements. A cooperative may
88.31 offset the net loss of an allocation unit or pooling arrangement
88.32 against the net income of other allocation units or pooling
88.33 arrangements.
88.34 Subd. 4. [FREQUENCY OF DISTRIBUTION.] Distribution of net
88.35 income shall be made at least annually. The board shall present
88.36 to the members at their annual meeting a report covering the
89.1 operations of the cooperative during the preceding fiscal year.
89.2 Subd. 5. [FORM OF DISTRIBUTION.] A cooperative may
89.3 distribute net income to patron members in cash, capital
89.4 credits, allocated patronage equities, revolving fund
89.5 certificates, or its own or other securities.
89.6 Subd. 6. [ELIGIBLE NONMEMBER PATRONS.] The cooperative may
89.7 provide in the bylaws that nonmember patrons are allowed to
89.8 participate in the distribution of net income payable to patron
89.9 members on equal terms with patron members.
89.10 Subd. 7. [PATRONAGE CREDITS FOR INELIGIBLE MEMBERS.] If a
89.11 nonmember patron with patronage credits is not qualified or
89.12 eligible for membership, a refund due may be credited to the
89.13 patron's individual account. The board may issue a certificate
89.14 of interest to reflect the credited amount. After the patron is
89.15 issued a certificate of interest, the patron may participate in
89.16 the distribution of income on the same basis as a patron member.
89.17 Sec. 66. [308B.731] [MEMBER CONTROL AGREEMENTS.]
89.18 Subdivision 1. [AUTHORIZATION.] A written agreement among
89.19 persons who are then members, including a sole member, or who
89.20 have signed subscription or contribution agreements, relating to
89.21 the control of any phase of the business and affairs of the
89.22 cooperative, its liquidation, dissolution and termination, or
89.23 the relations among members or persons who have signed
89.24 subscription or contribution agreements is valid as provided in
89.25 subdivision 2. Wherever this chapter provides that a particular
89.26 result may or must be obtained through a provision in the
89.27 articles or bylaws, the same result can be accomplished through
89.28 a member control agreement valid under this section or through a
89.29 procedure established by a member control agreement valid under
89.30 this section.
89.31 Subd. 2. [VALID EXECUTION.] Other than patron member
89.32 voting control under section 308B.545 and patron member
89.33 allocation and distribution provisions under sections 308B.721
89.34 and 308B.725, a written agreement among persons described in
89.35 subdivision 1 that relates to the control of or the liquidation,
89.36 dissolution, and termination of the cooperative; the relations
90.1 among them; or any phase of the business and affairs of the
90.2 cooperative, including, without limitation, the management of
90.3 its business; the declaration and payment of distributions; the
90.4 sharing of profits and losses; the election of directors; the
90.5 employment of members by the cooperative; or the arbitration of
90.6 disputes, is valid, if the agreement is signed by all persons
90.7 who are then the members of the cooperative, whether or not the
90.8 members all have voting power, and all those who have signed
90.9 contribution agreements, regardless of whether those signatories
90.10 will, when members, have voting power.
90.11 Subd. 3. [OTHER AGREEMENTS NOT AFFECTED.] This section
90.12 does not apply to, limit, or restrict agreements otherwise
90.13 valid, nor is the procedure set forth in this section the
90.14 exclusive method of agreement among members or between the
90.15 members and the cooperative with respect to any of the matters
90.16 described.
90.17 Sec. 67. [308B.735] [DISTRIBUTION OF UNCLAIMED PROPERTY.]
90.18 Subdivision 1. [ALTERNATE PROCEDURE TO DISBURSE PROPERTY.]
90.19 A cooperative may, in lieu of paying or delivering to the state
90.20 the unclaimed property specified in its report of unclaimed
90.21 property, distribute the unclaimed property to a business entity
90.22 or organization that is exempt from taxation. A cooperative
90.23 making the election to distribute unclaimed property shall file
90.24 with the secretary of state:
90.25 (1) a verified written explanation of the proof of claim of
90.26 an owner establishing a right to receive the abandoned property;
90.27 (2) any error in the presumption of abandonment;
90.28 (3) the name, address, and exemption number of the business
90.29 entity or organization to which the property was or is to be
90.30 distributed; and
90.31 (4) the approximate date of distribution.
90.32 Subd. 2. [REPORTING AND CLAIMING PROCEDURE NOT
90.33 AFFECTED.] This subdivision does not alter the procedure
90.34 provided by law for cooperatives to report unclaimed property to
90.35 the state and the requirement that claims of owners are made to
90.36 the cooperatives for a period following the publication of lists
91.1 of abandoned property.
91.2 Subd. 3. [OWNER'S RIGHT EXTINGUISHED ON DISBURSEMENT.] The
91.3 right of an owner to unclaimed property held by a cooperative is
91.4 extinguished when the property is disbursed by the cooperative
91.5 to a tax exempt organization in accordance with this section.
91.6 MERGER
91.7 Sec. 68. [308B.801] [MERGER AND CONSOLIDATION.]
91.8 Subdivision 1. [AUTHORIZATION.] Unless otherwise
91.9 prohibited, cooperatives organized under the laws of this state,
91.10 including cooperatives organized under this chapter or chapter
91.11 308A, may merge or consolidate with each other, a Minnesota
91.12 limited liability company under the provisions of section
91.13 322B.755, or other business entities organized under the laws of
91.14 another state by complying with the provisions of this section
91.15 and the law of the state where the surviving or new business
91.16 entity will exist. A cooperative may not merge or consolidate
91.17 with a business entity organized under the laws of this state,
91.18 other than a cooperative organized under chapter 308A, unless
91.19 the law governing the business entity expressly authorizes
91.20 merger or consolidation with a cooperative. This subdivision
91.21 does not authorize a foreign business entity to do any act not
91.22 authorized by the law governing the foreign business entity.
91.23 Subd. 2. [PLAN.] To initiate a merger or consolidation of
91.24 a cooperative, a written plan of merger or consolidation shall
91.25 be prepared by the board or by a committee selected by the board
91.26 to prepare a plan. The plan shall state:
91.27 (1) the names of the constituent domestic cooperatives, the
91.28 name of any Minnesota limited liability company that is a party
91.29 to the merger, to the extent authorized under section 322B.755,
91.30 and any foreign business entities;
91.31 (2) the name of the surviving or new domestic cooperative,
91.32 Minnesota limited liability company as required by section
91.33 322B.755, or other foreign business entity;
91.34 (3) the manner and basis of converting membership or
91.35 ownership interests of the constituent domestic cooperatives,
91.36 the surviving Minnesota limited liability company as provided in
92.1 section 322B.755, or foreign business entities into membership
92.2 or ownership interests in the surviving or new domestic
92.3 cooperative, the surviving Minnesota limited liability company
92.4 as authorized in section 322B.755, or foreign business entity;
92.5 (4) the terms of the merger or consolidation;
92.6 (5) the proposed effect of the consolidation or merger on
92.7 the members and patron members of each constituent domestic
92.8 cooperative; and
92.9 (6) for a consolidation, the plan shall contain the
92.10 articles of the entity or organizational documents to be filed
92.11 with the state in which the entity is organized or, if the
92.12 surviving organization is a Minnesota limited liability company,
92.13 the articles of organization.
92.14 Subd. 3. [NOTICE.] The following shall apply to notice:
92.15 (1) the board shall mail or otherwise transmit or deliver
92.16 notice of the merger or consolidation to each member. The
92.17 notice shall contain the full text of the plan, and the time and
92.18 place of the meeting at which the plan will be considered; and
92.19 (2) a cooperative with more than 200 members may provide
92.20 the notice in the same manner as a regular members' meeting
92.21 notice.
