Office of the Revisor of Statutes
Minnesota Session Laws - 2003, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 105-H.F.No. 984
An act relating to cooperatives; authorizing
businesses to organize as cooperative associations;
providing penalties; amending Minnesota Statutes 2002,
sections 80A.14, subdivision 17; 80A.15, subdivision
2; 322B.70, subdivision 1; proposing coding for new
law in Minnesota Statutes, chapter 322B; proposing
coding for new law as Minnesota Statutes, chapter 308B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
MINNESOTA COOPERATIVE ASSOCIATIONS ACT
Section 1. [308B.001] [CITATION.]
This chapter may be cited as the "Minnesota Cooperative
Associations Act."
Sec. 2. [308B.005] [DEFINITIONS.]
Subdivision 1. [SCOPE.] The definitions in this section
apply to this chapter.
Subd. 2. [ADDRESS.] "Address" means mailing address,
including a zip code. In the case of a registered address, the
term means the mailing address and the actual office location,
which may not be a post office box.
Subd. 3. [ALTERNATIVE BALLOT.] "Alternative ballot" means
a method of voting on a candidate or issue prescribed by the
board of directors in advance of the vote, and may include
voting by electronic, telephonic, Internet, or other means that
reasonably allow members the opportunity to vote.
Subd. 4. [ARTICLES.] "Articles" means the articles of
organization of a cooperative as originally filed and
subsequently amended.
Subd. 5. [ASSOCIATION.] "Association" means an
organization conducting business on a cooperative plan under the
laws of this state or another state that is chartered to conduct
business under other laws of this state or another state.
Subd. 6. [BOARD.] "Board" means the board of directors of
a cooperative.
Subd. 7. [BUSINESS ENTITY.] "Business entity" means a
company, limited liability company, limited liability
partnership, or other legal entity, whether domestic or foreign,
association, or body vested with the power or function of a
legal entity.
Subd. 8. [CHAPTER.] "Chapter" means sections 308B.001 to
308B.975.
Subd. 9. [COOPERATIVE.] "Cooperative" means an association
organized under this chapter conducting business on a
cooperative plan as provided under this chapter.
Subd. 10. [DOMESTIC BUSINESS ENTITY.] "Domestic business
entity" means a business entity organized under the laws of this
state.
Subd. 11. [DOMESTIC COOPERATIVE.] "Domestic cooperative"
means a cooperative organized under this chapter or chapter 308A.
Subd. 12. [FILED WITH THE SECRETARY OF STATE.] "Filed with
the secretary of state" means that a document meeting the
applicable requirements of this chapter, signed and accompanied
by the required filing fee, has been delivered to the secretary
of state. The secretary of state shall endorse on the document
the word "filed" or a similar word determined by the secretary
of state and the month, day, and year of filing, record the
document in the office of the secretary of state, and return a
document to the person or entity who delivered it for filing.
Subd. 13. [FOREIGN BUSINESS ENTITY.] "Foreign business
entity" means a business entity that is not a domestic business
entity.
Subd. 14. [FOREIGN COOPERATIVE.] "Foreign cooperative"
means a foreign business entity organized to conduct business on
a cooperative plan consistent with this chapter or chapter 308A.
Subd. 15. [MEMBER.] "Member" means a person or entity
reflected on the books of the cooperative as the owner of
governance rights of a membership interest of the cooperative
and includes patron and nonpatron members.
Subd. 16. [MEMBERSHIP INTEREST.] "Membership interest"
means a member's interest in a cooperative consisting of a
member's financial rights, a member's right to assign financial
rights, a member's governance rights, and a member's right to
assign governance rights. Membership interest includes patron
membership interests and nonpatron membership interests.
Subd. 17. [MEMBERS' MEETING.] "Members' meeting" means a
regular or special members' meeting.
Subd. 18. [MINNESOTA LIMITED LIABILITY COMPANY.]
"Minnesota limited liability company" means a limited liability
company governed by chapter 322B.
Subd. 19. [NONPATRON MEMBERSHIP INTEREST.] "Nonpatron
membership interest" means a membership interest that does not
require the holder to conduct patronage business for or with the
cooperative to receive financial rights or distributions.
Subd. 20. [PATRON.] "Patron" means a person or entity who
conducts patronage business with the cooperative.
Subd. 21. [PATRONAGE.] "Patronage" means business,
transactions, or services done for or with the cooperative as
defined by the cooperative.
Subd. 22. [PATRON MEMBER.] "Patron member" means a member
holding a patron membership interest.
Subd. 23. [PATRON MEMBERSHIP INTEREST.] "Patron membership
interest" means the membership interest requiring the holder to
conduct patronage business for or with the cooperative, as
specified by the cooperative to receive financial rights or
distributions.
Subd. 24. [SIGNED.] "Signed" means that the signature of a
person has been written on a document, and with respect to a
document required by this chapter to be filed with the secretary
of state, means that the document has been signed by a person
authorized to do so by this chapter, the articles or bylaws, or
by a resolution approved by the directors or the members. A
signature on a document may be a facsimile affixed, engraved,
printed, placed, stamped with indelible ink, transmitted by
facsimile or electronically, or in any other manner reproduced
on the document.
GENERAL PROVISIONS
Sec. 3. [308B.101] [RESERVATION OF RIGHT.]
The state reserves the right to amend or repeal the
provisions of this chapter by law. A cooperative organized or
governed by this chapter is subject to this reserved right.
Sec. 4. [308B.111] [FILING FEES.]
Unless otherwise provided, the filing fee for documents
filed under this chapter with the secretary of state is $35.
Sec. 5. [308B.115] [REGISTERED OFFICE AND AGENT.]
Subdivision 1. [REGISTERED OFFICE AND AGENT.] A
cooperative must establish and continuously maintain in this
state:
(1) a registered office that may be, but need not be, the
same as its place of business; and
(2) a registered agent, which agent may be either an
individual resident in this state whose business office is
identical with the registered office, or a domestic business
entity, or a foreign business entity authorized to transact
business in this state, having an office identical with the
registered office.
Subd. 2. [CHANGE OF OFFICE AND AGENT.] A cooperative may
designate or change its registered office or agent, or both,
upon filing in the office of the secretary of state a statement
setting forth:
(1) the name of the cooperative;
(2) the address of its then registered office;
(3) if the address of its registered office is to be
changed, the address to which the registered office is to be
changed;
(4) the name of its then registered agent;
(5) if its registered agent is to be changed, the name of
its successor registered agent;
(6) that the address of its registered office and the
address of the business office of its registered agent, as
changed, will be identical; and
(7) that the change was authorized by affirmative vote of a
majority of the board of the cooperative.
Subd. 3. [FILING.] The statement shall be signed and
delivered to the secretary of state. If the secretary of state
finds that the statement conforms to the provisions of this
section, the secretary of state shall file the statement, and
upon filing the change of address of the registered office or
the appointment of a new registered agent or both, as the case
may be, is effective.
Subd. 4. [RESIGNATION OF AGENT.] Any registered agent of a
cooperative may resign as agent upon filing a written notice
resignation, signed with one original and one exact or conformed
copy, with the secretary of state, who shall mail a copy to the
cooperative at its principal mailing address as defined and
prescribed by the secretary of state. The appointment of the
agent shall terminate upon the expiration of 30 days after
receipt of notice by the secretary of state.
Subd. 5. [CHANGE OF ADDRESS OR NAME OF AGENT.] If the
address or name of a registered agent changes, the agent must
change the address of the registered office or the name of the
registered agent of the cooperative represented by the agent by
filing with the secretary of state the statement required in
subdivision 2, except that the statement need only be signed by
the registered agent, need not be responsive to subdivision 2,
clause (5), but must state that a copy of the statement has been
mailed to the cooperative or to the legal representative of the
cooperative.
Sec. 6. [308B.121] [PERIODIC REGISTRATION.]
Subdivision 1. [PERIODIC REGISTRATION IN CERTAIN
YEARS.] Each cooperative governed by this chapter and each
foreign cooperative registered under section 308B.151, must file
a periodic registration with the secretary of state with the
initial articles and any amendment of the articles in each
odd-numbered year. In these years, the secretary of state must
mail by first class mail a registration form to the registered
office of each cooperative and registered foreign cooperative as
shown in the records of the secretary of state, or if no such
address is in the records, to the location of the principal
place of business shown in the records of the secretary of
state. For a cooperative, the form must include the following
notice:
"NOTICE: Failure to file this form by December 31 of this
year will result in the dissolution of this cooperative without
further notice from the secretary of state, under Minnesota
Statutes, section 308B.121, subdivision 4, paragraph (b)."
For a foreign cooperative, the form must contain the
following notice:
"NOTICE: Failure to file this form by December 31 of this
year will result in the loss of good standing and the authority
to do business in Minnesota."
Subd. 2. [REGISTRATION FORM.] In each calendar year in
which a registration is to be filed, a cooperative must file
with the secretary of state a registration by December 31 of
that calendar year containing:
(1) the name of the cooperative;
(2) the address of its registered office;
(3) the address of its principal place of business, if
different from the registered office address; and
(4) the name and business address of the officer or other
person exercising the principal functions of the chief executive
officer of the cooperative.
Subd. 3. [INFORMATION PUBLIC.] The information required by
subdivision 2 is public data.
Subd. 4. [PENALTY; DISSOLUTION.] (a) A cooperative that
has failed to file a registration under the requirements of this
section must be dissolved by the secretary of state as described
in paragraph (b).
(b) If the cooperative has not filed the registration by
December 31 of that calendar year, the secretary of state must
issue a certificate of involuntary dissolution and the
certificate must be filed in the office of the secretary of
state. The secretary of state must annually inform the attorney
general and the commissioner of revenue of the methods by which
the names of cooperatives dissolved under this section during
the preceding year may be determined. The secretary of state
must also make available in an electronic format the names of
the dissolved cooperatives. A cooperative dissolved in this
manner is not entitled to the benefits of section 308B.971.
Subd. 5. [REINSTATEMENT.] A cooperative may, within one
year of the date of dissolution under this section,
retroactively reinstate its existence by filing a single annual
registration and paying a $25 fee. Filing the annual
registration with the secretary of state:
(1) returns the cooperative to active status as of the date
of the dissolution;
(2) validates contracts or other acts within the authority
of the articles and the cooperative is liable for those
contracts or acts; and
(3) restores to the cooperative all assets and rights of
the cooperative and its shareholders or members to the extent
they were held by the cooperative and its shareholders or
members before the dissolution occurred, except to the extent
that assets or rights were affected by acts occurring after the
dissolution or sold or otherwise distributed after that time.
Sec. 7. [308B.007] [LEGAL RECOGNITION OF ELECTRONIC
RECORDS AND SIGNATURES.]
Subdivision 1. [DEFINITIONS.] (a) The definitions in this
subdivision apply to this section.
(b) "Electronic" means relating to technology having
electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities.
(c) "Electronic record" means a record created, generated,
sent, communicated, received, or stored by electronic means.
(d) "Electronic signature" means an electronic sound,
symbol, or process attached to or logically associated with a
record and executed or adopted by a person with the intent to
sign the record.
(e) "Record" means information that is inscribed on a
tangible medium or that is stored in an electronic or other
medium and is retrievable in perceivable form.
Subd. 2. [ELECTRONIC RECORDS AND SIGNATURES.] For purposes
of this chapter:
(1) a record or signature may not be denied legal effect or
enforceability solely because it is in electronic form;
(2) a contract may not be denied legal effect or
enforceability solely because an electronic record was used in
its formation;
(3) if a provision requires a record to be in writing, an
electronic record satisfies the requirement; and
(4) if a provision requires a signature, an electronic
signature satisfies the requirement.
Sec. 8. [308B.151] [FOREIGN COOPERATIVES.]
Subdivision 1. [AUTHORITY.] (a) Subject to the
constitution of this state, the laws of the jurisdiction under
which a foreign cooperative is organized govern its organization
and internal affairs and the liability of its members. A
foreign cooperative may not be denied a certificate of authority
to transact business in this state by reason of any difference
between those laws and the laws of this state.
(b) A foreign cooperative holding a valid certificate of
authority in this state has no greater rights and privileges
than a domestic cooperative. The certificate of authority does
not authorize the foreign cooperative to exercise any of its
powers or purposes that a domestic cooperative is forbidden by
law to exercise in this state.
(c) A foreign cooperative may apply for a certificate of
authority under any name that would be available to a
cooperative, whether or not the name is the name under which it
is authorized in its jurisdiction of organization.
Subd. 2. [CERTIFICATE OF AUTHORITY.] (a) Before
transacting business in this state, a foreign cooperative shall
obtain a certificate of authority. An applicant for the
certificate shall file with the secretary of state a certificate
of status from the filing office in the jurisdiction in which
the business entity is organized and an application executed by
an authorized person and setting forth:
(1) the name of the foreign cooperative and, if different,
the name under which it proposes to transact business in this
state;
(2) the jurisdiction of its organization;
(3) the name and business address of the proposed
registered agent in this state, which agent shall be an
individual resident of this state, a domestic business entity,
or a foreign cooperative having a place of business in, and
authorized to do business in, this state;
(4) the address of the office required to be maintained in
the jurisdiction of its organization by the laws of that
jurisdiction or, if not so required, of the principal place of
business of the foreign cooperative; and
(5) the date the foreign cooperative expires in the
jurisdiction of its organization.
(b) The application must be accompanied by payment of $185,
which includes a $150 initial license fee in addition to the $35
filing fee required by section 308B.111.
(c) If the secretary of state finds that an application for
a certificate of authority conforms to law and all fees have
been paid, the secretary of state shall:
(1) endorse on the application the word "Filed" and the
date of filing the application;
(2) file the original application; and
(3) return the original application to the person who filed
it with a certificate of authority issued by the secretary of
state.
(d) A certificate of authority issued under this section is
effective from the date the application is filed with the
secretary of state accompanied by the payment of the requisite
fees.
(e) If any statement in the application for a certificate
of authority by a foreign cooperative was false when made or any
arrangements or other facts described have changed, making the
application inaccurate in any respect, the foreign cooperative
shall promptly file with the secretary of state:
(1) in the case of a change in its name, a termination, or
a merger, a certificate to that effect authenticated by the
proper officer of the state or country under the laws of which
the foreign cooperative is organized; or
(2) in the case of a change in the name or address of the
registered agent required to be maintained by section 308B.121,
an amendment to the certificate of authority signed by an
authorized person.
The fee for filing the document is the same as for filing
an amendment.
Subd. 3. [REGISTERED AGENT AND CERTAIN REPORTS.] A foreign
cooperative authorized to transact business in this state shall:
(1) appoint and continuously maintain a registered agent in
the same manner as provided in section 308B.121; or
(2) file a report upon any change in the name or business
address of its registered agent in the same manner as provided
in section 308B.121.
Subd. 4. [BIENNIAL REGISTRATION.] (a) A foreign
cooperative must file a periodic registration with the secretary
of state in each odd-numbered year containing:
(1) the name of the foreign cooperative;
(2) the alternate name, if any, the foreign cooperative has
adopted for use in this state;
(3) the address of its registered office;
(4) the name of its registered agent, if any;
(5) the jurisdiction in which the foreign cooperative is
organized; and
(6) the name and business address of the manager or other
person exercising the principal functions of the chief manager
of the foreign cooperative.
