3rd Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
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;
and117.27 (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.