92.22 Subd. 4. [ADOPTION OF PLAN.] (a) A plan of merger or
92.23 consolidation shall be adopted by a domestic cooperative as
92.24 provided in this subdivision.
92.25 (b) A plan of merger or consolidation is adopted if:
92.26 (1) a quorum of the members eligible to vote is registered
92.27 as being present or represented by mail vote or alternative
92.28 ballot at the meeting; and
92.29 (2) the plan is approved by the patron members, or if
92.30 otherwise provided in the articles or bylaws is approved by a
92.31 majority of the votes cast in each class of votes cast, or for a
92.32 domestic cooperative with articles or bylaws requiring more than
92.33 a majority of the votes cast or other conditions for approval,
92.34 the plan is approved by a proportion of the votes cast or a
92.35 number of total members as required by the articles or bylaws
92.36 and the conditions for approval in the articles or bylaws have
93.1 been satisfied.
93.2 (c) After the plan has been adopted, articles of merger or
93.3 consolidation stating the plan and that the plan was adopted
93.4 according to this subdivision shall be signed by the chair, vice
93.5 chair, records officer, or documents officer of each cooperative
93.6 merging or consolidating.
93.7 (d) The articles of merger or consolidation shall be filed
93.8 in the office of the secretary of state.
93.9 (e) For a merger, the articles of the surviving domestic
93.10 cooperative subject to this chapter are deemed amended to the
93.11 extent provided in the articles of merger.
93.12 (f) Unless a later date is provided in the plan, the merger
93.13 or consolidation is effective when the articles of merger or
93.14 consolidation are filed in the office of the secretary of state
93.15 or the appropriate office of another jurisdiction.
93.16 (g) The secretary of state shall issue a certificate of
93.17 organization of the merged or consolidated cooperative.
93.18 Subd. 5. [EFFECT OF MERGER.] For a merger that does not
93.19 involve a Minnesota limited liability company, the following
93.20 shall apply to the effect of a merger:
93.21 (a) After the effective date, the domestic cooperative,
93.22 Minnesota limited liability company, if party to the plan, and
93.23 any foreign business entity that is a party to the plan become a
93.24 single entity. For a merger, the surviving business entity is
93.25 the business entity designated in the plan. For a
93.26 consolidation, the new domestic cooperative, the Minnesota
93.27 limited liability company, if any, and any foreign business
93.28 entity is the business entity provided for in the plan. Except
93.29 for the surviving or new domestic cooperative, Minnesota limited
93.30 liability company, or foreign business entity, the separate
93.31 existence of each merged or consolidated domestic or foreign
93.32 business entity that is a party to the plan ceases on the
93.33 effective date of the merger or consolidation.
93.34 (b) The surviving or new domestic cooperative, Minnesota
93.35 limited liability company, or foreign business entity possesses
93.36 all of the rights and property of each of the merged or
94.1 consolidated business entities and is responsible for all their
94.2 obligations. The title to property of the merged or
94.3 consolidated domestic cooperative or foreign business entity is
94.4 vested in the surviving or new domestic cooperative, Minnesota
94.5 limited liability company, or foreign business entity without
94.6 reversion or impairment of the title caused by the merger or
94.7 consolidation.
94.8 (c) If a merger involves a Minnesota limited liability
94.9 company, this subdivision is subject to the provisions of
94.10 section 322B.755.
94.11 Sec. 69. [308B.805] [MERGER OF SUBSIDIARY.]
94.12 Subdivision 1. [WHEN AUTHORIZED; CONTENTS OF PLAN.] (a)
94.13 For purposes of this section, "subsidiary" means a domestic
94.14 cooperative, a Minnesota limited liability company, or a foreign
94.15 cooperative, and "cooperative" means a domestic cooperative. A
94.16 Minnesota limited liability company may only participate in a
94.17 merger under this section to the extent authorized under section
94.18 322B.755. A parent domestic cooperative or a subsidiary that is
94.19 a domestic cooperative may complete the merger of a subsidiary
94.20 as provided in this section, provided however, if either the
94.21 parent or the subsidiary is a business entity organized under
94.22 the laws of this state, the merger of the subsidiary is not
94.23 authorized under this section unless the law governing the
94.24 business entity expressly authorizes merger with a cooperative.
94.25 A parent cooperative owning at least 90 percent of the
94.26 outstanding ownership interests of each class and series of a
94.27 subsidiary directly, or indirectly through related
94.28 organizations, other than classes or series that, absent this
94.29 section, would otherwise not be entitled to vote on the merger,
94.30 may merge the subsidiary into itself or into any other
94.31 subsidiary at least 90 percent of the outstanding ownership
94.32 interests of each class and series of which is owned by the
94.33 parent cooperative directly, or indirectly through related
94.34 organizations, other than classes or series that, absent this
94.35 section, would otherwise not be entitled to vote on the merger,
94.36 without a vote of the members of itself or any subsidiary or may
95.1 merge itself, or itself and one or more of the subsidiaries,
95.2 into one of the subsidiaries under this section. A resolution
95.3 approved by the affirmative vote of a majority of the directors
95.4 of the parent cooperative present shall set forth a plan of
95.5 merger that contains:
95.6 (1) the name of the subsidiary or subsidiaries, the name of
95.7 the parent, and the name of the surviving cooperative;
95.8 (2) the manner and basis of converting the membership
95.9 interests of the subsidiary or subsidiaries or parent into
95.10 securities of the parent, subsidiary, or of another cooperative
95.11 or, in the whole or in part, into money or other property;
95.12 (3) if the parent is a constituent cooperative but is not
95.13 the surviving cooperative in the merger, a provision for the pro
95.14 rata issuance of membership interests of the surviving
95.15 cooperative to the holders of membership interests of the parent
95.16 on surrender of any certificates for shares of the parent; and
95.17 (4) if the surviving cooperative is a subsidiary, a
95.18 statement of any amendments to the articles of the surviving
95.19 cooperative that will be part of the merger.
95.20 (b) If the parent is a constituent cooperative and the
95.21 surviving cooperative in the merger, it may change its
95.22 cooperative name, without a vote of its members, by the
95.23 inclusion of a provision to that effect in the resolution of
95.24 merger setting forth the plan of merger that is approved by the
95.25 affirmative vote of a majority of the directors of the parent
95.26 present. Upon the effective date of the merger, the name of the
95.27 parent shall be changed.
95.28 (c) If the parent is a constituent cooperative but is not
95.29 the surviving cooperative in the merger, the resolution is not
95.30 effective unless it is also approved by the affirmative vote of
95.31 the holders of a majority of the voting power of all membership
95.32 interests of the parent entitled to vote at a regular or special
95.33 meeting if the parent is a cooperative, or in accordance with
95.34 the laws under which it is organized if the parent is a foreign
95.35 business entity or cooperative.
95.36 Subd. 2. [NOTICE TO MEMBERS OF SUBSIDIARY.] Notice of the
96.1 action, including a copy of the plan of merger, shall be given
96.2 to each member, other than the parent and any subsidiary of each
96.3 subsidiary that is a constituent cooperative in the merger
96.4 before, or within ten days after, the effective date of the
96.5 merger.
96.6 Subd. 3. [ARTICLES OF MERGER; CONTENTS OF ARTICLES.]
96.7 Articles of merger shall be prepared that contain:
96.8 (1) the plan of merger;
96.9 (2) the number of outstanding membership interests of each
96.10 series and class of each subsidiary that is a constituent
96.11 cooperative in the merger, other than the series or classes
96.12 that, absent this section, would otherwise not be entitled to
96.13 vote on the merger, and the number of membership interests of
96.14 each series and class of the subsidiary or subsidiaries, other
96.15 than series or classes that, absent this section, would
96.16 otherwise not be entitled to vote on the merger, owned by the
96.17 parent directly, or indirectly through related organizations;
96.18 and
96.19 (3) a statement that the plan of merger has been approved
96.20 by the parent under this section.