(b) The secretary of state shall mail a registration form
to each foreign cooperative not less than 90 days before the
registration is due. The registration form must be sent to the
last registered office address filed with the secretary of
state. A foreign cooperative that needs to amend its name,
registered office address, or registered agent may make these
amendments on the biennial registration form. If an amendment
is made on the biennial registration form, it must be signed by
an authorized person. The fee listed in section 308B.121
applies to these amendments.
(c) A foreign cooperative that fails to file a registration
under the requirements of this subdivision loses its good
standing in this state. The business entity may regain its good
standing in this state by filing a registration and paying a $50
fee.
(d) If a foreign cooperative has not filed a registration
during a reporting period, the secretary of state shall notify
the business entity that its authority to do business in this
state will be revoked if the biennial registration is not filed
by the due date of the next registration. This notice must be
sent to the foreign cooperative at its registered office address
of record as part of the registration form. If the foreign
cooperative does not file the biennial registration by the due
date, the secretary of state shall revoke the authority of the
foreign cooperative to do business in this state. The secretary
of state shall issue a certificate of revocation, which shall be
sent to the foreign cooperative at its registered office
address. A copy of the certificate must be filed with the
secretary of state.
(e) If a foreign cooperative has its authority to do
business in this state revoked, it may retroactively reinstate
its authority to do business by filing a single biennial
registration and paying a $50 fee but only within one year of
the date of termination or revocation.
(f) A foreign cooperative filing the biennial registration
restores the foreign cooperative's ability to do business in
this state and the rights and privileges that accompany that
authority.
Subd. 5. [CERTIFICATE OF WITHDRAWAL.] (a) A foreign
cooperative authorized to transact business in this state may
withdraw from this state upon procuring from the secretary of
state a certificate of withdrawal. In order to procure the
certificate, the foreign cooperative shall file with the
secretary of state an application for withdrawal which must set
forth:
(1) the name of the foreign cooperative and the state or
country under the laws of which it is organized;
(2) that the foreign cooperative is not transacting
business in this state;
(3) that the foreign cooperative surrenders its authority
to transact business in this state;
(4) that the foreign cooperative revokes the authority of
its registered agent in this state to accept service of process
and consents to that service of process in any action, suit, or
proceeding based upon any cause of action arising in this state
during the time the business entity was authorized to transact
business in this state. Service may be made on the business
entity by service upon the secretary of state; and
(5) a post office address to which a person may mail a copy
of any process against the business entity.
(b) The filing with the secretary of state of a certificate
of termination or a certificate of merger if the foreign
cooperative is not the surviving organization from the proper
officer of the state or country under the laws of which the
business entity is organized constitutes a valid application of
withdrawal and the authority of the business entity to transact
business in this state shall cease upon filing of the
certificate.
(c) The certificate of authority of a foreign cooperative
to transact business in this state may be revoked by the
secretary of state upon the occurrence of any of these events:
(1) the foreign cooperative has failed to appoint and
maintain a registered agent as required by this chapter, file a
report upon any change in the name or business address of the
registered agent, or file in the office of the secretary of
state any amendment to its application for a certificate of
authority as specified in section 308B.121; or
(2) a misrepresentation has been made of any material
matter in any application, report, affidavit, or other document
submitted by the foreign cooperative under this chapter.
(d) No certificate of authority of a foreign cooperative
shall be revoked by the secretary of state unless:
(1) the secretary of state has given the foreign
cooperative not less than 60 days' notice by mail addressed to
its registered office in this state or, if the foreign
cooperative fails to appoint and maintain a registered agent in
this state, addressed to the office address in the jurisdiction
of organization; and
(2) during the 60-day period, the foreign cooperative has
failed to file the report of change regarding the registered
agent, to file any amendment, or to correct the
misrepresentation.
(e) Sixty days after the mailing of the notice, the
authority of the foreign cooperative to transact business in
this state ceases. The secretary of state shall issue a
certificate of revocation and shall mail the certificate to the
address of the principal place of business or the office
required to be maintained in the jurisdiction of organization of
the foreign cooperative.
Subd. 6. [TRANSACTION OF BUSINESS WITHOUT CERTIFICATE OF
AUTHORITY.] (a) A foreign cooperative transacting business in
this state may not maintain any action, suit, or proceeding in
any court of this state until it possesses a certificate of
authority.
(b) The failure of a foreign cooperative to obtain a
certificate of authority does not impair the validity of any
contract or act of the foreign cooperative or prevent the
foreign cooperative from defending any action, suit, or
proceeding in any court of this state.
(c) A foreign cooperative, by transacting business in this
state without a certificate of authority, appoints the secretary
of state as its agent upon whom any notice, process, or demand
may be served.
(d) A foreign cooperative that transacts business in this
state without a valid certificate of authority is liable to the
state for the years or parts of years during which it transacted
business in this state without the certificate in any amount
equal to all fees that would have been imposed by this chapter
upon that business entity had it duly obtained the certificate,
filed all reports required by this chapter, and paid all
penalties imposed by this chapter. The attorney general shall
bring proceedings to recover all amounts due this state under
the provisions of this section.
(e) A foreign cooperative that transacts business in this
state without a valid certificate of authority is subject to a
civil penalty, payable to the state, not to exceed $5,000. Each
director or, in the absence of directors, each member or agent
who authorizes, directs, or participates in the transaction of
business in this state on behalf of a foreign cooperative that
does not have a certificate is subject to a civil penalty,
payable to the state, not to exceed $1,000.
(f) The civil penalties set forth in paragraph (e) may be
recovered in an action brought in the district court for Ramsey
county by the attorney general. Upon a finding by the court
that a foreign cooperative or any of its members, directors, or
agents have transacted business in this state in violation of
this chapter, the court shall issue, in addition to the
imposition of a civil penalty, an injunction restraining the
further transaction of the business of the foreign cooperative
and the further exercise of any business entity's rights and
privileges in this state. The foreign cooperation must be
enjoined from transacting business in this state until all civil
penalties plus any interest and court costs that the court may
assess have been paid and until the foreign cooperative has
otherwise complied with the provisions of this chapter.
(g) A member of a foreign cooperative is not liable for the
debts and obligations of the foreign cooperative solely by
reason of the business entity's having transacted business in
this state without a valid certificate of authority.
Subd. 7. [TRANSACTIONS NOT CONSTITUTING TRANSACTING
BUSINESS.] (a) The following activities of a foreign
cooperative, among others, do not constitute transacting
business within the meaning of this section:
(1) maintaining, defending, or settling any proceeding;
(2) holding meetings of its members or carrying on any
other activities concerning its internal affairs;
(3) maintaining bank accounts;
(4) maintaining offices or agencies for the transfer,
exchange, and registration of the foreign cooperative's own
securities or maintaining trustees or depositories with respect
to those securities;
(5) selling through independent contractors;
(6) soliciting or obtaining orders, whether by mail or
through employees or agents or otherwise, if the orders require
acceptance outside this state before they become contracts;
(7) creating or acquiring indebtedness, mortgages, and
security interests in real or personal property;
(8) securing or collecting debts or enforcing mortgages,
and security interests in property securing the debts;
(9) holding, protecting, renting, maintaining, and
operating real or personal property in this state;
(10) selling or transferring title to property in this
state to any person; or
(11) conducting an isolated transaction that is completed
within 30 days and that is not one in the course of repeated
transactions of a like manner.
(b) The term "transacting business" as used in this section
has no effect on personal jurisdiction under section 543.19.
(c) For purposes of this section, any foreign cooperative
that owns income-producing real or tangible personal property in
this state, other than property exempted under paragraph (a), is
considered to be transacting business in this state.
(d) The list of activities in paragraph (a) is not
exhaustive. This subdivision does not apply in determining the
contracts or activities that may subject a foreign cooperative
to service of process or taxation in this state or to regulation
under any other law of this state.
Subd. 8. [ACTION TO RESTRAIN FOREIGN COOPERATIVE.] The
attorney general may bring an action to restrain a foreign
cooperative from transacting business in this state in violation
of this chapter, chapter 308A, or other laws of this state.
Subd 9. [SERVICE OF PROCESS.] Service of process on a
foreign cooperative must be as provided under section 5.25.
ORGANIZATION
Sec. 9. [308B.201] [ORGANIZATIONAL PURPOSE.]
A cooperative may be formed and organized on a cooperative
plan for any lawful purpose, including:
(1) to market, process, or otherwise change the form or
marketability of products, including crops, livestock, and other
agricultural products, the manufacturing and further processing
of those products, other purposes that are necessary or
convenient to facilitate the production or marketing of products
by patron members and others, and other purposes that are
related to the business of the cooperative;
(2) to provide products, supplies, and services to its
members; and
(3) for any other purposes that cooperatives are authorized
by law.
Sec. 10. [308B.205] [ORGANIZERS.]
Subdivision 1. [QUALIFICATION.] A cooperative may be
organized by one or more organizers who shall be adult natural
persons, and who may act for themselves as individuals or as the
agents of other entities. The organizers forming the
cooperative need not be members of the cooperative.
Subd. 2. [ROLE OF ORGANIZERS.] If the first board is not
named in the articles of organization, the organizers may elect
the first board or may act as directors with all of the powers,
rights, duties, and liabilities of directors, until directors
are elected or until a contribution is accepted, whichever
occurs first.
Subd. 3. [MEETING.] After the filing of articles of
organization, the organizers or the directors named in the
articles of organization shall either hold an organizational
meeting at the call of a majority of the organizers or of the
directors named in the articles, or take written action for the
purposes of transacting business and taking actions necessary or
appropriate to complete the organization of the cooperative,
including, without limitations, amending the articles, electing
directors; adopting bylaws, adopting banking resolutions,
authorizing or ratifying the purchase, lease, or other
acquisition of suitable space, furniture, furnishings, supplies,
and materials; adopting a fiscal year for the cooperative;
contracting to receive and accept contributions; and making any
appropriate tax elections. If a meeting is held, the person or
persons calling the meeting shall give at least three days'
notice of the meeting to each organizer or director named,
stating the date, time, and place of the meeting. Organizers
and directors may waive notice of an organizational meeting in
the same manner that a director may waive notice of meetings of
the board.
Sec. 11. [308B.211] [COOPERATIVE NAME.]
Subdivision 1. [DISTINGUISHED NAME.] The name of a
cooperative shall distinguish the cooperative upon the records
in the office of the secretary of state from the name of a
domestic business entity or a foreign business entity,
authorized or registered to do business in this state, or a name
the right to which is, at the time of organization, reserved or
provided for by law.
Subd. 2. [RESERVATION; CONTEST OF NAME.] The cooperative
name shall be reserved for the cooperative during its
existence. A person doing business in this state may contest
the registration of a name with the secretary of state under
section 5.22.
Sec. 12. [308B.215] [ARTICLES OF ORGANIZATION.]
Subdivision 1. [REQUIREMENTS.] (a) The articles of the
cooperative shall include:
(1) the name of the cooperative;
(2) the purpose of the cooperative;
(3) the name and address of each organizer; and
(4) the period of duration for the cooperative, if the
duration is not to be perpetual.
(b) The articles may contain any other lawful provision.
(c) The articles shall be signed by the organizers.
Subd. 2. [FILING.] The original articles and a designation
of the cooperative's registered office and agent, including a
registration form under section 308B.121, shall be filed with
the secretary of state. The fee for filing the articles with
the secretary of state is $60.
Subd. 3. [EFFECT OF FILING.] When the articles, the
registration form under section 308B.121, and the designation of
the cooperative's registered office and agent have been filed
with the secretary of state and the required fee has been paid
to the secretary of state, it shall be presumed that:
(1) all conditions precedent that are required to be
performed by the organizers have been complied with;
(2) the organization of the cooperative has been chartered
by the state as a separate legal entity; and
(3) the secretary of state shall issue a certificate of
organization to the cooperative.
Sec. 13. [308B.221] [AMENDMENT OF ARTICLES.]
Subdivision 1. [PROCEDURE.] (a) The articles of a
cooperative shall be amended as follows:
(1) the board, by majority vote, shall pass a resolution
stating the text of the proposed amendment. The text of the
proposed amendment and an attached mail or alternative ballot,
if the board has provided for a mail or alternative ballot in
the resolution or alternative method approved by the board and
stated in the resolution, shall be mailed or otherwise
distributed with a regular or special meeting notice to each
member. The notice shall designate the time and place of the
meeting for the proposed amendment to be considered and voted
on;
(2) if a quorum of the members is registered as being
present or represented by alternative vote at the meeting, the
proposed amendment is adopted:
(i) if approved by a majority of the votes cast; or
(ii) for a cooperative with articles or bylaws requiring
more than majority approval or other conditions for approval,
the amendment is approved by a proportion of the votes cast or a
number of total members as required by the articles or bylaws
and the conditions for approval in the articles or bylaws have
been satisfied.
(b) After an amendment has been adopted by the members, the
amendment shall be signed by the chair, vice chair, records
officer, or assistant records officer and a copy of the
amendment filed in the office of the secretary of state.
Subd. 2. [CERTIFICATE.] (a) A certificate shall be
prepared stating:
(1) the vote and meeting of the board adopting a resolution
of the proposed amendment;
(2) the notice given to members of the meeting at which the
amendment was adopted;
(3) the quorum registered at the meeting; and
(4) the vote cast adopting the amendment.
(b) The certificate shall be signed by the chair, vice
chair, records officer, or financial officer and filed with the
records of the cooperative.
Subd. 3. [AMENDMENT BY DIRECTORS.] A majority of directors
may amend the articles if the cooperative does not have any
members with voting rights.
Subd. 4. [FILING.] An amendment of the articles shall be
filed with the secretary of state with a registration statement
under section 308B.121, and the amendment is effective upon
filing or the date specified in the resolution adopting the
amendment.
Sec. 14. [308B.225] [AMENDMENT OF ORGANIZATIONAL DOCUMENTS
TO BE GOVERNED BY THIS CHAPTER.]
Subdivision 1. [AUTHORITY.] (a) A cooperative organized
under chapter 308A may convert and become subject to this
chapter by amending its organizational documents to conform to
the requirements of this chapter.
(b) A cooperative organized under chapter 308A that becomes
subject to this chapter must provide its members with a
disclosure statement of the rights and obligations of the
members and the capital structure of the cooperative before
becoming subject to this chapter. A cooperative organized under
chapter 308A, upon distribution of the disclosure required in
this subdivision and approval of its members as necessary for
amending its articles under chapter 308A, may amend its articles
to comply with this chapter.
(c) A cooperative organized under chapter 308A that is
converting to be subject to this chapter must prepare a
certificate stating:
(1) the date on which the entity was first organized;
(2) the name of the chapter 308A cooperative and, if the
name is changed, the name of the cooperative to be governed
under this chapter; and
(3) the future effective date and time, which must be a
date and time certain, that it will be governed by this chapter,
if the effective date and time is not to be the date and time of
filing.