96.21 Subd. 4. [ARTICLES SIGNED, FILED.] The articles of merger
96.22 shall be signed on behalf of the parent and filed with the
96.23 secretary of state.
96.24 Subd. 5. [CERTIFICATE.] The secretary of state shall issue
96.25 a certificate of merger to the parent or its legal
96.26 representative or, if the parent is a constituent cooperative
96.27 but is not the surviving cooperative in the merger, to the
96.28 surviving cooperative or its legal representative.
96.29 Subd. 6. [NONEXCLUSIVITY.] A merger among a parent and one
96.30 or more subsidiaries or among two or more subsidiaries of a
96.31 parent may be accomplished under section 308B.801 instead of
96.32 this section, in which case this section does not apply.
96.33 Sec. 70. [308B.835] [ABANDONMENT.]
96.34 Subdivision 1. [ABANDONMENT BY MEMBERS OR PLAN.] After a
96.35 plan of merger has been approved by the members entitled to vote
96.36 on the approval of the plan and before the effective date of the
97.1 plan, the plan may be abandoned by the same vote that approved
97.2 the plan.
97.3 Subd. 2. [ABANDONMENT OF MERGER.] (a) A merger may be
97.4 abandoned:
97.5 (1) if the members of each of the constituent domestic
97.6 cooperatives entitled to vote on the approval of the plan have
97.7 approved the abandonment at a meeting by the affirmative vote of
97.8 the holders of a majority of the voting power of the membership
97.9 interests entitled to vote; if the merger is with a domestic
97.10 cooperative and a Minnesota limited liability company or foreign
97.11 business entity, if abandonment is approved in such manner as
97.12 may be required by section 322B.755 for the involvement of a
97.13 Minnesota limited liability company, or for a foreign business
97.14 entity by the laws of the state under which the foreign business
97.15 entity is organized; and the members of a constituent domestic
97.16 cooperative are not entitled to vote on the approval of the
97.17 plan, the board of the constituent domestic cooperative has
97.18 approved the abandonment by the affirmative vote of a majority
97.19 of the directors present;
97.20 (2) if the plan itself provides for abandonment and all
97.21 conditions for abandonment set forth in the plan are met; or
97.22 (3) under paragraph (b).
97.23 (b) A plan of merger may be abandoned before the effective
97.24 date of the plan by a resolution of the board of any constituent
97.25 domestic cooperative abandoning the plan of merger approved by
97.26 the affirmative vote of a majority of the directors present,
97.27 subject to the contract rights of any other person under the
97.28 plan. If a plan of merger is with a domestic or foreign
97.29 business entity, the plan of merger may be abandoned before the
97.30 effective date of the plan by a resolution of the foreign
97.31 business entity adopted according to the laws of the state under
97.32 which the foreign business entity is organized, subject to the
97.33 contract rights of any other person under the plan. If the plan
97.34 of merger is with a Minnesota limited liability company, the
97.35 plan of merger may be abandoned by the Minnesota limited
97.36 liability company as provided in section 322B.755, subject to
98.1 the contractual rights of any other person under the plan.
98.2 (c) If articles of merger have been filed with the
98.3 secretary of state, but have not yet become effective, the
98.4 constituent organizations, in the case of abandonment under
98.5 paragraph (a), clause (1), the constituent organizations or any
98.6 one of them, in the case of abandonment under paragraph (a),
98.7 clause (2), or the abandoning organization in the case of
98.8 abandonment under paragraph (b), shall file with the secretary
98.9 of state articles of abandonment that contain:
98.10 (1) the names of the constituent organizations;
98.11 (2) the provisions of this section under which the plan is
98.12 abandoned; and
98.13 (3) if the plan is abandoned under paragraph (b), the text
98.14 of the resolution abandoning the plan.
98.15 DISSOLUTION
98.16 Sec. 71. [308B.901] [METHODS OF DISSOLUTION.]
98.17 A cooperative may be dissolved by the members or by order
98.18 of the court.
98.19 Sec. 72. [308B.905] [WINDING UP.]
98.20 Subdivision 1. [COLLECTION AND PAYMENT OF DEBTS.] After
98.21 the notice of intent to dissolve has been filed with the
98.22 secretary of state, the board, or the officers acting under the
98.23 direction of the board shall proceed as soon as possible:
98.24 (1) to collect or make provision for the collection of all
98.25 debts due or owing to the cooperative, including unpaid
98.26 subscriptions for shares; and
98.27 (2) to pay or make provision for the payment of all debts,
98.28 obligations, and liabilities of the cooperative according to
98.29 their priorities.
98.30 Subd. 2. [TRANSFER OF ASSETS.] After the notice of intent
98.31 to dissolve has been filed with the secretary of state, the
98.32 board may sell, lease, transfer, or otherwise dispose of all or
98.33 substantially all of the property and assets of the dissolving
98.34 cooperative without a vote of the members.
98.35 Subd. 3. [DISTRIBUTION TO MEMBERS.] Tangible and
98.36 intangible property, including money, remaining after the
99.1 discharge of the debts, obligations, and liabilities of the
99.2 cooperative shall be distributed to the members and former
99.3 members as provided in the articles or bylaws, unless otherwise
99.4 provided by law. If previously authorized by the members, the
99.5 tangible and intangible property of the cooperative may be
99.6 liquidated and disposed of at the discretion of the board.
99.7 Sec. 73. [308B.911] [REVOCATION OF DISSOLUTION
99.8 PROCEEDINGS.]
99.9 Subdivision 1. [AUTHORITY TO REVOKE.] Dissolution
99.10 proceedings may be revoked before the articles of dissolution
99.11 are filed with the secretary of state.
99.12 Subd. 2. [REVOCATION BY MEMBERS.] The chair may call a
99.13 members' meeting to consider the advisability of revoking the
99.14 dissolution proceedings. The question of the proposed
99.15 revocation shall be submitted to the members at the members'
99.16 meeting called to consider the revocation. The dissolution
99.17 proceedings are revoked if the proposed revocation is approved
99.18 at the members' meeting by a majority of the members of the
99.19 cooperative or for a cooperative with articles or bylaws
99.20 requiring a greater number of members, the number of members
99.21 required by the articles or bylaws.
99.22 Subd. 3. [FILING WITH THE SECRETARY OF STATE.] Revocation
99.23 of dissolution proceedings is effective when a notice of
99.24 revocation is filed with the secretary of state. After the
99.25 notice is filed, the cooperative may resume business.
99.26 Sec. 74. [308B.915] [STATUTE OF LIMITATIONS.]
99.27 The claim of a creditor or claimant against a dissolving
99.28 cooperative is barred if the claim has not been enforced by
99.29 initiating legal, administrative, or arbitration proceedings
99.30 concerning the claim by two years after the date the notice of
99.31 intent to dissolve is filed with the secretary of state.
99.32 Sec. 75. [308B.921] [ARTICLES OF DISSOLUTION.]
99.33 Subdivision 1. [CONDITIONS TO FILE.] Articles of
99.34 dissolution of a cooperative shall be filed with the secretary
99.35 of state after payment of the claims of all known creditors and
99.36 claimants has been made or provided for and the remaining
100.1 property has been distributed by the board. The articles of
100.2 dissolution shall state:
100.3 (1) that all debts, obligations, and liabilities of the
100.4 cooperative have been paid or discharged or adequate provisions
100.5 have been made for them or time periods allowing claims have run
100.6 and other claims are not outstanding;
100.7 (2) that the remaining property, assets, and claims of the
100.8 cooperative have been distributed among the members or under a
100.9 liquidation authorized by the members; and
100.10 (3) that legal, administrative, or arbitration proceedings
100.11 by or against the cooperative are not pending or adequate
100.12 provision has been made for the satisfaction of a judgment,
100.13 order, or decree that may be entered against the cooperative in
100.14 a pending proceeding.