(d) Upon filing with the secretary of state of the articles
for compliance with this chapter and the certificate required
under paragraph (c), a cooperative organized under chapter 308A
is converted and governed by this chapter unless a later date
and time is specified in the certificate under paragraph (c).
(e) In connection with a conversion under which a
cooperative becomes governed by this chapter, the rights,
securities, or interests in the chapter 308A cooperative may be
exchanged or converted into rights, property, securities, or
interests in the cooperative as governed by this chapter.
Subd. 2. [EFFECT OF BEING GOVERNED BY THIS CHAPTER.] The
conversion of a cooperative organized under chapter 308A to a
cooperative governed by this chapter does not affect any
obligations or liabilities of the cooperative before the
conversion or the personal liability of any person incurred
before the conversion. When the conversion is effective, the
rights, privileges, and powers of the cooperative, real and
personal property of the cooperative, debts due to the
cooperative, and causes of action belonging to the cooperative,
remain vested in the cooperative and are the property of the
cooperative as converted and governed by this chapter. Title to
real property vested by deed or otherwise in the cooperative
organized under chapter 308A does not revert and is not impaired
by reason of the cooperative being converted and governed by
this chapter. Rights of creditors and liens upon property of
the cooperative under chapter 308A are preserved unimpaired, and
debts, liabilities, and duties of the cooperative under chapter
308A remain attached to the cooperative as converted and
governed by this chapter and may be enforced against the
cooperative to the same extent as if the debts, liabilities, and
duties had originally been incurred or contracted by the
cooperative as organized under this chapter. The rights,
privileges, powers, and interests in property of the cooperative
under chapter 308A, as well as the debts, liabilities, and
duties of the cooperative are not deemed, as a consequence of
the conversion, to have been transferred for any purpose of the
laws of this state.
Sec. 15. [308B.231] [CURATIVE FILING.]
If the secretary of state determines that a filing has been
made in error by the cooperative, the secretary of state may
revoke and expunge the erroneous filing and authorize a curative
document to be filed. A filing fee of $500 shall be charged for
any such revocation or expungement and subsequent curative
filing.
Sec. 16. [308B.235] [EXISTENCE.]
Subdivision 1. [COMMENCEMENT UPON FILING.] The existence
of a cooperative shall commence when the articles are filed with
the secretary of state.
Subd. 2. [DURATION.] A cooperative shall have a perpetual
duration unless the cooperative provides for a limited period of
duration in the articles.
Sec. 17. [308B.241] [BYLAWS.]
Subdivision 1. [REQUIRED.] A cooperative shall have bylaws
governing the cooperative's business affairs, structure, the
qualifications, classification, rights and obligations of
members, and the classifications, allocations, and distributions
of membership interests, which are not otherwise provided in the
articles or by this chapter.
Subd. 2. [CONTENTS.] (a) If not stated in the articles,
the bylaws must state:
(1) the purpose of the cooperative;
(2) the capital structure of the cooperative to the extent
not stated in the articles, including a statement of the classes
and relative rights, preferences, and restrictions granted to or
imposed upon each class of member interests, the rights to share
in profits or distributions of the cooperative, and the
authority to issue membership interests, which may be designated
to be determined by the board;
(3) a provision designating the voting and governance
rights, to the extent not stated in the articles, including
which membership interests have voting power and any limitations
or restrictions on the voting power, which shall be in
accordance with the provisions of this chapter;
(4) a statement that patron membership interests with
voting power shall be restricted to one vote for each member
regardless of the amount of patron membership interests held in
the affairs of the cooperative or a statement describing the
allocation of voting power allocated as prescribed in this
chapter;
(5) a statement that membership interests held by a member
are transferable only with the approval of the board or as
provided in the bylaws; and
(6) if nonpatron membership interests are authorized, a
statement as to how profits and losses will be allocated and
cash will be distributed between patron membership interests
collectively and nonpatron membership interests collectively to
the extent not stated in the articles, a statement that net
income allocated to a patron membership interest as determined
by the board in excess of dividends and additions to reserves
shall be distributed on the basis of patronage, and a statement
that the records of the cooperative shall include patron
membership interests and, if authorized, nonpatron membership
interests, which may be further described in the bylaws of any
classes and in the reserves.
(b) The bylaws may contain any provision relating to the
management or regulation of the affairs of the cooperative that
are not inconsistent with law or the articles, and shall include
the following:
(1) the number of directors and the qualifications, manner
of election, powers, duties, and compensation, if any, of
directors;
(2) the qualifications of members and any limitations on
their number;
(3) the manner of admission, withdrawal, suspensions, and
expulsion of members;
(4) generally, the governance rights, financial rights,
assignability of governance and financial rights, and other
rights, privileges, and obligations of members and their
membership interests, which may be further described in member
control agreements; and
(5) any provisions required by the articles to be in the
bylaws.
Subd. 3. [ADOPTION.] (a) Bylaws shall be adopted before
any distributions to members, but if the articles or bylaws
provide that rights of contributors to a class of membership
interest will be determined in the bylaws, then the bylaws must
be adopted before the acceptance of any contributions to that
class.
(b) Subject to subdivisions 4, 5, and 6, the bylaws of a
cooperative may be adopted or amended by the directors, or the
members may adopt or amend bylaws at a regular or special
members' meeting if:
(1) the notice of the regular or special meeting contains a
statement that the bylaws or restated bylaws will be voted upon
and copies are included with the notice, or copies are available
upon request from the cooperative and summary statement of the
proposed bylaws or amendment is included with the notice;
(2) a quorum is registered as being present or represented
by mail or alternative voting method if the mail or alternative
voting method is authorized by the board; and
(3) the bylaws or amendment is approved by a majority vote
cast, or for a cooperative with articles or bylaws requiring
more than majority approval or other conditions for approval,
the bylaws or amendment is approved by a proportion of the vote
cast or a number of the total members are required by the
articles or bylaws and the conditions for approval in the
articles or bylaws have been satisfied.
(c) Until the next annual or special members' meeting, the
majority of directors may adopt and amend bylaws for the
cooperative that are consistent with subdivisions 4 to 6, which
may be further amended or repealed by the members at an annual
or special members' meeting.
Subd. 4. [AMENDMENT OF BYLAWS BY BOARD OR MEMBERS.] (a)
The board may amend the bylaws at any time to add, change, or
delete a provision, unless:
(1) this chapter, the articles, or the bylaws reserve the
power exclusively to the members in whole or in part; or
(2) a particular bylaw expressly prohibits the board from
doing so.
(b) Any amendment of the bylaws by the board must be
distributed to the members no later than ten days after adoption
and the notice of the annual meeting of the members must contain
a notice and summary or the actual amendments to the bylaws
adopted by the board.
(c) The members may amend the bylaws even though the bylaws
may also be amended by the board.
Subd. 5. [BYLAW CHANGING QUORUM OR VOTING REQUIREMENT FOR
MEMBERS.] (a) The members may amend the bylaws to fix a greater
quorum or voting requirement for members, or voting groups of
members, than is required under this chapter. An amendment to
the bylaws to add, change, or delete a greater quorum or voting
requirement for members shall meet the same quorum requirement
and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in
effect or proposed to be adopted, whichever is greater.
(b) A bylaw that fixes a greater quorum or voting
requirement for members under paragraph (a) may not be adopted
and shall not be amended by the board.
Subd. 6. [BYLAW CHANGING QUORUM OR VOTING REQUIREMENT FOR
DIRECTORS.] (a) A bylaw that fixes a greater quorum or voting
requirement for the board may be amended:
(1) if adopted by the members, only by the members; or
(2) if adopted by the board, either by the members or by
the board.
(b) A bylaw adopted or amended by the members that fixes a
greater quorum or voting requirement for the board may provide
that it may be amended only by a specified vote of either the
members or the board, but if the bylaw is to be amended by a
specified vote of the members, the bylaw must be adopted by the
same specified vote of the members.
(c) Action by the board under paragraph (a), clause (2), to
adopt or amend a bylaw that changes the quorum or voting
requirement for the board shall meet the same quorum requirement
and be adopted by the same vote required to take action under
the quorum and voting requirement then in effect or proposed to
be adopted, whichever is greater.
Subd. 7. [EMERGENCY BYLAWS.] (a) Unless otherwise provided
in the articles or bylaws, the board may adopt bylaws to be
effective only in an emergency as defined in paragraph (d). The
emergency bylaws, which are subject to amendment or repeal by
the members, may include all provisions necessary for managing
the cooperative during the emergency, including:
(1) procedures for calling a meeting of the board;
(2) quorum requirements for the meeting; and
(3) designation of additional or substitute directors.
(b) All provisions of the regular bylaws consistent with
the emergency bylaws shall remain in effect during the
emergency. The emergency bylaws shall not be effective after
the emergency ends.
(c) Action taken in good faith in accordance with the
emergency bylaws:
(1) binds the cooperative; and
(2) may not be the basis for imposition of liability on any
director, officer, employee, or agent of the cooperative on the
grounds that the action was not authorized cooperative action.
(d) An emergency exists for the purposes of this section,
if a quorum of the directors cannot readily be obtained because
of some catastrophic event.
Sec. 18. [308B.245] [COOPERATIVE RECORDS.]
(a) A cooperative shall keep as permanent records minutes
of all meetings of its members and of the board, a record of all
actions taken by the members or the board without a meeting by a
written unanimous consent in lieu of a meeting, and a record of
all waivers of notices of meetings of the members and of the
board.
(b) A cooperative shall maintain appropriate accounting
records.
(c) A cooperative shall maintain its records in written
form or in another form capable of conversion into written form
within a reasonable time.
(d) A cooperative shall keep a copy of each of the
following records at its principal office:
(1) its articles and other governing instruments;
(2) its bylaws or other similar instruments;
(3) a record of the names and addresses of its members, in
a form that allows preparation of an alphabetical list of
members with each member's address;
(4) the minutes of members' meetings, and records of all
actions taken by members without a meeting by unanimous written
consent in lieu of a meeting, for the past three years;
(5) all written communications within the past three years
to members as a group or to any class of members as a group;
(6) a list of the names and business addresses of its
current board members and officers;
(7) a copy of its most recent periodic registration
delivered to the secretary of state under section 308B.121; and
(8) all financial statements prepared for periods ending
during the last fiscal year.
(e) Except as otherwise limited by this chapter, the board
of a cooperative shall have discretion to determine what records
are appropriate for the purposes of the cooperative, the length
of time records are to be retained, and policies relating to the
confidentiality, disclosure, inspection, and copying of the
records of the cooperative.
Sec. 19. [308B.301] [POWERS.]
Subdivision 1. [GENERALLY.] (a) In addition to other
powers, a cooperative as an agent or otherwise:
(1) may perform every act necessary or proper to the
conduct of the cooperative's business or the accomplishment of
the purposes of the cooperative;
(2) has other rights, powers, or privileges granted by the
laws of this state to other cooperatives, except those that are
inconsistent with the express provisions of this chapter; and
(3) has the powers given in section 308A.201 and in this
section.
(b) This section does not give a cooperative the power or
authority to exercise the powers of a credit union under chapter
52, a bank under chapter 48, or a savings association under
chapter 51A.
Subd. 2. [DEALING IN PRODUCTS.] A cooperative may buy,
sell, or deal in its own products; the products of its
individual members, patrons, or nonmembers; the products of
another cooperative association or of its members or patrons; or
the products of another person or entity. A cooperative may
negotiate the price at which its products may be sold.
Subd. 3. [CONTRACTS WITH MEMBERS.] A cooperative may enter
into or become a party to a contract or agreement for the
cooperative or for the cooperative's individual members or
patrons or between the cooperative and its members.
Subd. 4. [HOLDING AND TRANSACTIONS OF REAL AND PERSONAL
PROPERTY.] (a) A cooperative may purchase and hold, lease,
mortgage, encumber, sell, exchange, and convey as a legal entity
real, personal, and intellectual property, including real
estate, buildings, personal property, patents, and copyrights as
the business of the cooperative may require, including the sale
or other disposition of assets required by the business of the
cooperative as determined by the board.
(b) A cooperative may take, receive, and hold real and
personal property, including the principal and interest of money
or other funds and rights in a contract, in trust for any
purpose not inconsistent with the purposes of the cooperative in
its articles or bylaws and may exercise fiduciary powers in
relation to taking, receiving, and holding the real and personal
property.
Subd. 5. [BUILDINGS.] A cooperative may erect buildings or
other structures or facilities on the cooperative's owned or
leased property or on a right-of-way legally acquired by the
cooperative.
Subd. 6. [DEBT INSTRUMENTS.] A cooperative may issue
bonds, debentures, or other evidence of indebtedness and may
borrow money, may secure any of its obligations by mortgage of
or creation of a security interest in or other encumbrances or
assignment of all or any of its property, franchises, or income,
and may issue guarantees for any legal purpose. The cooperative
may form special purpose business entities to secure assets of
the cooperative.
Subd. 7. [ADVANCES TO PATRONS.] A cooperative may make
advances to its members or patrons on products delivered by the
members or patrons to the cooperative.
Subd. 8. [DEPOSITS.] A cooperative may accept donations or
deposits of money or real personal property from other
cooperatives or associations from which it is constituted.
Subd. 9. [LENDING, BORROWING, INVESTING.] A cooperative
may loan or borrow money to or from individual members,
cooperatives, or associations from which it is constituted with
security that it considers sufficient. A cooperative may invest
and reinvest its funds.
Subd. 10. [PENSIONS AND BENEFITS.] A cooperative may pay
pensions, retirement allowances, and compensation for past
services to and for the benefit of; and establish, maintain,
continue, and carry out, wholly or partially at the expense of
the cooperative, employee or incentive benefit plans, trust, and
provisions to or for the benefit of any or all of its and its
related organizations' officers, managers, directors, governors,
employees, and agents; and in the case of a related organization
that is a cooperative, members who provide services to the
cooperative, and any of their families, dependents, and
beneficiaries. It may indemnify and purchase and maintain
insurance for and on behalf of a fiduciary of any of these
employee benefit and incentive plans, trusts, and provisions.
Subd. 11. [INSURANCE.] A cooperative may provide for its
benefit life insurance and other insurance with respect to the
services of any or all of its members, managers, directors,
employees, and agents, or on the life of a member for the
purpose of acquiring at the death of the member any or all
membership interests in the cooperative owned by the member.
Subd. 12. [OWNERSHIP INTERESTS IN OTHER ENTITIES.] (a) A
cooperative may purchase, acquire, hold, or dispose of the
ownership interests of another business entity or organize
business entities whether organized under the laws of this state
or another state or the United States and assume all rights,
interests, privileges, responsibilities, and obligations arising
out of the ownership interests, including a business entity
organized:
(1) as a federation of associations;
(2) for the purpose of forming a district, state, or
national marketing sales or service agency; or
(3) for the purpose of acquiring marketing facilities at
terminal or other markets in this state or other states.
(b) A cooperative may purchase, own, and hold ownership
interests, including stock and other equity interests,
memberships, interests in nonstock capital, and evidences of
indebtedness of any domestic business entity or foreign business
entity.
Subd. 13. [FIDUCIARY POWERS.] A cooperative may exercise
any and all fiduciary powers in relations with members,
cooperatives, associations, or business entities from which it
is constituted.
Sec. 20. [308B.305] [EMERGENCY POWERS.]
(a) In anticipation of or during an emergency defined in
paragraph (d), the board may:
(1) modify lines of succession to accommodate the
incapacity of any director, officer, employee, or agent; and
(2) relocate the principal office, designate alternative
principal offices or regional offices, or authorize the officers
to do so.
(b) During an emergency as contemplated in paragraph (d),
unless emergency bylaws provide otherwise:
(1) notice of a meeting of the board need be given only to
those directors to whom it is practicable to reach and may be
given in any practicable manner, including by publication or
radio; and
(2) one of more officers of the cooperative present at a
meeting of the board may be deemed to be directors for the
meeting, in order of rank and within the same rank in order of
seniority, as necessary to achieve a quorum.
(c) Cooperative action taken in good faith during an
emergency under this section to further the ordinary business
affairs of the cooperative:
(1) binds the cooperative; and
(2) may not be the basis for the imposition of liability on
any director, officer, employee, or agent of the cooperative on
the grounds that the action was not an authorized cooperative
action.
(d) An emergency exists for purposes of this section if a
quorum of the directors cannot readily be obtained because of a
catastrophic event.
Sec. 21. [308B.311] [AGRICULTURAL PRODUCT MARKETING
CONTRACTS.]
Subdivision 1. [AUTHORITY.] A cooperative and its patron
member or patron may make and execute a marketing contract,
requiring the patron member or patron to sell a specified
portion of the patron member's or patron's agricultural product
or specified commodity produced from a certain area exclusively
to or through the cooperative or facility established by the
cooperative.
Subd. 2. [TITLE TO PRODUCTS.] If a sale is contracted to
the cooperative, the sale shall transfer title to the product
absolutely, except for a recorded lien or security interest
against the agricultural products of the patron member or patron
in the state central notification system and liens granted
against farm products under federal law, to the cooperative on
delivery of the product or at another specified time if
expressly provided in the contract. The contract may allow the
cooperative to sell or resell the product of its patron member
or patron with or without taking title to the product, and pay
the resale price to the patron member or patron, after deducting
all necessary selling, overhead, and other costs and expenses,
including other proper reserves and interest.
Subd. 3. [TERM OF CONTRACT.] A single term of a marketing
contract shall not exceed ten years, but a marketing contract
may be made self-renewing for periods not exceeding five years
each, subject to the right of either party to terminate by
giving written notice of the termination during a period of the
current term as specified in the contract.
Subd. 4. [DAMAGES FOR BREACH OF CONTRACT.] The bylaws or
the marketing contract, or both, may set a specific sum as
liquidated damages to be paid by the patron member or patron to
the cooperative for breach of any provision of the marketing
contract regarding the sale or delivery or withholding of a
product and may provide that the member or patron shall pay the
costs, premiums for bonds, expenses, and fees if an action is
brought on the contract by the cooperative. The remedies for
breach of contract are valid and enforceable in the courts of
this state. The provisions shall be enforced as liquidated
damages and are not considered a penalty.
Subd. 5. [INJUNCTION AGAINST BREACH OF CONTRACT.] If there
is a breach or threatened breach of a marketing contract by a
patron member or patron, the cooperative is entitled to an
injunction to prevent the further breach of the contract and to
a decree of specific performance of the contract. Pending the
adjudication of the action after filing a complaint showing the
breach or threatened breach and filing a sufficient bond, the
cooperative is entitled to a temporary restraining order and
preliminary injunction against the patron member or patron.
Subd. 6. [PENALTIES FOR CONTRACT INTERFERENCE AND FALSE
REPORTS.] Any person who knowingly induces or attempts to induce
any member or patron of a cooperative organized under this
chapter to breach a marketing contract with the cooperative, or
who maliciously and knowingly spreads false reports about the
cooperative's finances or management, is guilty of a misdemeanor
and subject to a fine of not less than $100, and not more than
$1,000, for each such offense.
Subd. 7. [CIVIL DAMAGES FOR CONTRACT INTERFERENCE AND
FALSE REPORTS.] In addition to the penalty provided in
subdivision 6, the person may be liable to the cooperative for
civil damages for any violation of subdivision 6. Each
violation shall constitute a separate offense.
DIRECTORS AND OFFICERS
Sec. 22. [308B.401] [BOARD GOVERNS COOPERATIVE.]
A cooperative shall be governed by its board, which shall
take all action for and on behalf of the cooperative, except
those actions reserved or granted to members. Board action
shall be by the affirmative vote of a majority of the directors
voting at a duly called meeting unless a greater majority is
required by the articles or bylaws. A director individually or
collectively with other directors does not have authority to act
for or on behalf of the cooperative unless authorized by the
board. A director may advocate interests of members or member
groups to the board, but the fiduciary duty of each director is
to represent the best interests of the cooperative and all
members collectively.
Sec. 23. [308B.405] [NUMBER OF DIRECTORS.]
The board shall not have less than five directors, except
that a cooperative with 50 or fewer members may have three or
more directors as prescribed in the articles or bylaws.
Sec. 24. [308B.411] [ELECTION OF DIRECTORS.]
Subdivision 1. [FIRST BOARD.] The organizers shall elect
and obtain the acknowledgment of the first board to serve until
directors are elected by members. Until election by members,
the first board shall appoint directors to fill any vacancies.
Subd. 2. [GENERALLY.] (a) Directors shall be elected for
the term, at the time, and in the manner provided in this
section and the bylaws.
(b) A majority of the directors shall be members and a
majority of the directors shall be elected exclusively by the
members holding patron membership interests unless otherwise
provided in the articles or bylaws.
(c) The voting authority of the directors may be allocated
according to allocation units or equity classifications of the
cooperative provided that at least one-half of the voting power
on general matters of the cooperative shall be allocated to the
directors elected by members holding patron membership
interests, or in the alternative, the directors elected by the
members holding patron membership interests shall have an equal
or shall not have a minority voting power on general matters of
the cooperative.
(d) A director holds office for the term the director was
elected and until a successor is elected and has qualified, or
until the earlier death, resignation, removal, or
disqualification of the director.
(e) The expiration of a director's term with or without
election of a qualified successor does not make the prior or
subsequent acts of the director or the board void or voidable.
(f) Subject to any limitation in the articles or bylaws,
the board may set the compensation of directors.
(g) Directors may be divided into or designated and elected
by class or other distinction as provided in the articles or
bylaws.
(h) A director may resign by giving written notice to the
chair of the board or the board. The resignation is effective
without acceptance when the notice is given to the chair of the
board or the board unless a later effective time is specified in
the notice.
Subd. 3. [ELECTION AT REGULAR MEETING.] Directors shall be
elected at the regular members' meeting for the terms of office
prescribed in the bylaws. Except for directors elected at
district meetings or special meetings to replace a vacancy, all
directors shall be elected at the regular members' meeting.
There shall be no cumulative voting for directors except as
provided in this chapter and the articles or bylaws.
Subd. 4. [DISTRICT OR LOCAL UNIT ELECTION OF
DIRECTORS.] For a cooperative with districts or other units,
members may elect directors on a district or unit basis if
provided in the bylaws. The directors may be nominated or
elected at district meetings if provided in the bylaws.
Directors who are nominated at district meetings shall be
elected at the annual regular members' meeting by vote of the
entire membership, unless the bylaws provide that directors who
are nominated at district meetings are to be elected by vote of
the members of the district, at the district meeting, or the
annual regular members' meeting.
Subd. 5. [VOTE BY MAIL OR ALTERNATIVE BALLOT.] The
following shall apply to voting by mail or alternative ballot
voting:
(1) a member may not vote for a director other than by
being present at a meeting or by mail ballot or alternative
ballot authorized by the board;
(2) the ballot shall be in a form prescribed by the board;
(3) the member shall mark the ballot for the candidate
chosen and mail the ballot to the cooperative in a sealed plain
envelope inside another envelope bearing the member's name, or
shall vote designating the candidate chosen by alternative
ballot in the manner prescribed by the board; and
(4) if the ballot of the member is received by the
cooperative on or before the date of the regular members'
meeting or as otherwise prescribed for alternative ballots, the
ballot shall be accepted and counted as the vote of the absent
member.
Subd. 6. [BUSINESS ENTITY MEMBERS MAY NOMINATE PERSONS FOR
DIRECTOR.] If a member of a cooperative is not a natural person,
and the bylaws do not provide otherwise, the member may appoint
or elect one or more natural persons to be eligible for election
as a director.
Subd. 7. [TERM.] A director holds office for the term the
director was elected and until a successor is elected and has
qualified, or the earlier death, resignation, removal, or
disqualification of the director.
Subd. 8. [ACTS NOT VOID OR VOIDABLE.] The expiration of a
director's term with or without the election of a qualified
successor does not make prior or subsequent acts of the director
void or voidable.
Subd. 9. [COMPENSATION.] Subject to any limitation in the
articles or bylaws, the board may fix the compensation of the
directors.
Subd. 10. [CLASSIFICATION.] Directors may be divided into
classes as provided in the articles or bylaws.
Sec. 25. [308B.415] [FILLING VACANCIES.]
Subdivision 1. [PATRON DIRECTORS.] If a patron member
director's position becomes vacant or a new director position is
created for a director that was or is to be elected by patron
members, the board, in consultation with the directors elected
by patron members, shall appoint a patron member of the
cooperative to fill the director's position until the next
regular or special members' meeting. If there are no directors
elected by patron members on the board at the time of the
vacancy, a special patron members' meeting shall be called to
fill the patron member director vacancy.
Subd. 2. [NONPATRON DIRECTORS.] If the vacating director
was not elected by the patron members or a new director position
is created, unless otherwise provided in the articles or bylaws,
the board shall appoint a director to fill the vacant position
by majority vote of the remaining or then serving directors even
though less than a quorum. At the next regular or special
members' meeting, the members or patron members shall elect a
director to fill the unexpired term of the vacant director's
position.
Sec. 26. [308B.421] [REMOVAL OF DIRECTORS.]
Subdivision 1. [MODIFICATION.] The provisions of this
section apply unless modified by the articles or the bylaws.
Subd. 2. [REMOVAL OF DIRECTORS.] A director may be removed
at any time, with or without cause, if:
(1) the director was named by the board to fill a vacancy;
(2) the members have not elected directors in the interval
between the time of the appointment to fill a vacancy and the
time of the removal; and
(3) a majority of the remaining directors present
affirmatively vote to remove the director.
Subd. 3. [REMOVAL BY MEMBERS.] Any one or all of the
directors may be removed at any time, with or without cause, by
the affirmative vote of the holders of a majority of the voting
power of membership interests entitled to vote at an election of
directors; provided that if a director has been elected solely
by the patron members or the holders of a class or series of
membership interests as stated in the articles or bylaws, then
that director may be removed only by the affirmative vote of the
holders of a majority of the voting power of the patron members
for a director elected by the patron members or of all
membership interests of that class or series entitled to vote at
an election of that director.
Subd. 4. [ELECTION OF REPLACEMENTS.] New directors may be
elected at a meeting at which directors are removed.
Sec. 27. [308B.425] [BOARD OF DIRECTORS' MEETINGS.]
Subdivision 1. [TIME AND PLACE.] Meetings of the board may
be held from time to time as provided in the articles or bylaws
at any place within or without the state that the board may
select or by any means described in subdivision 2. If the board
fails to select a place for a meeting, the meeting must be held
at the principal executive office, unless the articles or bylaws
provide otherwise.
Subd. 2. [ELECTRONIC COMMUNICATIONS.] (a) A conference
among directors by any means of communication through which the
directors may simultaneously hear each other during the
conference constitutes a board meeting, if the same notice is
given of the conference as would be required by subdivision 3
for a meeting, and if the number of directors participating in
the conference would be sufficient to constitute a quorum at a
meeting. Participation in a meeting by that means constitutes
presence in person at the meeting.
(b) A director may participate in a board meeting not
described in paragraph (a) by any means of communication through
which the director, other directors so participating, and all
directors physically present at the meeting may simultaneously
hear each other during the meeting. Participation in a meeting
by that means constitutes presence in person at the meeting.
Subd. 3. [CALLING MEETINGS AND NOTICE.] Unless the
articles or bylaws provide for a different time period, a
director may call a board meeting by giving at least ten days'
notice or, in the case of organizational meetings, at least
three days' notice to all directors of the date, time, and place
of the meeting. The notice need not state the purpose of the
meeting unless this chapter, the articles, or the bylaws require
it.
Subd. 4. [PREVIOUSLY SCHEDULED MEETINGS.] If the day or
date, time, and place of a board meeting have been provided in
the articles or bylaws, or announced at a previous meeting of
the board, no notice is required. Notice of an adjourned
meeting need not be given other than by announcement at the
meeting at which adjournment is taken.
Subd. 5. [WAIVER OF NOTICE.] A director may waive notice
of a meeting of the board. A waiver of notice by a director
entitled to notice is effective whether given before, at, or
after the meeting, and whether given in writing, orally, or by
attendance. Attendance by a director at a meeting is a waiver
of notice of that meeting, except where the director objects at
the beginning of the meeting to the transaction of business
because the meeting is not lawfully called or convened and does
not participate in the meeting after the objection.
Subd. 6. [ABSENT DIRECTORS.] If the articles or bylaws so
provide, a director may give advance written consent or
opposition to a proposal to be acted on at a board meeting. If
the director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for
purposes of determining the existence of a quorum, but consent
or opposition must be counted as the vote of a director present
at the meeting in favor of or against the proposal and must be
entered in the minutes or other record of action at the meeting,
if the proposal acted on at the meeting is substantially the
same or has substantially the same effect as the proposal to
which the director has consented or objected.
Sec. 28. [308B.431] [QUORUM.]
A majority, or a larger or smaller portion or number
provided in the articles or bylaws, of the directors currently
holding office is a quorum for the transaction of business. In
the absence of a quorum, a majority of the directors present may
adjourn a meeting from time to time until a quorum is present.
If a quorum is present when a duly called or held meeting is
convened, the directors present may continue to transact
business until adjournment, even though the withdrawal of a
number of directors originally present leaves less than the
proportion of number otherwise required for a quorum.
Sec. 29. [308B.435] [ACT OF BOARD OF DIRECTORS.]
The board shall take action by the affirmative vote of the
greater of (1) a majority of directors present at a duly held
meeting at the time the action is taken, or (2) a majority of
the minimum proportion or number of directors that would
constitute a quorum for the transaction of business at the
meeting, except where this chapter, the articles, or bylaws
require the affirmative vote of a larger proportion or number.
If the articles or bylaws require a larger proportion or number
than is required by this chapter for a particular action, the
articles or bylaws control.
Sec. 30. [308B.441] [ACTION WITHOUT A MEETING.]
Subdivision 1. [METHOD.] An action required or permitted
to be taken at a board meeting may be taken by written action
signed by all of the directors. If the articles or bylaws so
provide, any action, other than an action requiring member
approval, may be taken by written action signed by the number of
directors that would be required to take the same action at a
meeting of the board at which all directors were present.