100.15 Subd. 2. [DISSOLUTION EFFECTIVE ON FILING.] The
100.16 cooperative is dissolved when the articles of dissolution have
100.17 been filed with the secretary of state.
100.18 Subd. 3. [CERTIFICATE.] The secretary of state shall issue
100.19 to the dissolved cooperative or its legal representative a
100.20 certificate of dissolution that contains:
100.21 (1) the name of the dissolved cooperative;
100.22 (2) the date the articles of dissolution were filed with
100.23 the secretary of state; and
100.24 (3) a statement that the cooperative is dissolved.
100.25 Sec. 76. [308B.925] [APPLICATION FOR COURT-SUPERVISED
100.26 VOLUNTARY DISSOLUTION.]
100.27 After a notice of intent to dissolve has been filed with
100.28 the secretary of state and before a certificate of dissolution
100.29 has been issued, the cooperative or, for good cause shown, a
100.30 member or creditor may apply to a court within the county where
100.31 the registered address is located to have the dissolution
100.32 conducted or continued under the supervision of the court.
100.33 Sec. 77. [308B.931] [COURT-ORDERED REMEDIES OR
100.34 DISSOLUTION.]
100.35 Subdivision 1. [CONDITIONS FOR RELIEF.] A court may grant
100.36 equitable relief that it deems just and reasonable in the
101.1 circumstances or may dissolve a cooperative and liquidate its
101.2 assets and business:
101.3 (1) in a supervised voluntary dissolution that is applied
101.4 for by the cooperative;
101.5 (2) in an action by a member when it is established that:
101.6 (i) the directors or the persons having the authority
101.7 otherwise vested in the board are deadlocked in the management
101.8 of the cooperative's affairs and the members are unable to break
101.9 the deadlock;
101.10 (ii) the directors or those in control of the cooperative
101.11 have acted fraudulently, illegally, or in a manner unfairly
101.12 prejudicial toward one or more members in their capacities as
101.13 members, directors, or officers;
101.14 (iii) the members of the cooperative are so divided in
101.15 voting power that, for a period that includes the time when two
101.16 consecutive regular members' meetings were held, they have
101.17 failed to elect successors to directors whose terms have expired
101.18 or would have expired upon the election and qualification of
101.19 their successors;
101.20 (iv) the cooperative assets are being misapplied or wasted;
101.21 or
101.22 (v) the period of duration as provided in the articles has
101.23 expired and has not been extended as provided in this chapter;
101.24 and
101.25 (3) in an action by a creditor when:
101.26 (i) the claim of the creditor against the cooperative has
101.27 been reduced to judgment and an execution on the judgment has
101.28 been returned unsatisfied;
101.29 (ii) the cooperative has admitted in writing that the claim
101.30 of the creditor against the cooperative is due and owing and it
101.31 is established that the cooperative is unable to pay its debts
101.32 in the ordinary course of business; or
101.33 (iii) in an action by the attorney general to dissolve the
101.34 cooperative in accordance with this chapter when it is
101.35 established that a decree of dissolution is appropriate.
101.36 Subd. 2. [CONDITION OF COOPERATIVE OR ASSOCIATION.] In
102.1 determining whether to order equitable relief or dissolution,
102.2 the court shall take into consideration the financial condition
102.3 of the cooperative but may not refuse to order equitable relief
102.4 or dissolution solely on the grounds that the cooperative has
102.5 accumulated operating net income or current operating net income.
102.6 Subd. 3. [DISSOLUTION AS REMEDY.] In deciding whether to
102.7 order dissolution of the cooperative, the court shall consider
102.8 whether lesser relief suggested by one or more parties, such as
102.9 a form of equitable relief or a partial liquidation, would be
102.10 adequate to permanently relieve the circumstances established
102.11 under subdivision 1, clause (2), item (ii) or (iii). Lesser
102.12 relief may be ordered if it would be appropriate under the facts
102.13 and circumstances of the case.
102.14 Subd. 4. [EXPENSES.] If the court finds that a party to a
102.15 proceeding brought under this section has acted arbitrarily,
102.16 vexatiously, or otherwise not in good faith, the court may in
102.17 its discretion award reasonable expenses, including attorney
102.18 fees and disbursements to any of the other parties.
102.19 Subd. 5. [VENUE.] Proceedings under this section shall be
102.20 brought in a court within the county where the registered
102.21 address of the cooperative is located.
102.22 Subd. 6. [PARTIES.] It is not necessary to make members
102.23 parties to the action or proceeding unless relief is sought
102.24 against them personally.
102.25 Sec. 78. [308B.935] [PROCEDURE IN INVOLUNTARY OR
102.26 COURT-SUPERVISED VOLUNTARY DISSOLUTION.]
102.27 Subdivision 1. [ACTION BEFORE HEARING.] In dissolution
102.28 proceedings before a hearing can be completed the court may:
102.29 (1) issue injunctions;
102.30 (2) appoint receivers with all powers and duties that the
102.31 court directs;
102.32 (3) take actions required to preserve the cooperative's
102.33 assets wherever located; and
102.34 (4) carry on the business of the cooperative.
102.35 Subd. 2. [ACTION AFTER HEARING.] After a hearing is
102.36 completed, upon notice to parties to the proceedings and to
103.1 other parties in interest designated by the court, the court may
103.2 appoint a receiver to collect the cooperative's assets,
103.3 including amounts owing to the cooperative by subscribers on
103.4 account of an unpaid portion of the consideration for the
103.5 issuance of shares. A receiver has authority, subject to the
103.6 order of the court, to continue the business of the cooperative
103.7 and to sell, lease, transfer, or otherwise dispose of the
103.8 property and assets of the cooperative either at public or
103.9 private sale.
103.10 Subd. 3. [DISCHARGE OF OBLIGATIONS.] The assets of the
103.11 cooperative or the proceeds resulting from a sale, lease,
103.12 transfer, or other disposition shall be applied in the following
103.13 order of priority:
103.14 (1) the costs and expense of the proceedings, including
103.15 attorney fees and disbursements;
103.16 (2) debts, taxes, and assessments due the United States,
103.17 this state, and other states in that order;
103.18 (3) claims duly proved and allowed to employees under the
103.19 provisions of the Workers' Compensation Act except that claims
103.20 under this clause may not be allowed if the cooperative carried
103.21 workers' compensation insurance, as provided by law, at the time
103.22 the injury was sustained;
103.23 (4) claims, including the value of all compensation paid in
103.24 a medium other than money, proved and allowed to employees for
103.25 services performed within three months preceding the appointment
103.26 of the receiver, if any; and
103.27 (5) other claims proved and allowed.
103.28 Subd. 4. [REMAINDER TO MEMBERS.] After payment of the
103.29 expenses of receivership and claims of creditors are proved, the
103.30 remaining assets, if any, may be distributed to the members or
103.31 distributed under an approved liquidation plan.
103.32 Sec. 79. [308B.941] [RECEIVER QUALIFICATIONS AND POWERS.]
103.33 Subdivision 1. [QUALIFICATIONS.] A receiver shall be a
103.34 natural person or a domestic business entity or a foreign
103.35 business entity authorized to transact business in this state.
103.36 A receiver shall give a bond as directed by the court with the
104.1 sureties required by the court.
104.2 Subd. 2. [POWERS.] A receiver may sue and defend in all
104.3 courts as receiver of the cooperative. The court appointing the
104.4 receiver has exclusive jurisdiction of the cooperative and its
104.5 property.