Subd. 2. [EFFECTIVE TIME.] The written action is effective
when signed by the required number of directors, unless a
different effective time is provided in the written action.
Subd. 3. [NOTICE AND LIABILITY.] When written action is
permitted to be taken by less than all directors, all directors
must be notified immediately of its text and effective date.
Failure to provide the notice does not invalidate the written
action. A director who does not sign or consent to the written
action has no liability for the action or actions taken by the
written action.
Sec. 31. [308B.445] [AUDIT COMMITTEE.]
The board shall establish an audit committee to review the
financial information and accounting report of the cooperative.
The cooperative shall have the financial information audited for
presentation to the members unless the bylaws allow financial
statements that are not audited and the financial statements
clearly state that they are not audited and the difference
between the financial statements and audited financial
statements that are prepared according to generally accepted
accounting procedures. The directors shall elect members to the
audit committee. The audit committee shall ensure an
independent review of the cooperative's finances and audit.
Sec. 32. [308B.451] [COMMITTEES.]
Subdivision 1. [GENERALLY.] A resolution approved by the
affirmative vote of a majority of the board may establish
committees having the authority of the board in the management
of the business of the cooperative only to the extent provided
in the resolution. Committees may include a special litigation
committee consisting of one or more independent directors or
other independent persons to consider legal rights or remedies
of the cooperative and whether those rights and remedies should
be pursued. Committees other than special litigation committees
are subject at all times to the direction and control of the
board.
Subd. 2. [MEMBERSHIP.] Committee members must be natural
persons. Unless the articles or bylaws provide for a different
membership or manner of appointment, a committee consists of one
or more persons, who need not be directors, appointed by
affirmative vote of a majority of the directors present.
Subd. 3. [PROCEDURE.] The procedures for meetings of the
board apply to committees and members of committees to the same
extent as those sections apply to the board and individual
directors.
Subd. 4. [MINUTES.] Minutes, if any, of committee meetings
must be made available upon request to members of the committee
and to any director.
Subd. 5. [STANDARD OF CONDUCT.] The establishment of,
delegation of authority to, and action by a committee does not
alone constitute compliance by a director with the standard of
conduct set forth in section 308B.455.
Subd. 6. [COMMITTEE MEMBERS CONSIDERED DIRECTORS.]
Committee members are considered to be directors for purposes of
sections 308B.455, 308B.461, and 308B.471.
Sec. 33. [308B.455] [STANDARD OF CONDUCT.]
Subdivision 1. [STANDARD AND LIABILITY.] A director shall
discharge the duties of the position of director in good faith,
in a manner the director reasonably believes to be in the best
interests of the cooperative, and with the care an ordinarily
prudent person in a like position would exercise under similar
circumstances. A person who so performs those duties is not
liable by reason of being or having been a director of the
cooperative.
Subd. 2. [RELIANCE.] (a) A director is entitled to rely on
information, opinions, reports, or statements, including
financial statements and other financial data, in each case
prepared or presented by:
(1) one or more officers or employees of the cooperative
who the director reasonably believes to be liable and competent
in the matters presented;
(2) counsel, public accountants, or other persons as to
matters that the director reasonably believes are within the
person's professional or expert competence; or
(3) a committee of the board upon which the director does
not serve, duly established by the board, as to matters within
its designated authority, if the director reasonably believes
the committee to merit confidence.
(b) Paragraph (a) does not apply to a director who has
knowledge concerning the matter in question that makes the
reliance otherwise permitted by paragraph (a) unwarranted.
Subd. 3. [PRESUMPTION OF ASSENT AND DISSENT.] A director
who is present at a meeting of the board when an action is
approved by the affirmative vote of a majority of the directors
present is presumed to have assented to the action approved,
unless the director:
(1) objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully
called or convened and does not participate in the meeting after
the objection, in which case the director is not considered to
be present at the meeting for any purpose of this chapter;
(2) votes against the action at the meeting; or
(3) is prohibited by a conflict of interest from voting on
the action.
Subd. 4. [CONSIDERATIONS.] In discharging the duties of
the position of director, a director may, in considering the
best interests of the cooperative, consider the interests of the
cooperative's employees, customers, suppliers, and creditors,
the economy of the state, and long-term as well as short-term
interests of the cooperative and its patron members, including
the possibility that these interests may be best served by the
continued independence of the cooperative.
Sec. 34. [308B.461] [DIRECTOR CONFLICTS OF INTEREST.]
Subdivision 1. [CONFLICT AND PROCEDURE WHEN CONFLICT
ARISES.] (a) A contract or other transaction between a
cooperative and one or more of its directors, or between a
cooperative and a business entity in or of which one or more of
its directors are governors, directors, managers, officers, or
legal representatives or have a material financial interest, is
not void or voidable because the director or directors or the
other business entities are parties or because the director or
directors are present at the meeting of the members or the board
or a committee at which the contract or transaction is
authorized, approved, or ratified, if:
(1) the contract or transaction was, and the person
asserting the validity of the contract or transaction sustains
the burden of establishing that the contract or transaction was,
fair and reasonable as to the cooperative at the time it was
authorized, approved, or ratified and:
(i) the material facts as to the contract or transaction
and as to the director's or directors' interest are disclosed or
known to the members; and
(ii) the material facts as to the contract or transaction
and as to the director's or directors' interest are fully
disclosed or known to the board or a committee, and the board or
committee authorizes, approves, or ratifies the contract or
transaction in good faith by a majority of the board or
committee, but the interested director or directors are not
counted in determining the presence of a quorum and must not
vote; or
(2) the contract or transaction is a distribution,
contract, or transaction that is made available to all members
or patron members as part of the cooperative's business.
(b) If a committee is elected or appointed to authorize,
ratify, or approve a contract or transaction under this section,
the members of the committee must not have a conflict of
interest and be charged with representing the best interests of
the cooperative.
Subd. 2. [MATERIAL FINANCIAL INTEREST.] For purposes of
this section:
(1) a resolution fixing the compensation of a director or
fixing the compensation of another director as a director,
officer, employee, or agent of the cooperative, is not void or
voidable or considered to be a contract or other transaction
between a cooperative and one or more of its directors for
purposes of this section even though the director receiving the
compensation fixed by the resolution is present and voting at
the meeting of the board or a committee at which the resolution
is authorized, approved, or ratified or even though other
directors voting upon the resolution are also receiving
compensation from the cooperative; and
(2) a director has a material financial interest in each
organization in which the director or the spouse; parents;
children and spouses of children; brothers and sisters and
spouses of brothers and sisters; and the brothers and sisters of
the spouse of the director or any combination of them have a
material financial interest. For purposes of this section, a
contract or other transaction between a cooperative and the
spouse; parents; children and spouses of children; brothers and
sisters and spouses of brothers and sisters; and the brothers
and sisters of the spouse of a director or any combination of
them, is considered to be a transaction between the cooperative
and the director.
Sec. 35. [308B.465] [LIMITATION OF DIRECTOR'S LIABILITY.]
Subdivision 1. [ARTICLES MAY LIMIT LIABILITY.] A
director's personal liability to the cooperative or members for
monetary damages for breach of fiduciary duty as a director may
be eliminated or limited in the articles or bylaws except as
provided in subdivision 2.
Subd. 2. [RESTRICTIONS ON LIABILITY LIMITATION.] The
articles or bylaws may not eliminate or limit the liability of a
director:
(1) for a breach of the director's duty of loyalty to the
cooperative or its members;
(2) for acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of law;
(3) for knowing violations of securities laws under section
80A.23 or for illegal distributions;
(4) for a transaction from which the director derived an
improper personal benefit; or
(5) for an act or omission occurring before the date when
the provision in the articles or bylaws eliminating or limiting
liability becomes effective.
Sec. 36. [308B.471] [INDEMNIFICATION.]
Subdivision 1. [DEFINITIONS.] (a) The definitions in this
subdivision apply to this section.
(b) "Cooperative" includes a domestic or foreign
cooperative that was the predecessor of the cooperative referred
to in this section in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the
transaction.
(c) "Official capacity" means:
(1) with respect to a director, the position of director in
a cooperative;
(2) with respect to a person other than a director, the
elective or appointive office or position held by the person,
member of a committee of the board, the employment relationship
undertaken by an employee of the cooperative, or the scope of
the services provided by members of the cooperative who provide
services to the cooperative; and
(3) with respect to a director, chief executive officer,
member, or employee of the cooperative who, while a member,
director, chief executive officer, or employee of the
cooperative, is or was serving at the request of the cooperative
or whose duties in that position involve or involved service as
a governor, director, manager, officer, member, partner,
trustee, employee, or agent of another organization or employee
benefit plan, the position of that person as a governor,
director, manager, officer, member, partner, trustee, employee,
or agent, as the case may be, of the other organization or
employee benefit plan.
(d) "Proceeding" means a threatened, pending, or completed
civil, criminal, administrative, arbitration, or investigative
proceeding, including a proceeding by or in the right of the
cooperative.
(e) "Special legal counsel" means counsel who has not
represented the cooperative or a related organization, or a
director, manager, member of a committee of the board, or
employee whose indemnification is in issue.
Subd. 2. [INDEMNIFICATION.] (a) Subject to the provisions
of subdivision 4, a cooperative shall indemnify a person made or
threatened to be made a party to a proceeding by reason of the
former or present official capacity of the person against
judgments, penalties, fines, including, without limitation,
excise taxes assessed against the person with respect to an
employee benefit plan, settlements, and reasonable expenses,
including attorney fees and disbursements incurred by the person
in connection with the proceeding, if, with respect to the acts
or omissions of the person complained of in the proceeding, the
person:
(1) has not been indemnified by another organization or
employee benefit plan for the same judgments, penalties, fines,
including, without limitation, excise taxes assessed against the
person with respect to an employee benefit plan, settlements,
and reasonable expenses, including attorney fees and
disbursements incurred by the person in connection with the
proceeding with respect to the same acts or omissions;
(2) acted in good faith;
(3) received no improper personal benefit and the person
has not committed an act for which liability cannot be
eliminated or limited under section 308B.465, subdivision 2;
(4) in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful; and
(5) in the case of acts or omissions occurring in the
official capacity described in subdivision 1, paragraph (c),
clause (1) or (2), reasonably believed that the conduct was in
the best interests of the cooperative, or in the case of acts or
omissions occurring in the official capacity described in
subdivision 1, paragraph (c), clause (3), reasonably believed
that the conduct was not opposed to the best interests of the
cooperative. If the person's acts or omissions complained of in
the proceeding relate to conduct at a director, officer,
trustee, employee, or agent of an employee benefit plan, the
conduct is not considered to be opposed to the best interests of
the cooperative if the person reasonably believed that the
conduct was in the best interests of the participants or
beneficiaries of the employee benefit plan.
(b) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent does not, of itself, establish that the person did
not meet the criteria set forth in this subdivision.
Subd. 3. [ADVANCES.] Subject to the provisions of
subdivision 4, if a person is made or threatened to be made a
party to a proceeding, the person is entitled, upon written
request to the cooperative, to payment or reimbursement by the
cooperative of reasonable expenses, including attorney fees and
disbursements incurred by the person in advance of the final
disposition of the proceeding:
(1) upon receipt by the cooperative of a written
affirmation by the person of a good faith belief that the
criteria for indemnification set forth in subdivision 2 have
been satisfied, and a written undertaking by the person to repay
all amounts paid or reimbursed by the cooperative, if it is
ultimately determined that the criteria for indemnification have
not been satisfied; and
(2) after a determination that the facts then known to
those making the determination would not preclude
indemnification under this section.
The written undertaking required by clause (1) is an
unlimited general obligation of the person making it, but need
not be secured and shall be accepted without reference to
financial ability to make the repayment.
Subd. 4. [PROHIBITION OR LIMIT ON INDEMNIFICATION OR
ADVANCES.] The articles or bylaws either may prohibit
indemnification or advances of expenses otherwise required by
this section or may impose conditions on indemnification or
advances of expenses in addition to the conditions contained in
subdivisions 2 and 3, including, without limitation, monetary
limits on indemnification or advances of expenses if the
conditions apply equally to all persons or to all persons within
a given class. A prohibition or limit on indemnification or
advances of expenses may not apply to or affect the right of a
person to indemnification or advances of expenses with respect
to any acts or omissions of the person occurring before the
effective date of a provision in the articles or the date of
adoption of a provision in the bylaws establishing the
prohibition or limit on indemnification or advances of expenses.
Subd. 5. [REIMBURSEMENT TO WITNESSES.] This section does
not require, or limit the ability of a cooperative to reimburse
expenses, including attorney fees and disbursements incurred by
a person in connection with an appearance as a witness in a
proceeding at a time when the person has not been made or
threatened to be made a party to a proceeding.
Subd. 6. [DETERMINATION OF ELIGIBILITY.] (a) All
determinations whether indemnification of a person is required
because the criteria set forth in subdivision 2 have been
satisfied and whether a person is entitled to payment or
reimbursement of expenses in advance of the final disposition of
a proceeding as provided in subdivision 3 must be made:
(1) by the board by a majority of a quorum, if the
directors who are, at the time, parties to the proceeding are
not counted for determining either a majority or the presence of
a quorum;
(2) if a quorum under clause (1) cannot be obtained by a
majority of a committee of the board consisting solely of two or
more directors not at the time parties to the proceeding duly
designated to act in the matter by a majority of the full board,
including directors who are parties;
(3) if a determination is not made under clause (1) or (2)
by special legal counsel selected either by a majority of the
board or a committee by vote under clause (1) or (2) or if the
requisite quorum of the full board cannot be obtained and the
committee cannot be established by a majority of the full board,
including directors who are parties;
(4) if a determination is not made under clauses (1) to (3)
by the affirmative vote of the members, but the membership
interests held by parties to the proceeding must not be counted
in determining the presence of a quorum, and are not considered
to be present and entitled to vote on the determination; or
(5) if an adverse determination is made under clauses (1)
to (4) or paragraph (b), or if no determination is made under
clauses (1) to (4) or paragraph (b) within 60 days after (i) the
later to occur of the termination of a proceeding or a written
request for indemnification to the cooperative, or (ii) a
written request for an advance of expenses, as the case may be,
by a court in this state, which may be the same court in which
the proceeding involving the person's liability took place upon
application of the person and any notice the court requires.
The person seeking indemnification or payment or reimbursement
of expenses under this clause has the burden of establishing
that the person is entitled to indemnification or payment or
reimbursement of expenses.
(b) With respect to a person who is not, and was not at the
time of the acts or omissions complained of in the proceedings,
a director, chief executive officer, or person possessing,
directly or indirectly, the power to direct or cause the
direction of the management or policies of the cooperative, the
determination whether indemnification of this person is required
because the criteria set forth in subdivision 2 have been
satisfied and whether this person is entitled to payment or
reimbursement of expenses in advance of the final disposition of
a proceeding as provided in subdivision 3 may be made by an
annually appointed committee of the board, having at least one
member who is a director. The committee shall report at least
annually to the board concerning its actions.
Subd. 7. [INSURANCE.] A cooperative may purchase and
maintain insurance on behalf of a person in that person's
official capacity against any liability asserted against and
incurred by the person in or arising from that capacity, whether
or not the cooperative would have been required to indemnify the
person against the liability under the provisions of this
section.
Subd. 8. [DISCLOSURE.] A cooperative that indemnifies or
advances expenses to a person in accordance with this section in
connection with a proceeding by or on behalf of the cooperative
shall report to the members in writing the amount of the
indemnification or advance and to whom and on whose behalf it
was paid not later than the next meeting of members.
Subd. 9. [INDEMNIFICATION OF OTHER PERSONS.] Nothing in
this section must be construed to limit the power of the
cooperative to indemnify persons other than a director, chief
executive officer, member, employee, or member of a committee of
the board of the cooperative by contract or otherwise.
Sec. 37. [308B.475] [OFFICERS.]
Subdivision 1. [REQUIRED OFFICERS.] (a) The board shall
elect:
(1) a chair; and
(2) one or more vice chairs.
(b) The board shall elect or appoint:
(1) a records officer; and
(2) a financial officer.
(c) The officers, other than the chief executive officer,
shall not have the authority to bind the cooperative except as
authorized by the board.
Subd. 2. [ADDITIONAL OFFICERS.] The board may elect
additional officers as the articles or bylaws authorize or
require.
Subd. 3. [RECORDS OFFICER AND FINANCIAL OFFICER MAY BE
COMBINED.] The offices of records officer and financial officer
may be combined.
Subd. 4. [OFFICERS THAT MUST BE MEMBERS.] The chair and
first vice chair shall be directors and members. The financial
officer, records officer, and additional officers need not be
directors or members.
Subd. 5. [CHIEF EXECUTIVE OFFICER.] The board may employ a
chief executive officer to manage the day-to-day affairs and
business of the cooperative, and if a chief executive officer is
employed, the chief executive officer shall have the authority
to implement the functions, duties, and obligations of the
cooperative except as restricted by the board. The chief
executive officer shall not exercise authority reserved to the
board or the members under this chapter, the articles, or the
bylaws.
MEMBERS
Sec. 38. [308B.501] [MEMBERS.]
Subdivision 1. [REQUIREMENT.] A cooperative shall have one
or more members.
Subd. 2. [GROUPING OF MEMBERS.] (a) A cooperative may
group members and patron members in districts, units, or on
another basis if and as authorized in its articles or bylaws.
The articles or bylaws may include authorization for the board
to determine the groupings.
(b) The board may implement the use of districts or units,
including setting the time and place and prescribing the rules
of conduct for holding meetings by districts or units to elect
delegates to members' meetings.
Subd. 3. [MEMBER VIOLATIONS.] (a) A member who knowingly,
intentionally, or repeatedly violates a provision of the
articles, bylaws, member control agreement, or marketing
contract with the cooperative may be required by the board to
surrender the member's voting power or the financial rights of
membership interest of any class owned by the member, or both.
(b) The cooperative shall refund to the member for the
surrendered financial rights of membership interest the lesser
of the book value or market value of the financial right of the
membership interest payable in not more than seven years from
the date of surrender or the board may transfer all of any
patron member's financial rights to a class of financial rights
held by members who are not patron members, or to a certificate
of interest, which carries liquidation rights on par with
membership interests and is redeemed within seven years after
the transfer as provided in the certificate.
(c) Membership interests required to be surrendered may be
reissued or be retired and canceled by the board.
Subd. 4. [INSPECTION OF COOPERATIVE RECORDS BY
MEMBER.] (a) A member is entitled to inspect and copy, at the
member's expense, during regular business hours at a reasonable
location specified by the cooperative, any of the records
described in section 308B.245 if the member meets the
requirements of paragraph (b) and gives the cooperative written
demand at least five business days before the date on which the
member wishes to inspect and copy the records. Notwithstanding
the provisions of this subdivision or any provisions of section
308B.245, no member shall have the right to inspect or copy any
records of the cooperative relating to the amount of equity
capital in the cooperative held by any person or any accounts
receivable or other amounts due the cooperative from any person,
or any personnel records or employment records of any employee.
(b) To be entitled to inspect and copy permitted records,
the member shall meet the following requirements:
(1) the member has been a member for at least one year
immediately preceding the demand to inspect or copy or is a
member holding at least five percent of all of the outstanding
equity interests in the cooperative as of the date the demand is
made;
(2) the demand is made in good faith and for a proper
cooperative business purpose;
(3) the member describes with reasonable particularity the
purpose and the records the member desires to inspect; and
(4) the records are directly connected with the described
purpose.
(c) The right of inspection granted by this subdivision
shall not be abolished or limited by the articles, bylaws, or
any actions of the board or the members.
(d) This subdivision does not affect:
(1) the right of a member to inspect records to the same
extent as any other litigant if the member is in litigation with
the cooperative; or
(2) the power of a court to compel the production of the
cooperative's records for examination.
(e) Notwithstanding any other provision in this
subdivision, if the records to be inspected or copied are in
active use or storage and, therefore, not available at the time
otherwise provided for inspection or copying, the cooperative
shall notify the member and shall set a date and hour within
three business days of the date otherwise set in this
subdivision for the inspection or copying.
(f) A member's agent or attorney has the same inspection
and copying rights as the member. The right to copy records
under this subdivision includes, if reasonable, the right to
receive copies made by photographic copying, xerographic
copying, or other means. The cooperative may impose a
reasonable charge, covering the costs of labor and material, for
copies of any documents provided to the member. The charge may
not exceed the estimated cost of production and reproduction of
the records.
(g) If a cooperative refuses to allow a member, or the
member's agent or attorney, who complies with this subdivision
to inspect or copy any records that the member is entitled to
inspect or copy within a prescribed time limit or, if none,
within a reasonable time, the district court of the county in
this state where the cooperative's principal office is located
or, if it has no principal office in this state, the district
court of the county in which its registered office is located
may, on application of the member, summarily order the
inspection or copying of the records demanded at the
cooperative's expense.
(h) If a court orders inspection or copying of the records
demanded, unless the cooperative proves that it refused
inspection or copying in good faith because it had a reasonable
basis for doubt about the right of the member or the member's
agent or attorney to inspect or copy the records demanded:
(1) the court may order the losing party to pay the
prevailing party's reasonable costs, including reasonable
attorney fees;
(2) the court may order the losing party to pay the
prevailing party for any damages the prevailing party shall have
incurred by reason of the subject matter of the litigation;
(3) if inspection or copying is ordered under this
paragraph, the court may order the cooperative to pay the
member's inspection and copying expenses;
(4) the court may grant either party any other remedy
provided by law; and
(5) the court may impose reasonable restrictions on the use
or distribution of the records by the demanding member.
Sec. 39. [308B.505] [MEMBER NOT LIABLE FOR COOPERATIVE
DEBTS.]
A member is not, merely on the account of that status,
personally liable for the acts, debts, liabilities, or
obligations of a cooperative. A member is liable for any unpaid
subscription for the membership interest, unpaid membership
fees, or a debt for which the member has separately contracted
with the cooperative.
Sec. 40. [308B.511] [REGULAR MEMBERS' MEETINGS.]
Subdivision 1. [ANNUAL MEETING.] Regular members' meetings
shall be held annually at a time determined by the board, unless
otherwise provided for in the bylaws.
Subd. 2. [LOCATION.] The regular members' meeting shall be
held at the principal place of business of the cooperative or at
another conveniently located place as determined by the bylaws
or the board.
Subd. 3. [BUSINESS AND FISCAL REPORTS.] The officers shall
submit reports to the members at the regular members' meeting
covering the business of the cooperative for the previous fiscal
year that show the condition of the cooperative at the close of
the fiscal year.
Subd. 4. [ELECTION OF DIRECTORS.] All directors shall be
elected at the regular members' meeting for the terms of office
prescribed in the bylaws, except for directors elected at
district or unit meetings.
Subd. 5. [NOTICE.] (a) The cooperative shall give notice
of regular members' meetings by mailing the regular members'
meeting notice to each member at the members' last known post
office address or by other notification approved by the board
and agreed to by the members. The regular members' meeting
notice shall be published or otherwise given by approved method
at least two weeks before the date of the meeting or mailed at
least 15 days before the date of the meeting.
(b) The notice shall contain a summary of any bylaw
amendments adopted by the board since the last annual meeting.
Subd. 6. [WAIVER AND OBJECTIONS.] A member may waive
notice of a meeting of members. A waiver of notice by a member
entitled to notice is effective whether given before, at, or
after the meeting, and whether given in writing, orally, or by
attendance. Attendance by a member at a meeting is a waiver of
notice of that meeting, except where the member objects at the
beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate
in the consideration of the item at that meeting.
Sec. 41. [308B.515] [SPECIAL MEMBERS' MEETINGS.]
Subdivision 1. [CALLING MEETING.] Special members'
meetings of the members may be called by:
(1) a majority vote of the board; or
(2) the written petition of at least 20 percent of the
patron members and, if authorized, 20 percent of the nonpatron
members, 20 percent of all members, or members representing 20
percent of the membership interests collectively are submitted
to the chair.
Subd. 2. [NOTICE.] The cooperative shall give notice of a
special members' meeting by mailing the special members' meeting
notice to each member personally at the person's last known post
office address or an alternative method approved by the board
and the member individually or the members generally. For a
member that is an entity, notice mailed or delivered by an
alternative method shall be to an officer of the entity. The
special members' meeting notice shall state the time, place, and
purpose of the special members' meeting. The special members'
meeting notice shall be issued within ten days from and after
the date of the presentation of a members' petition, and the
special members' meeting shall be held within 30 days after the
date of the presentation of the members' petition.
Subd. 3. [WAIVER AND OBJECTIONS.] A member may waive
notice of a meeting of members. A waiver of notice by a member
entitled to notice is effective whether given before, at, or
after the meeting, and whether given in writing, orally, or by
attendance. Attendance by a member at a meeting is a waiver of
notice of that meeting, except where the member objects at the
beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate
in the consideration of the item at that meeting.
Sec. 42. [308B.521] [CERTIFICATION OF MEETING NOTICE.]
Subdivision 1. [CERTIFICATE OF MAILING.] After mailing
special or regular members' meeting notices or otherwise
delivering the notices, the cooperative shall execute a
certificate containing the date of mailing or delivery of the
notice and a statement that the special or regular members'
meeting notices were mailed or delivered as prescribed by law.
Subd. 2. [MATTER OF RECORD.] The certificate shall be made
a part of the record of the meeting.
Subd. 3. [FAILURE TO RECEIVE MEETING NOTICE.] Failure of a
member to receive a special or regular members' meeting notice
does not invalidate an action taken by the members at a members'
meeting.
Sec. 43. [308B.525] [QUORUM.]
Subdivision 1. [QUORUM.] The quorum for a members' meeting
to transact business shall be:
(1) ten percent of the total number of members for a
cooperative with 500 or fewer members; or
(2) 50 members for cooperatives with more than 500 members.
Subd. 2. [QUORUM FOR VOTING BY MAIL.] In determining a
quorum at a meeting, on a question submitted to a vote by mail
or an alternative method, members present in person or
represented by mail vote or the alternative voting method shall
be counted. The attendance of a sufficient number of members to
constitute a quorum shall be established by a registration of
the members of the cooperative present at the meeting. The
registration shall be verified by the chair or the records
officer of the cooperative and shall be reported in the minutes
of the meeting.
Subd. 3. [MEETING ACTION INVALID WITHOUT QUORUM.] An
action by a cooperative is not valid or legal in the absence of
a quorum at the meeting at which the action was taken.
Sec. 44. [308B.531] [REMOTE COMMUNICATIONS FOR MEMBER
MEETINGS.]
Subdivision 1. [CONSTRUCTION AND APPLICATION.] This
section shall be construed and applied to:
(1) facilitate remote communication consistent with other
applicable law; and
(2) be consistent with reasonable practices concerning
remote communication and with the continued expansion of those
practices.
Subd. 2. [MEMBER MEETINGS HELD SOLELY BY MEANS OF REMOTE
COMMUNICATION.] To the extent authorized in the articles, a
member control agreement, or the bylaws and determined by the
board, a regular or special meeting of members may be held
solely by any combination of means of remote communication
through which the members may participate in the meeting, if
notice of the meeting is given to every owner of membership
interests entitled to vote as would be required by this chapter
for a meeting, and if the membership interests held by the
members participating in the meeting would be sufficient to
constitute a quorum at a meeting. Participation by a member by
that means constitutes presence at the meeting in person or by
proxy if all the other requirements of this chapter for the
meeting are met.
Subd. 3. [PARTICIPATION IN MEMBER MEETINGS BY MEANS OF
REMOTE COMMUNICATION.] To the extent authorized in the articles
or the bylaws and determined by the board, a member not
physically present in person or by proxy at a regular or special
meeting of members may, by means of remote communication,
participate in a meeting of members held at a designated place.
Participation by a member by that means constitutes presence at
the meeting in person or by proxy if all the other requirements
of this chapter for the meeting are met.
Subd. 4. [REQUIREMENTS FOR MEETINGS HELD SOLELY BY MEANS
OF REMOTE COMMUNICATION AND FOR PARTICIPATION BY MEANS OF REMOTE
COMMUNICATION.] In any meeting of members held solely by means
of remote communication under subdivision 2 or in any meeting of
members held at a designated place in which one or more members
participate by means of remote communication under subdivision 3:
(1) the cooperative shall implement reasonable measures to
verify that each person deemed present and entitled to vote at
the meeting by means of remote communication is a member; and
(2) the cooperative shall implement reasonable measures to
provide each member participating by means of remote
communication with a reasonable opportunity to participate in
the meeting, including an opportunity to:
(i) read or hear the proceedings of the meeting
substantially concurrently with those proceedings;
(ii) if allowed by the procedures governing the meeting,
have the member's remarks heard or read by other participants in
the meeting substantially concurrently with the making of those
remarks; and
(iii) if otherwise entitled, vote on matters submitted to
the members.
Subd. 5. [NOTICE TO MEMBERS.] (a) Any notice to members
given by the cooperative under any provision of this chapter,
the articles, or the bylaws by a form of electronic
communication consented to by the member to whom the notice is
given, is effective when given. The notice is deemed given:
(1) if by facsimile communication, when directed to a
telephone number at which the member has consented to receive
notice;
(2) if by electronic mail, when directed to an electronic
mail address at which the member has consented to receive
notice;
(3) if by a posting on an electronic network on which the
member has consented to receive notice, together with separate
notice to the member of the specific posting, upon the later of:
(i) the posting; and
(ii) the giving of the separate notice; and
(4) if by any other form of electronic communication by
which the member has consented to receive notice, when directed
to the member.
(b) An affidavit of the secretary, other authorized
officer, or authorized agent of the cooperative that the notice
has been given by a form of electronic communication is, in the
absence of fraud, prima facie evidence of the facts stated in
the affidavit.
(c) Consent by a member to notice given by electronic
communication may be given in writing or by authenticated
electronic communication. The cooperative is entitled to rely
on any consent so given until revoked by the member, provided
that no revocation affects the validity of any notice given
before receipt by the cooperative of revocation of the consent.