104.6 Sec. 80. [308B.945] [DISSOLUTION ACTION BY ATTORNEY
104.7 GENERAL; ADMINISTRATIVE DISSOLUTION.]
104.8 Subdivision 1. [CONDITIONS TO BEGIN ACTION.] A cooperative
104.9 may be dissolved involuntarily by a decree of a court in this
104.10 state in an action filed by the attorney general it if is
104.11 established that:
104.12 (1) the articles and certificate of organization were
104.13 procured through fraud;
104.14 (2) the cooperative was organized for a purpose not
104.15 permitted by this chapter or prohibited by state law;
104.16 (3) the cooperative has flagrantly violated a provision of
104.17 this chapter, has violated a provision of this chapter more than
104.18 once, or has violated more than one provision of this chapter;
104.19 or
104.20 (4) the cooperative has acted, or failed to act, in a
104.21 manner that constitutes surrender or abandonment of the
104.22 cooperative's franchise, privileges, or enterprise.
104.23 Subd. 2. [NOTICE TO COOPERATIVE.] An action may not be
104.24 commenced under subdivision 1 until 30 days after notice to the
104.25 cooperative by the attorney general of the reason for the filing
104.26 of the action. If the reason for filing the action is an act
104.27 that the cooperative has done, or omitted to do, and the act or
104.28 omission may be corrected by an amendment of the articles or
104.29 bylaws or by performance of or abstention from the act, the
104.30 attorney general shall give the cooperative 30 additional days
104.31 to make the correction before filing the action.
104.32 Sec. 81. [308B.951] [FILING CLAIMS IN COURT-SUPERVISED
104.33 DISSOLUTION PROCEEDINGS.]
104.34 Subdivision 1. [FILING UNDER OATH.] In proceedings to
104.35 dissolve a cooperative, the court may require all creditors and
104.36 claimants of the cooperative to file their claims under oath
105.1 with the court administrator or with the receiver in a form
105.2 prescribed by the court.
105.3 Subd. 2. [DATE TO FILE A CLAIM.] If the court requires the
105.4 filing of claims, the court shall:
105.5 (1) set a date, by order, at least 120 days after the date
105.6 the order is filed as the last day for the filing of claims; and
105.7 (2) prescribe the notice of the fixed date that shall be
105.8 given to creditors and claimants.
105.9 Subd. 3. [FIXED DATE OR EXTENSION FOR FILING.] Before the
105.10 fixed date, the court may extend the time for filing claims.
105.11 Creditors and claimants failing to file claims on or before the
105.12 fixed date may be barred, by order of court, from claiming an
105.13 interest in or receiving payment out of the property or assets
105.14 of the cooperative.
105.15 Sec. 82. [308B.955] [DISCONTINUANCE OF COURT-SUPERVISED
105.16 DISSOLUTION PROCEEDINGS.]
105.17 The involuntary or supervised voluntary dissolution of a
105.18 cooperative may be discontinued at any time during the
105.19 dissolution proceedings if it is established that cause for
105.20 dissolution does not exist. The court shall dismiss the
105.21 proceedings and direct the receiver, if any, to redeliver to the
105.22 cooperative its remaining property and assets.
105.23 Sec. 83. [308B.961] [COURT-SUPERVISED DISSOLUTION ORDER.]
105.24 Subdivision 1. [CONDITIONS FOR DISSOLUTION ORDER.] In an
105.25 involuntary or supervised voluntary dissolution after the costs
105.26 and expenses of the proceedings and all debts, obligations, and
105.27 liabilities of the cooperative have been paid or discharged and
105.28 the remaining property and assets have been distributed to its
105.29 members or, if its property and assets are not sufficient to
105.30 satisfy and discharge the costs, expenses, debts, obligations,
105.31 and liabilities, when all the property and assets have been
105.32 applied so far as they will go to their payment according to
105.33 their priorities, the court shall enter an order dissolving the
105.34 cooperative.
105.35 Subd. 2. [DISSOLUTION EFFECTIVE ON FILING ORDER.] When the
105.36 order dissolving the cooperative or association has been
106.1 entered, the cooperative or association is dissolved.
106.2 Sec. 84. [308B.965] [FILING COURT'S DISSOLUTION ORDER.]
106.3 After the court enters an order dissolving a cooperative,
106.4 the court administrator shall cause a certified copy of the
106.5 dissolution order to be filed with the secretary of state. The
106.6 secretary of state may not charge a fee for filing the
106.7 dissolution order.
106.8 Sec. 85. [308B.971] [BARRING OF CLAIMS.]
106.9 Subdivision 1. [CLAIMS BARRED.] A person who is or becomes
106.10 a creditor or claimant before, during, or following the
106.11 conclusion of dissolution proceedings, who does not file a claim
106.12 or pursue a remedy in a legal, administrative, or arbitration
106.13 proceeding during the pendency of the dissolution proceeding or
106.14 has not initiated a legal, administrative, or arbitration
106.15 proceeding before the commencement of the dissolution
106.16 proceedings and all those claiming through or under the creditor
106.17 or claimant, are forever barred from suing on that claim or
106.18 otherwise realizing upon or enforcing it, except as provided in
106.19 this section.
106.20 Subd. 2. [CERTAIN UNFILED CLAIMS ALLOWED.] Within one year
106.21 after articles of dissolution have been filed with the secretary
106.22 of state under this chapter or a dissolution order has been
106.23 entered, a creditor or claimant who shows good cause for not
106.24 having previously filed the claim may apply to a court in this
106.25 state to allow a claim:
106.26 (1) against the cooperative to the extent of undistributed
106.27 assets; or
106.28 (2) if the undistributed assets are not sufficient to
106.29 satisfy the claim, the claim may be allowed against a member to
106.30 the extent of the distributions to members in dissolution
106.31 received by the member.
106.32 Subd. 3. [OMITTED CLAIMS ALLOWED.] Debts, obligations, and
106.33 liabilities incurred during dissolution proceedings shall be
106.34 paid or provided for by the cooperative before the distribution
106.35 of assets to a member. A person to whom this kind of debt,
106.36 obligation, or liability is owed but is not paid may pursue any
107.1 remedy against the offenders, directors, or members of the
107.2 cooperative before the expiration of the applicable statute of
107.3 limitations. This subdivision does not apply to dissolution
107.4 under the supervision or order of a court.
107.5 Sec. 86. [308B.975] [RIGHT TO SUE OR DEFEND AFTER
107.6 DISSOLUTION.]
107.7 After a cooperative has been dissolved, any of its former
107.8 officers, directors, or members may assert or defend, in the
107.9 name of the cooperative, a claim by or against the cooperative.
107.10 ARTICLE 2
107.11 SECURITIES; CROSS-REFERENCES
107.12 Section 1. Minnesota Statutes 2002, section 80A.14,
107.13 subdivision 17, is amended to read:
107.14 Subd. 17. [SALE, SELL.] (1) "Sale" or "sell" includes
107.15 every contract of sale of, contract to sell, or disposition of,
107.16 a security or interest in a security for value.
107.17 (2) "Offer" or "offer to sell" includes every attempt or
107.18 offer to dispose of, or solicitation of an offer to buy, a
107.19 security or interest in a security for value.
107.20 (3) Any security given or delivered with, or as a bonus on
107.21 account of, any purchase of securities or any other thing is
107.22 considered to constitute part of the subject of the purchase and
107.23 to have been offered and sold for value.
107.24 (4) A purported gift of assessable stock is considered to
107.25 involve an offer and sale.
107.26 (5) Every sale or offer of a warrant or right to purchase
107.27 or subscribe to another security of the same or another issuer,
107.28 as well as every sale or offer of a security which gives the
107.29 holder a present or future right or privilege to convert into
107.30 another security of the same or another issuer, is considered to
107.31 include an offer of the other security.