Subd. 6. [REVOCATION.] Any ballot, vote, authorization, or
consent submitted by electronic communication under this chapter
may be revoked by the member submitting the ballot, vote,
authorization, or consent so long as the revocation is received
by a director or the chief executive officer of the cooperative
at or before the meeting or before an action without a meeting
is effective.
Subd. 7. [WAIVER.] Waiver of notice by a member of a
meeting by means of authenticated electronic communication may
be given in the manner provided for the regular or special
meeting. Participation in a meeting by means of remote
communication described in subdivisions 2 and 3 is a waiver of
notice of that meeting, except where the member objects at the
beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not
lawfully be considered at the meeting and does not participate
in the consideration of the item at that meeting.
Sec. 45. [308B.535] [ACT OF MEMBERS.]
Subdivision 1. [ACTION BY AFFIRMATIVE VOTE OF MEMBERS.] (a)
The members shall take action by the affirmative vote of the
members of the greater of:
(1) a majority of the voting power of the membership
interests present and entitled to vote on that item of business;
or
(2) a majority of the voting power that would constitute a
quorum for the transaction of business at the meeting, except
where this chapter, the articles or bylaws, or a member control
agreement require a larger proportion.
(b) If the articles, bylaws, or a member control agreement
require a larger proportion than is required by this chapter for
a particular action, the articles, bylaws, or the member control
agreement shall have control over the provisions of this chapter.
Subd. 2. [CLASS OR SERIES OF MEMBERSHIP INTERESTS.] In any
case where a class or series of membership interests is entitled
by this chapter, the articles, bylaws, a member control
agreement, or the terms of the membership interests to vote as a
class or series, the matter being voted upon must also receive
the affirmative vote of the owners of the same proportion of the
membership interests present of that class or series; or of the
total outstanding membership interests of that class or series,
as the proportion required under subdivision 1, unless the
articles, bylaws, or the member control agreement require a
larger proportion. Unless otherwise stated in the articles,
bylaws, or a member control agreement, in the case of voting as
a class or series, the minimum percentage of the total voting
power of membership interests of the class or series that must
be present is equal to the minimum percentage of all membership
interests entitled to vote required to be present under section
308B.525.
Subd. 3. [GREATER QUORUM OR VOTING REQUIREMENTS.] (a) The
articles or bylaws adopted by the members may provide for a
greater quorum or voting requirement for members or voting
groups than is provided for by this chapter.
(b) An amendment to the articles or bylaws that adds,
changes, or deletes a greater quorum or voting requirement shall
meet the same quorum requirement and be adopted by the same vote
and voting groups required to take action under the quorum and
voting requirements then in effect or proposed to be adopted,
whichever is greater.
Sec. 46. [308B.541] [ACTION WITHOUT A MEETING.]
Subdivision 1. [METHOD.] An action required or permitted
to be taken at a meeting of the members may be taken by written
action signed, or consented to by authenticated electronic
communication, by all of the members. If the articles, bylaws,
or a member control agreement so provide, any action may be
taken by written action signed, or consented to by authenticated
electronic communication, by the members who own voting power
equal to the voting power that would be required to take the
same action at a meeting of the members at which all members
were present.
Subd. 2. [EFFECTIVE TIME.] The written action is effective
when signed or consented to by authenticated electronic
communication by the required members, unless a different
effective time is provided in the written action.
Subd. 3. [NOTICE AND LIABILITY.] When written action is
permitted to be taken by less than all members, all members must
be notified immediately of its text and effective date. Failure
to provide the notice does not invalidate the written action. A
member who does not sign or consent to the written action has no
liability for the action or actions taken by the written action.
Sec. 47. [308B.545] [MEMBER VOTING RIGHTS.]
Subdivision 1. [MEMBER HAS ONE VOTE; OR PATRONAGE VOTING.]
A patron member of a cooperative is only entitled to one vote on
an issue to be voted upon by members holding patron membership
interests, except that if authorized in the articles or bylaws a
patron member may be entitled to additional votes based on
patronage criteria in section 308B.551. On any matter of the
cooperative, the entire patron members voting power shall be
voted collectively based upon the vote of the majority of patron
members voting on the issue and the collective vote of the
patron members shall be a majority of the vote cast unless
otherwise provided in the bylaws. The bylaws may not reduce the
collective patron member vote to less than 15 percent of the
total vote on matters of the cooperative. A nonpatron member
has the voting rights in accordance to his nonpatron membership
interests as granted in the bylaws, subject to the provisions of
this chapter.
Subd. 2. [RIGHT TO VOTE AT MEETING.] A member or delegate
may exercise voting rights on any matter that is before the
members as prescribed in the articles or bylaws at a members'
meeting from the time the member or delegate arrives at the
members' meeting, unless the articles or bylaws specify an
earlier and specific time for closing the right to vote.
Subd. 3. [VOTING METHOD.] A member's vote at a members'
meeting shall be in person or by mail if a mail vote is
authorized by the board or by alternative method if authorized
by the board and not by proxy, except as provided in subdivision
4.
Subd. 4. [MEMBERS REPRESENTED BY DELEGATES.] (a) The
provisions of this subdivision apply to members represented by
delegates.
(b) A cooperative may provide in the articles or bylaws
that units or districts of members are entitled to be
represented at members' meetings by delegates chosen by the
members of the unit or district. The delegates may vote on
matters at the members' meeting in the same manner as a member.
The delegates may only exercise the voting rights on a basis and
with the number of votes as prescribed in the articles or bylaws.
(c) If the approval of a certain portion of the members is
required for adoption of amendments, a dissolution, a merger, a
consolidation, or a sale of assets, the votes of delegates shall
be counted as votes by the members represented by the delegate.
(d) Patron members may be represented by the proxy of other
patron members.
(e) Nonpatron members may be represented by proxy if
authorized in the bylaws.
Subd. 5. [ABSENTEE BALLOTS.] (a) The provisions of this
subdivision apply to absentee ballots.
(b) A member who is or will be absent from a members'
meeting may vote by mail or by an approved alternative method on
the ballot prescribed in this subdivision on any motion,
resolution, or amendment that the board submits for vote by mail
or alternative method to the members.
(c) The ballot shall be in the form prescribed by the board
and contain:
(1) the exact text of the proposed motion, resolution, or
amendment to be acted on at the meeting; and
(2) the text of the motion, resolution, or amendment for
which the member may indicate an affirmative or negative vote.
(d) The member shall express a choice by marking an
appropriate choice on the ballot and mail, deliver, or otherwise
submit the ballot to the cooperative in a plain, sealed envelope
inside another envelope bearing the member's name or by an
alternative method approved by the board.
(e) A properly executed ballot shall be accepted by the
board and counted as the vote of the absent member at the
meeting.
Sec. 48. [308B.551] [PATRON MEMBER VOTING BASED ON
PATRONAGE.]
Subdivision 1. [PATRON MEMBERS TO HAVE AN ADDITIONAL
VOTE.] A cooperative may authorize by the articles or the bylaws
for patron members to have an additional vote for:
(1) a stipulated amount of business transacted between the
patron member and cooperative;
(2) a stipulated number of patron members in a member
cooperative;
(3) a certain stipulated amount of equity allocated to or
held by a patron member cooperative in the cooperative's central
organization; or
(4) a combination of methods in clauses (1) to (3).
Subd. 2. [DELEGATES ELECTED BY PATRONS TO HAVE AN
ADDITIONAL VOTE.] A cooperative that is organized into units or
districts of patron members may, by the articles or the bylaws,
authorize the delegates elected by its patron members or have an
additional vote for:
(1) a stipulated amount of business transacted between the
patron members in the units or districts and the cooperative;
(2) a certain stipulated amount of equity allocated to or
held by the patron members of the units or districts of the
cooperative; or
(3) a combination of methods in clauses (1) and (2).
Sec. 49. [308B.555] [VOTING RIGHTS.]
Subdivision 1. [DETERMINATION.] The board may fix a date
not more than 60 days, or a shorter time period provided in the
articles or bylaws, before the date of a meeting of members as
the date for the determination of the owners of membership
interests entitled to notice of and entitled to vote at the
meeting. When a date is so fixed, only members on that date are
entitled to notice of and permitted to vote at that meeting of
members.
Subd. 2. [VOTING POWER.] Unless otherwise provided in the
articles, bylaws, or a member control agreement, members have
voting power as provided in section 308B.545.
Subd. 3. [NONMEMBERS.] The articles or bylaws may give or
prescribe the manner of giving a creditor, security holder, or
other person a right to vote on patron membership interests
under this section.
Subd. 4. [JOINTLY OWNED MEMBERSHIP INTERESTS.] Membership
interests owned by two or more members may be voted by any one
of them unless the cooperative receives written notice from any
one of them denying the authority of that person to vote those
membership interests.
Subd. 5. [MANNER OF VOTING AND PRESUMPTION.] Except as
provided in subdivision 4, an owner of a nonpatron membership
interest or a patron membership interest with more than one vote
that is entitled to vote may vote any portion of the membership
interest in any way the member chooses. If a member votes
without designating the proportion voted in a particular way,
the member is considered to have voted all of the membership
interest in that way.
Sec. 50. [308B.561] [VOTING BY ORGANIZATIONS AND LEGAL
REPRESENTATIVES.]
Subdivision 1. [MEMBERSHIP INTERESTS HELD BY ANOTHER
ORGANIZATION.] Membership interests of a cooperative reflected
in the required records as being owned by another domestic or
foreign business entity may be voted by the chair, chief
executive officer, or another legal representative of that
organization.
Subd. 2. [MEMBERSHIP INTERESTS HELD BY SUBSIDIARY.] Except
as provided in subdivision 3, membership interests of a
cooperative reflected in the required records as being owned by
a subsidiary are not entitled to be voted on any matter.
Subd. 3. [MEMBERSHIP INTERESTS CONTROLLED IN A FIDUCIARY
CAPACITY.] Membership interests of a cooperative in the name of,
or under the control of, the cooperative or a subsidiary in a
fiduciary capacity are not entitled to be voted on any matter,
except to the extent that the settlor or beneficiary possesses
and exercises a right to vote or gives the cooperative or, with
respect to membership interests in the name of or under control
of a subsidiary, the subsidiary, binding instructions on how to
vote the membership interests.
Subd. 4. [VOTING BY CERTAIN REPRESENTATIVES.] Subject to
section 308B.545, membership interests under the control of a
person in a capacity as a personal representative, an
administrator, executor, guardian, conservator, or the like may
be voted by the person, either in person or by proxy, without
reflecting in the required records those membership interests in
the name of the person.
Subd. 5. [VOTING BY TRUSTEES IN BANKRUPTCY OR
RECEIVER.] Membership interests reflected in the required
records in the name of a trustee in bankruptcy or a receiver may
be voted by the trustee or receiver either in person or by
proxy. Membership interests under the control of a trustee in
bankruptcy or a receiver may be voted by the trustee or receiver
without reflecting in the required records the name of the
trustee or receiver, if authority to do so is contained in an
appropriate order of the court by which the trustee or receiver
was appointed. The right to vote of trustees in bankruptcy and
receivers is subject to section 308B.545.
Subd. 6. [MEMBERSHIP INTERESTS HELD BY OTHER
ORGANIZATIONS.] Membership interests reflected in the required
records in the name of a business entity not described in
subdivisions 1 to 5 may be voted either in person or by proxy by
the legal representative of that business entity.
Subd. 7. [GRANT OF SECURITY INTEREST.] The grant of a
security interest in a membership interest does not entitle the
holders of the security interest to vote.
Sec. 51. [308B.565] [PROXIES.]
Subdivision 1. [AUTHORIZATION.] (a) A patron member may
only grant a proxy to vote to another patron member.
(b) A member may cast or authorize the casting of a vote by:
(1) filing a written appointment of a proxy with the board
at or before the meeting at which the appointment is to be
effective; or
(2) telephonic transmission or authenticated electronic
communication, whether or not accompanied by written
instructions of the member, of an appointment of a proxy with
the cooperative or the cooperative's duly authorized agent at or
before the meeting at which the appointment is to be effective.
(c) The telephonic transmission or authenticated electronic
communication must set forth or be submitted with information
from which it can be determined that the appointment was
authorized by the member. If it is reasonably concluded that
the telephonic transmission or authenticated electronic
communication is valid, the inspectors of election or, if there
are not inspectors, the other persons making that determination
shall specify the information upon which they relied to make
that determination. A proxy so appointed may vote on behalf of
the member, or otherwise participate, in a meeting by remote
communication under section 308B.531, to the extent the member
appointing the proxy would have been entitled to participate by
remote communication if the member did not appoint the proxy.
(d) A copy, facsimile, telecommunication, or other
reproduction of the original writing or transmission may be
substituted or used in lieu of the original writing or
transmission for any purpose for which the original transmission
could be used, if the copy, facsimile, telecommunication, or
other reproduction is a complete and legible reproduction of the
entire original writing or transmission.
(e) An appointment of a proxy for membership interests
owned jointly by two or more members is valid if signed or
consented to by authenticated electronic communication, by any
one of them, unless the cooperative receives from any one of
those members written notice or an authenticated electronic
communication either denying the authority of that person to
appoint a proxy or appointing a different proxy.
Subd. 2. [DURATION.] The appointment of a proxy is valid
for 11 months unless a longer period is expressly provided in
the appointment. No appointment is irrevocable unless the
appointment is coupled with an interest in the membership
interests or the cooperative.
Subd. 3. [TERMINATION.] An appointment may be terminated
at will unless the appointment is coupled with an interest, in
which case it shall not be terminated except in accordance with
the terms of an agreement, if any, between the parties to the
appointment. Termination may be made by filing written notice
of the termination of the appointment with a manager of the
cooperative or by filing a new written appointment of a proxy
with a manager of the cooperative. Termination in either manner
revokes all prior proxy appointments and is effective when filed
with a manager of the cooperative.
Subd. 4. [REVOCATION BY DEATH OR INCAPACITY.] The death or
incapacity of a person appointing a proxy does not revoke the
authority of the proxy, unless written notice of the death or
incapacity is received by a manager of the cooperative before
the proxy exercises the authority under that appointment.
Subd. 5. [MULTIPLE PROXIES.] Unless the appointment
specifically provides otherwise, if two or more persons are
appointed as proxies for a member:
(1) any one of them may vote the membership interests on
each item of business in accordance with specific instructions
contained in the appointment; and
(2) if no specific instructions are contained in the
appointment with respect to voting the membership interests on a
particular item of business, the membership interests must be
voted as a majority of the proxies determine. If the proxies
are equally divided, the membership interests must not be voted.
Subd. 6. [VOTE OF PROXY ACCEPTED AND LIABILITY.] Unless
the appointment of a proxy contains a restriction, limitation,
or specific reservation of authority, the cooperative may accept
a vote or action taken by a person named in the appointment.
The vote of a proxy is final, binding, and not subject to
challenge, but the proxy is liable to the member for damages
resulting from a failure to exercise the proxy or from an
exercise of the proxy in violation of the authority granted in
the appointment.