107.32 (6) The terms defined in this subdivision do not include
107.33 (i) any bona fide pledge or loans; (ii) any stock dividend,
107.34 whether the corporation or other entity distributing the
107.35 dividend is the issuer of the stock or not; or (iii) a dividend
107.36 on equity distributed by a cooperative organized under chapter
108.1 308B.
108.2 Sec. 2. Minnesota Statutes 2002, section 80A.15,
108.3 subdivision 2, is amended to read:
108.4 Subd. 2. [TRANSACTIONS EXEMPTED.] The following
108.5 transactions are exempted from sections 80A.08 and 80A.16:
108.6 (a) Any sales, whether or not effected through a
108.7 broker-dealer, provided that:
108.8 (1) no person shall make more than ten sales of securities
108.9 in Minnesota of the same issuer pursuant to this exemption,
108.10 exclusive of sales according to clause (2), during any period of
108.11 12 consecutive months; provided further, that in the case of
108.12 sales by an issuer, except sales of securities registered under
108.13 the Securities Act of 1933 or exempted by section 3(b) of that
108.14 act, (i) the seller reasonably believes that all buyers are
108.15 purchasing for investment, and (ii) the securities are not
108.16 advertised for sale to the general public in newspapers or other
108.17 publications of general circulation or otherwise, or by radio,
108.18 television, electronic means or similar communications media, or
108.19 through a program of general solicitation by means of mail or
108.20 telephone; or
108.21 (2) no issuer shall make more than 25 sales of its
108.22 securities in Minnesota according to this exemption, exclusive
108.23 of sales pursuant to clause (1), during any period of 12
108.24 consecutive months; provided further, that the issuer meets the
108.25 conditions in clause (1) and, in addition meets the following
108.26 additional conditions: (i) files with the commissioner, ten
108.27 days before a sale according to this clause, a statement of
108.28 issuer on a form prescribed by the commissioner; and (ii) no
108.29 commission or other remuneration is paid or given directly or
108.30 indirectly for soliciting any prospective buyers in this state
108.31 in connection with a sale according to this clause except
108.32 reasonable and customary commissions paid by the issuer to a
108.33 broker-dealer licensed under this chapter.
108.34 (b) Any nonissuer distribution of an outstanding security
108.35 if (1) either Moody's, Fitch's, or Standard & Poor's Securities
108.36 Manuals, or other recognized manuals approved by the
109.1 commissioner contains the names of the issuer's officers and
109.2 directors, a balance sheet of the issuer as of a date not more
109.3 than 18 months prior to the date of the sale, and a profit and
109.4 loss statement for the fiscal year preceding the date of the
109.5 balance sheet, and (2) the issuer or its predecessor has been in
109.6 active, continuous business operation for the five-year period
109.7 next preceding the date of sale, and (3) if the security has a
109.8 fixed maturity or fixed interest or dividend provision, the
109.9 issuer has not, within the three preceding fiscal years,
109.10 defaulted in payment of principal, interest, or dividends on the
109.11 securities.
109.12 (c) The execution of any orders by a licensed broker-dealer
109.13 for the purchase or sale of any security, pursuant to an
109.14 unsolicited offer to purchase or sell; provided that the
109.15 broker-dealer acts as agent for the purchaser or seller, and has
109.16 no direct material interest in the sale or distribution of the
109.17 security, receives no commission, profit, or other compensation
109.18 from any source other than the purchaser and seller and delivers
109.19 to the purchaser and seller written confirmation of the
109.20 transaction which clearly itemizes the commission, or other
109.21 compensation.
109.22 (d) Any nonissuer sale of notes or bonds secured by a
109.23 mortgage lien if the entire mortgage, together with all notes or
109.24 bonds secured thereby, is sold to a single purchaser at a single
109.25 sale.
109.26 (e) Any judicial sale, exchange, or issuance of securities
109.27 made pursuant to an order of a court of competent jurisdiction.
109.28 (f) The sale, by a pledge holder, of a security pledged in
109.29 good faith as collateral for a bona fide debt.
109.30 (g) Any offer or sale to a bank, savings institution, trust
109.31 company, insurance company, investment company as defined in the
109.32 Investment Company Act of 1940, or other financial institution
109.33 or institutional buyer, or to a broker-dealer, whether the
109.34 purchaser is acting for itself or in some fiduciary capacity.
109.35 (h) An offer or sale of securities by an issuer made in
109.36 reliance on the exemptions provided by Rule 505 or 506 of
110.1 Regulation D promulgated by the Securities and Exchange
110.2 Commission, Code of Federal Regulations, title 17, sections
110.3 230.501 to 230.508, subject to the conditions and definitions
110.4 provided by Rules 501 to 503 of Regulation D, if the offer and
110.5 sale also satisfies the conditions and limitations in clauses
110.6 (1) to (10).
110.7 (1) The exemption under this paragraph is not available for
110.8 the securities of an issuer if any of the persons described in
110.9 Rule 252(c) to (f) of Regulation A promulgated by the Securities
110.10 and Exchange Commission, Code of Federal Regulations, title 17,
110.11 sections 230.251 to 230.263:
110.12 (i) has filed a registration statement that is the subject
110.13 of a currently effective order entered against the issuer, its
110.14 officers, directors, general partners, controlling persons, or
110.15 affiliates, according to any state's law within five years
110.16 before the filing of the notice required under clause (5),
110.17 denying effectiveness to, or suspending or revoking the
110.18 effectiveness of, the registration statement;
110.19 (ii) has been convicted, within five years before the
110.20 filing of the notice required under clause (5), of a felony or
110.21 misdemeanor in connection with the offer, sale, or purchase of a
110.22 security or franchise, or a felony involving fraud or deceit,
110.23 including but not limited to forgery, embezzlement, obtaining
110.24 money under false pretenses, larceny, or conspiracy to defraud;
110.25 (iii) is subject to an effective administrative order or
110.26 judgment entered by a state securities administrator within five
110.27 years before the filing of the notice required under clause (5),
110.28 that prohibits, denies, or revokes the use of an exemption from
110.29 securities registration, that prohibits the transaction of
110.30 business by the person as a broker-dealer or agent, that is
110.31 based on fraud, deceit, an untrue statement of a material fact,
110.32 or an omission to state a material fact; or
110.33 (iv) is subject to an order, judgment, or decree of a court
110.34 entered within five years before the filing of the notice
110.35 required under clause (5), temporarily, preliminarily, or
110.36 permanently restraining or enjoining the person from engaging in
111.1 or continuing any conduct or practice in connection with the
111.2 offer, sale, or purchase of a security, or the making of a false
111.3 filing with a state.
111.4 A disqualification under paragraph (h) involving a
111.5 broker-dealer or agent is waived if the broker-dealer or agent
111.6 is or continues to be licensed in the state in which the
111.7 administrative order or judgment was entered against the person
111.8 or if the broker-dealer or agent is or continues to be licensed
111.9 in this state as a broker-dealer or agent after notifying the
111.10 commissioner of the act or event causing disqualification.
111.11 The commissioner may waive a disqualification under
111.12 paragraph (h) upon a showing of good cause that it is not
111.13 necessary under the circumstances that use of the exemption be
111.14 denied.
111.15 A disqualification under paragraph (h) may be waived if the
111.16 state securities administrator or agency of the state that
111.17 created the basis for disqualification has determined, upon a
111.18 showing of good cause, that it is not necessary under the
111.19 circumstances that an exemption from registration of securities
111.20 under the state's laws be denied.
111.21 It is a defense to a violation of paragraph (h) based upon
111.22 a disqualification if the issuer sustains the burden of proof to
111.23 establish that the issuer did not know, and in the exercise of
111.24 reasonable care could not have known, that a disqualification
111.25 under paragraph (h) existed.
111.26 (2) This exemption must not be available to an issuer with
111.27 respect to a transaction that, although in technical compliance
111.28 with this exemption, is part of a plan or scheme to evade
111.29 registration or the conditions or limitations explicitly stated
111.30 in paragraph (h).
111.31 (3) No commission, finder's fee, or other remuneration
111.32 shall be paid or given, directly or indirectly, for soliciting a
111.33 prospective purchaser, unless the recipient is appropriately
111.34 licensed, or exempt from licensure, in this state as a
111.35 broker-dealer.
111.36 (4) Nothing in this exemption is intended to or should be
112.1 in any way construed as relieving issuers or persons acting on
112.2 behalf of issuers from providing disclosure to prospective
112.3 investors adequate to satisfy the antifraud provisions of the
112.4 securities law of Minnesota.
112.5 (5) The issuer shall file with the commissioner a notice on
112.6 form D as adopted by the Securities and Exchange Commission
112.7 according to Regulation D, Code of Federal Regulations, title
112.8 17, section 230.502. The notice must be filed not later than 15
112.9 days after the first sale in this state of securities in an
112.10 offering under this exemption. Every notice on form D must be
112.11 manually signed by a person duly authorized by the issuer and
112.12 must be accompanied by a consent to service of process on a form
112.13 prescribed by the commissioner.
112.14 (6) A failure to comply with a term, condition, or
112.15 requirement of paragraph (h) will not result in loss of the
112.16 exemption for an offer or sale to a particular individual or
112.17 entity if the person relying on the exemption shows that: (i)
112.18 the failure to comply did not pertain to a term, condition, or
112.19 requirement directly intended to protect that particular
112.20 individual or entity, and the failure to comply was
112.21 insignificant with respect to the offering as a whole; and (ii)
112.22 a good faith and reasonable attempt was made to comply with all
112.23 applicable terms, conditions, and requirements of paragraph (h),
112.24 except that, where an exemption is established only through
112.25 reliance upon this provision, the failure to comply shall
112.26 nonetheless constitute a violation of section 80A.08 and be
112.27 actionable by the commissioner.
112.28 (7) The issuer, upon request by the commissioner, shall,
112.29 within ten days of the request, furnish to the commissioner a
112.30 copy of any and all information, documents, or materials
112.31 furnished to investors or offerees in connection with the offer
112.32 and sale according to paragraph (h).
112.33 (8) Neither compliance nor attempted compliance with the
112.34 exemption provided by paragraph (h), nor the absence of an
112.35 objection or order by the commissioner with respect to an offer
112.36 or sale of securities undertaken according to this exemption,
113.1 shall be considered to be a waiver of a condition of the
113.2 exemption or considered to be a confirmation by the commissioner
113.3 of the availability of this exemption.
113.4 (9) The commissioner may, by rule or order, increase the
113.5 number of purchasers or waive any other condition of this
113.6 exemption.
113.7 (10) The determination whether offers and sales made in
113.8 reliance on the exemption set forth in paragraph (h) shall be
113.9 integrated with offers and sales according to other paragraphs
113.10 of this subdivision shall be made according to the integration
113.11 standard set forth in Rule 502 of Regulation D promulgated by
113.12 the Securities and Exchange Commission, Code of Federal
113.13 Regulations, title 17, section 230.502. If not subject to
113.14 integration according to that rule, offers and sales according
113.15 to paragraph (h) shall not otherwise be integrated with offers
113.16 and sales according to other exemptions set forth in this
113.17 subdivision.
113.18 (i) Any offer (but not a sale) of a security for which a
113.19 registration statement has been filed under sections 80A.01 to
113.20 80A.31, if no stop order or refusal order is in effect and no
113.21 public proceeding or examination looking toward an order is
113.22 pending; and any offer of a security if the sale of the security
113.23 is or would be exempt under this section. The commissioner may
113.24 by rule exempt offers (but not sales) of securities for which a
113.25 registration statement has been filed as the commissioner deems
113.26 appropriate, consistent with the purposes of sections 80A.01 to
113.27 80A.31.
113.28 (j) The offer and sale by a cooperative organized under
113.29 chapter 308A or under the laws of another state, of its
113.30 securities when the securities are offered and sold only to its
113.31 members, or when the purchase of the securities is necessary or
113.32 incidental to establishing membership in the cooperative, or
113.33 when such securities are issued as patronage dividends. This
113.34 paragraph applies to a cooperative organized under the laws of
113.35 another state only if the cooperative has filed with the
113.36 commissioner a consent to service of process under section
114.1 80A.27, subdivision 7, and has, not less than ten days prior to
114.2 the issuance or delivery, furnished the commissioner with a
114.3 written general description of the transaction and any other
114.4 information that the commissioner requires by rule or otherwise.
114.5 (l) The issuance and delivery of any securities of one
114.6 corporation to another corporation or its security holders in
114.7 connection with a merger, exchange of shares, or transfer of
114.8 assets whereby the approval of stockholders of the other
114.9 corporation is required to be obtained, provided, that the
114.10 commissioner has been furnished with a general description of
114.11 the transaction and with other information as the commissioner
114.12 by rule prescribes not less than ten days prior to the issuance
114.13 and delivery. For purposes of this paragraph, a corporation
114.14 includes a cooperative organized under chapter 308B, and the
114.15 approval of stockholders applies to members of such a
114.16 cooperative.
114.17 (m) Any transaction between the issuer or other person on
114.18 whose behalf the offering is made and an underwriter or among
114.19 underwriters.
114.20 (n) The distribution by a corporation of its or other
114.21 securities to its own security holders as a stock dividend or as
114.22 a dividend from earnings or surplus or as a liquidating
114.23 distribution; or upon conversion of an outstanding convertible
114.24 security; or pursuant to a stock split or reverse stock
114.25 split. For purposes of this paragraph, a corporation includes a
114.26 cooperative organized under chapter 308B, and the term "stock"
114.27 applies to interests in such a cooperative.
114.28 (o) Any offer or sale of securities by an affiliate of the
114.29 issuer thereof if: (1) a registration statement is in effect
114.30 with respect to securities of the same class of the issuer and
114.31 (2) the offer or sale has been exempted from registration by
114.32 rule or order of the commissioner.
114.33 (p) Any transaction pursuant to an offer to existing
114.34 security holders of the issuer, including persons who at the
114.35 time of the transaction are holders of convertible securities,
114.36 nontransferable warrants, or transferable warrants exercisable
115.1 within not more than 90 days of their issuance, if: (1) no
115.2 commission or other remuneration (other than a standby
115.3 commission) is paid or given directly or indirectly for
115.4 soliciting any security holder in this state; and (2) the
115.5 commissioner has been furnished with a general description of
115.6 the transaction and with other information as the commissioner
115.7 may by rule prescribe no less than ten days prior to the
115.8 transaction.
115.9 (q) Any nonissuer sales of any security, including a
115.10 revenue obligation, issued by the state of Minnesota or any of
115.11 its political or governmental subdivisions, municipalities,
115.12 governmental agencies, or instrumentalities.
115.13 (r) Any transaction as to which the commissioner by rule or
115.14 order finds that registration is not necessary in the public
115.15 interest and for the protection of investors.
115.16 (s) An offer or sale of a security issued in connection
115.17 with an employee's stock purchase, savings, option, profit
115.18 sharing, pension, or similar employee benefit plan, if the
115.19 following conditions are met:
115.20 (1) the issuer, its parent corporation or any of its
115.21 majority-owned subsidiaries offers or sells the security
115.22 according to a written benefit plan or written contract relating
115.23 to the compensation of the purchaser; and
115.24 (2) the class of securities offered according to the plan
115.25 or contract, or if an option or right to purchase a security,
115.26 the class of securities to be issued upon the exercise of the
115.27 option or right, is registered under section 12 of the
115.28 Securities Exchange Act of 1934, or is a class of securities
115.29 with respect to which the issuer files reports according to
115.30 section 15(d) of the Securities Exchange Act of 1934; or
115.31 (3) the issuer fully complies with the provisions of Rule
115.32 701 as adopted by the Securities and Exchange Commission, Code
115.33 of Federal Regulations, title 12, section 230.701.
115.34 The issuer shall file not less than ten days before the
115.35 transaction, a general description of the transaction and any
115.36 other information that the commissioner requires by rule or
116.1 otherwise or, if applicable, a Securities and Exchange Form S-8.
116.2 Annually, within 90 days after the end of the issuer's fiscal
116.3 year, the issuer shall file a notice as provided with the
116.4 commissioner.
116.5 (t) Any sale of a security of an issuer that is a pooled
116.6 income fund, a charitable remainder trust, or a charitable lead
116.7 trust that has a qualified charity as the only charitable
116.8 beneficiary.
116.9 (u) Any sale by a qualified charity of a security that is a
116.10 charitable gift annuity if the issuer has a net worth, otherwise
116.11 defined as unrestricted fund balance, of not less than $300,000
116.12 and either: (1) has been in continuous operation for not less
116.13 than three years; or (2) is a successor or affiliate of a
116.14 qualified charity that has been in continuous operation for not
116.15 less than three years.
116.16 (v) The offer and sale by a cooperative organized under
116.17 chapter 308B of its securities when the securities are offered
116.18 and sold only to its existing members or when the purchase of
116.19 the securities is necessary or incidental to establishing patron
116.20 membership in the cooperative, or when such securities are
116.21 issued as patronage dividends. This paragraph applies when
116.22 securities are issued as patronage dividends or otherwise only
116.23 when:
116.24 (1) the issuer, prior to the completion of the sale of such
116.25 securities, provides each offeree or purchaser disclosure
116.26 materials, which to the extent material to an understanding of
116.27 the issuer, its business, and the securities being offered
116.28 substantially meet the disclosure conditions and limitations
116.29 found in rule 502(b) of regulation d promulgated by the
116.30 Securities and Exchange Commission, Code of Federal Regulations,
116.31 title 17, section 230.502; and
116.32 (2) within 15 days after the completion of the first sale
116.33 in each offering completed in reliance upon this exemption, the
116.34 cooperative has filed with the commissioner a consent to service
116.35 of process under section 80A.27, subdivision 7, and has
116.36 furnished the commissioner with a written general description of
117.1 the transaction and any other information that the commissioner
117.2 requires by rule or otherwise.
117.3 A cooperative may, at or about the same time as offers or sales
117.4 are being completed in reliance upon this exemption from
117.5 registration and as part of a common plan of financing, offer or
117.6 sell its securities in reliance upon any other exemption from
117.7 registration available under this chapter. The offer or sale of
117.8 securities in reliance upon this paragraph shall not be
117.9 considered or deemed a part of or be integrated with any offer
117.10 or sale of securities conducted by the cooperative in reliance
117.11 upon any other exemption from registration available under this
117.12 chapter, nor shall offers or sales of securities by the
117.13 cooperative in reliance upon any other exemption from
117.14 registration available under this chapter be considered or
117.15 deemed a part of or be integrated with any offer or sale
117.16 conducted by the cooperative in reliance upon this paragraph.
117.17 Sec. 3. Minnesota Statutes 2002, section 322B.70,
117.18 subdivision 1, is amended to read:
117.19 Subdivision 1. [MERGER.] With or without a business
117.20 purpose, a limited liability company may merge:
117.21 (1) with another limited liability company pursuant to a
117.22 plan of merger approved in the manner provided in sections
117.23 322B.71 to 322B.75;
117.24 (2) with a domestic corporation under a plan of merger
117.25 approved in the manner provided in sections 322B.71 to 322B.75,
117.26 and in chapter 302A; and
117.27 (3) with any foreign corporation or foreign limited
117.28 liability company pursuant to a plan of merger approved in the
117.29 manner provided in section 322B.76; and
117.30 (4) with one or more cooperatives organized under chapter
117.31 308A or 308B, in the manner provided by and subject to the
117.32 limitations in section 322B.755.
117.33 Sec. 4. [322B.755] [MERGER OF DOMESTIC COOPERATIVE INTO A
117.34 DOMESTIC LIMITED LIABILITY COMPANY.]
117.35 Subdivision 1. [DEFINITION.] As used in this section,
117.36 "domestic cooperative" means a cooperative organized under
118.1 chapter 308A or 308B.
118.2 Subd. 2. [AUTHORIZATION; LIMITATIONS.] (a) A limited
118.3 liability company may merge with a domestic cooperative only as
118.4 provided by this section. A limited liability company may merge
118.5 with one or more domestic cooperatives if:
118.6 (1) only one limited liability company and only one or more
118.7 domestic cooperatives are parties to the merger;
118.8 (2) when the merger becomes effective, the separate
118.9 existence of each domestic cooperative ceases and the limited
118.10 liability company is the surviving organization;
118.11 (3) as to each domestic cooperative, the plan of merger is
118.12 initiated and adopted, and the merger is effectuated, as
118.13 provided in section 308B.801; and
118.14 (4) as to the limited liability company, the plan of merger
118.15 complies with section 322B.71, the plan of merger is approved as
118.16 provided in section 322B.72, and the articles of merger are
118.17 prepared, signed, and filed as provided in section 322B.73.
118.18 (b) For purposes of a merger authorized by this section:
118.19 (1) the term "constituent organization" as used in sections
118.20 322B.71, subdivision 1, clause (1); 322B.71, subdivision 1,
118.21 clause (3), item (i); 322B.73; and 322B.75, includes a domestic
118.22 cooperative;
118.23 (2) the term "constituent organization" as used in section
118.24 322B.72 does not include a domestic cooperative;
118.25 (3) the term "ownership interests" as used in section
118.26 322B.71, subdivision 1, clause (3), item (i), includes
118.27 membership interests in a domestic cooperative;
118.28 (4) notwithstanding sections 322B.71, subdivision 1, clause
118.29 (1), item (i); 322B.71, subdivision 1, clause (4); 322B.75,
118.30 subdivision 2, clause (1); 322B.75, subdivision 2, clause (4),
118.31 item (i); and 322B.75, subdivision 2, clause (5), the surviving
118.32 organization must be the limited liability company;
118.33 (5) section 322B.75, subdivision 2, clause (3), does not
118.34 apply;
118.35 (6) the term "ownership interests" includes membership
118.36 interests in a domestic cooperative and the term "owners"
119.1 includes members of a domestic cooperative; and
119.2 (7) "dissenters rights" includes dissenters rights under
119.3 the law governing the domestic cooperative.
119.4 Subd. 3. [ABANDONMENT.] Section 308B.835 governs the
119.5 abandonment by a domestic cooperative of a merger authorized by
119.6 this section. Section 322B.74 governs the abandonment by a
119.7 limited liability company of a merger authorized by this
119.8 section, except that for the purposes of a merger authorized by
119.9 this section:
119.10 (1) the term "constituent organization" as used in section
119.11 322B.74, subdivision 1, clause (1), does not include a domestic
119.12 cooperative;
119.13 (2) the requirement stated in section 322B.74, subdivision
119.14 1, clause (1), as to a domestic corporation does not apply and
119.15 instead the abandonment must have been approved by the domestic
119.16 cooperative in the manner provided in chapter 308B;
119.17 (3) the reference in section 322B.74, subdivision 2, to a
119.18 domestic corporation does not apply and instead the abandonment
119.19 by the domestic cooperative may be accomplished as provided in
119.20 chapter 308B; and
119.21 (4) the term "constituent organization" as used in section
119.22 322B.74, subdivision 3, includes a domestic cooperative.