Subd. 7. [LIMITED AUTHORITY.] If a proxy is given
authority by a member to vote on less than all items of business
considered at a meeting of members, the member is considered to
be present and entitled to vote by the proxy only with respect
to those items of business for which the proxy has authority to
vote. A proxy who is given authority by a member who abstains
with respect to an item of business is considered to have
authority to vote on the item of business for purposes of this
subdivision.
Sec. 52. [308B.571] [SALE OF PROPERTY AND ASSETS.]
Subdivision 1. [MEMBER APPROVAL NOT REQUIRED.] A
cooperative may, by affirmative vote of a majority of the board
present, upon those terms and conditions and for those
considerations, which may be money, securities, or other
instruments for the payment of money or other property, as the
board considers expedient and without member approval:
(1) sell, lease, transfer, or otherwise dispose of all or
substantially all of its property and assets in the usual and
regular course of its business;
(2) sell, lease, transfer, or otherwise dispose of all or
substantially all of its property and assets not in the usual
and regular course of its business if:
(i) the cooperative's accountant has given an opinion that
the cooperative cannot continue as an ongoing business and the
cooperative is under financial duress;
(ii) the cooperative has given notice to the members of the
impending or potential disposition prior to the disposition; and
(iii) the board has determined that failure to proceed with
the disposition would be adverse to the interests of the members
and the cooperative;
(3) grant a security interest in all or substantially all
of its property and assets whether or not in the usual and
regular course of its business;
(4) transfer any or all of its property to a business
entity all the ownership interests of which are owned by the
cooperative; or
(5) for purposes of debt financing, transfer any or all of
its property to a special purpose entity owned or controlled by
the cooperative for an asset securitization.
Subd. 2. [MEMBER APPROVAL REQUIRED.] Except as provided in
subdivision 1, a cooperative, by affirmative vote of a majority
of the board present, may sell, lease, transfer, or otherwise
dispose of all or substantially all of its property and assets,
including its good will, not in the usual and regular course of
its business, upon those terms and conditions and for those
considerations, which may be money, securities, or other
instruments for the payment of money or other property, as the
board considers expedient, when approved at a regular or special
meeting of the members by the affirmative vote of the owners of
a majority of the voting power of the interests entitled to
vote. Written notice of the meeting must be given to all
members whether or not they are entitled to vote at the
meeting. The written notice must state that a purpose of the
meeting is to consider the sale, lease, transfer, or other
disposition of all or substantially all of the property and
assets of the cooperative.
Subd. 3. [CONFIRMATORY DOCUMENTS.] Confirmatory deeds,
assignments, or similar instruments to evidence a sale, lease,
transfer, or other disposition may be signed and delivered at
any time in the name of the transferor by its current chair of
the board or authorized agents.
Subd. 4. [LIABILITY OF TRANSFEREE.] The transferee is
liable for the debts, obligations, and liabilities of the
transferor only to the extent provided in the contract or
agreement between the transferee and the transferor or to the
extent provided by law.
Sec. 53. [308B.575] [VOTE OF OWNERSHIP INTERESTS HELD BY
COOPERATIVE.]
A cooperative that holds ownership interests of another
business entity may, by direction of the cooperative's board,
elect or appoint a person to represent the cooperative at a
meeting of the business entity. The representative has
authority to represent the cooperative and may cast the
cooperative's vote at the business entity's meeting.
MEMBERSHIP INTERESTS
Sec. 54. [308B.601] [MEMBERSHIP INTERESTS.]
Subdivision 1. [AMOUNTS AND DIVISIONS OF MEMBERSHIP
INTERESTS.] The authorized amount and divisions of patron
membership interests and, if authorized, nonpatron membership
interests may be increased, decreased, established, or altered,
in accordance with the restrictions in this chapter by amending
the articles or bylaws at a regular members' meeting or at a
special members' meeting called for the purpose of the amendment.
Subd. 2. [ISSUANCE OF MEMBERSHIP INTERESTS.] Authorized
membership interests may be issued on terms and conditions
prescribed in the articles, bylaws, or if authorized in the
articles or bylaws as determined by the board. The cooperative
shall disclose to any person or entity acquiring membership
interests to be issued by the cooperative, the organization,
capital structure, and known business prospects and risks of the
cooperative, the nature of the governance and financial rights
of the membership interest being acquired and of other classes
of membership and membership interests. The cooperative shall
notify all members of the membership interests being issued by
the cooperative. A membership interest may not be issued until
the subscription price of the membership interest has been paid
for in money or property with the value of the property to be
contributed approved by the board.
Subd. 3. [PATRON MEMBERSHIP INTERESTS.] The patron
membership interests collectively shall have not less than 60
percent of the cooperative's financial rights to profit
allocations and distributions. If authorized in the original
articles as filed, or articles or bylaws adopted by an
affirmative vote of the patron members, or the articles or
bylaws are amended by the affirmative vote of patron members,
then the cooperative's financial rights to profit allocations
and distributions to patron members collectively may be not less
than 15 percent.
Subd. 4. [TRANSFERRING OR SELLING MEMBERSHIP
INTERESTS.] After issuance by the cooperative, membership
interests in a cooperative may only be sold or transferred with
the approval of the board. The board may adopt resolutions
prescribing procedures to prospectively approve transfers.
Subd. 5. [NONPATRON MEMBERSHIP INTERESTS.] If authorized
by the articles, the cooperative may solicit and issue nonpatron
membership interests on terms and conditions determined by the
board and disclosed in the articles, bylaws, or by separate
disclosure to the members. Each member acquiring nonpatron
membership interests shall sign a member control agreement or
agree to the conditions of the bylaws, either of which shall
describe the rights and obligations of the member as it relates
to the nonpatron membership interests, the financial and
governance rights, the transferability of the nonpatron
membership interests, the division and allocations of profits
and losses among the membership interests and membership
classes, and financial rights upon liquidation. If the articles
or bylaws do not otherwise provide for the allocation of the
profits and losses between patron membership interests and
nonpatron membership interests, then the allocation of profits
and losses among nonpatron membership interests individually and
patron membership interests collectively shall be allocated on
the basis of the value of contributions to capital made
according to the patron membership interests collectively and
the nonpatron membership interests individually to the extent
the contributions have been accepted by the cooperative.
Distributions of cash or other assets of the cooperative shall
be allocated among the membership interests as provided in the
articles and bylaws, subject to the provisions of this chapter.
If not otherwise provided in the articles or bylaws,
distributions shall be made on the basis of value of the capital
contributions of the patron membership interests collectively
and the nonpatron membership interests to the extent the
contributions have been accepted by the cooperative.
Subd. 6. [COOPERATIVE FIRST RIGHT TO PURCHASE MEMBERSHIP
INTERESTS.] The articles or bylaws may provide that the
cooperative or the patron members, individually or collectively,
have the first privilege of purchasing the membership interests
of any class of membership interests offered for sale. The
first privilege to purchase membership interests may be
satisfied by notice to other members that the membership
interests are for sale and a procedure by which members may
proceed to attempt to purchase and acquire the membership
interests. A membership interest acquired by the cooperative
may be held to be reissued or may be retired and canceled.
Subd. 7. [PAYMENT FOR NONPATRON MEMBERSHIP
INTERESTS.] Subject to the provisions in the articles and
bylaws, a member may dissent from and obtain payment for the
fair value of the member's nonpatron membership interests in the
cooperative if the articles or bylaws are amended in a manner
that materially and adversely affects the rights and preferences
of the nonpatron membership interests of the dissenting member.
The dissenting member shall file a notice of intent to demand
fair value of the membership interest with the records officer
of the cooperative within 30 days after the amendment of the
bylaws and notice of the amendment to members, otherwise the
right of the dissenting member to demand payment of fair value
for the membership interest is waived. If a proposed amendment
of the articles or bylaws must be approved by the members, a
member who is entitled to dissent and who wishes to exercise
dissenter's rights shall file a notice to demand fair value of
the membership interest with the records officer of the
cooperative before the vote on the proposed action and shall not
vote in favor of the proposed action, otherwise the right to
demand fair value for the membership interest by the dissenting
member is waived. After receipt of the dissenting member's
demand notice and approval of the amendment, the cooperative has
60 days to rescind the amendment or otherwise the cooperative
shall remit the fair value for the member's interest to the
dissenting member by 180 days after receipt of the notice. Upon
receipt of the fair value for the membership interest, the
member has no further member rights in the cooperative.
Sec. 55. [308B.605] [ASSIGNMENT OF FINANCIAL RIGHTS.]
Subdivision 1. [ASSIGNMENT OF FINANCIAL RIGHTS PERMITTED.]
Except as provided in subdivision 3, a member's financial rights
are transferable in whole or in part.
Subd. 2. [EFFECT OF ASSIGNMENT OF FINANCIAL RIGHTS.] An
assignment of a member's financial rights entitles the assignee
to receive, to the extent assigned, only the share of profits
and losses and the distributions to which the assignor would
otherwise be entitled. An assignment of a member's financial
rights does not dissolve the cooperative and does not entitle or
empower the assignee to become a member, to exercise any
governance rights, to receive any notices from the cooperative,
or to cause dissolution. The assignment shall not allow the
assignee to control the member's exercise of governance or
voting rights.
Subd. 3. [RESTRICTIONS OF ASSIGNMENT OF FINANCIAL
RIGHTS.] (a) A restriction on the assignment of financial rights
may be imposed in the articles, in the bylaws, in a member
control agreement, by a resolution adopted by the members, by an
agreement among or other written action by the members, or by an
agreement among or other written action by the members and the
cooperative. A restriction is not binding with respect to
financial rights reflected in the required records before the
adoption of the restriction, unless the owners of those
financial rights are parties to the agreement or voted in favor
of the restriction.
(b) Subject to paragraph (c), a written restriction on the
assignment of financial rights that is not manifestly
unreasonable under the circumstances and is noted conspicuously
in the required records may be enforced against the owner of the
restricted financial rights or a successor or transferee of the
owner, including a pledgee or a legal representative. Unless
noted conspicuously in the required records, a restriction, even
though permitted by this section, is ineffective against a
person without knowledge of the restriction.
(c) With regard to restrictions on the assignment of
financial rights, a would-be assignee of financial rights is
entitled to rely on a statement of membership interest issued by
the cooperative under section 308B.611. A restriction on the
assignment of financial rights, which is otherwise valid and in
effect at the time of the issuance of a statement of membership
interest but which is not reflected in that statement, is
ineffective against an assignee who takes an assignment in
reliance on the statement.
(d) Notwithstanding any provision of law, articles, bylaws,
member control agreement, other agreement, resolution, or action
to the contrary, a security interest in a member's financial
rights may be foreclosed and otherwise enforced, and a secured
party may assign a member's financial rights in accordance with
chapter 336, without the consent or approval of the member whose
financial rights are subject to the security interest.
Sec. 56. [308B.611] [NATURE OF A MEMBERSHIP INTEREST AND
STATEMENT OF INTEREST OWNED.]
Subdivision 1. [GENERALLY.] A membership interest is
personal property. A member has no interest in specific
cooperative property. All property of the cooperative is
property of the cooperative itself.
Subd. 2. [STATEMENT OF MEMBERSHIP INTEREST.] At the
request of any member, the cooperative shall state in writing
the particular membership interest owned by that member as of
the date the cooperative makes the statement. The statement
must describe the member's rights to vote, if any, to share in
profits and losses, and to share in distributions, restrictions
on assignments of financial rights under section 308B.605,
subdivision 3, or voting rights under section 308B.555 then in
effect, as well as any assignment of the member's rights then in
effect other than a security interest.
Subd. 3. [TERMS OF MEMBERSHIP INTERESTS.] All the
membership interests of a cooperative must:
(1) be of one class, without series, unless the articles or
bylaws establish or authorize the board to establish more than
one class or series within classes;
(2) be ordinary patron membership interests and if
authorized nonpatron membership interest subject to this chapter
entitled to vote as provided in section 308B.555, and have equal
rights and preferences in all matters not otherwise provided for
by the board and to the extent that the articles or bylaws have
fixed the relative rights and preferences of different classes
and series; and
(3) share profits and losses and are entitled to
distributions as provided in sections 308B.721 and 308B.725.
Subd. 4. [RIGHTS OF JUDGMENT CREDITOR.] On application to
a court of competent jurisdiction by any judgment creditor of a
member, the court may charge a member's or an assignee's
financial rights with payment of the unsatisfied amount of the
judgment with interest. To the extent so charged, the judgment
creditor has only the rights of an assignee of a member's
financial rights under section 308B.605. This chapter does not
deprive any member or assignee of financial rights of the
benefit of any exemption laws applicable to the membership
interest. This section is the sole and exclusive remedy of a
judgment creditor with respect to the judgment debtor's
membership interest.
Subd. 5. [PROCEDURE FOR FIXING TERMS.] (a) Subject to any
restrictions in the articles or bylaws, the power granted in
this subdivision may be exercised by a resolution or resolutions
establishing a class or series, setting forth the designation of
the class or series, and fixing the relative rights and
preferences of the class or series. Any of the rights and
preferences of a class or series established in the articles,
bylaws, or by resolution of the board:
(1) may be made dependent upon facts ascertainable outside
the articles or bylaws or outside the resolution or resolutions
establishing the class or series, if the manner in which the
facts operate upon the rights and preferences of the class or
series is clearly and expressly set forth in the articles or
bylaws or in the resolution or resolutions establishing the
class or series; and
(2) may include by reference some or all of the terms of
any agreements, contracts, or other arrangements entered into by
the cooperative in connection with the establishment of the
class or series if the cooperative retains at its principal
executive office a copy of the agreements, contracts, or other
arrangements or the portions will be included by reference.
(b) A statement setting forth the name of the cooperative
and the text of the resolution and certifying the adoption of
the resolution and the date of adoption must be given to the
members before the acceptance of any contributions for which the
resolution creates rights or preferences not set forth in the
articles or bylaws. Where the members have received notice of
the creation of membership interests with rights or preferences
not set forth in the articles or bylaws before the acceptance of
the contributions with respect to the membership interests, the
statement may be filed any time within one year after the
acceptance of the contributions. The resolution is effective
three days after delivery to the members is deemed effective by
the board, or, if the statement is not required to be given to
the members before the acceptance of contributions, on the date
of its adoption by the directors.
Subd. 6. [SPECIFIC TERMS.] Without limiting the authority
granted in this section, a cooperative may have membership
interests of a class or series:
(1) subject to the right of the cooperative to redeem any
of those membership interests at the price fixed for their
redemption by the articles or bylaws or by the board;
(2) entitling the members to cumulative, partially
cumulative, or noncumulative distributions;
(3) having preference over any class or series of
membership interests for the payment of distributions of any or
all kinds;
(4) convertible into membership interests of any other
class or any series of the same or another class; or
(5) having full, partial, or no voting rights, except as
provided in section 308B.555.
Subd. 7. [GRANT OF A SECURITY INTEREST.] For the purpose
of any law relating to security interests, membership interests,
governance or voting rights, and financial rights are each to be
characterized as provided in section 336.8-103, paragraph (c).
Subd. 8. [POWERS OF ESTATE OF A DECEASED OR INCOMPETENT
MEMBER.] (a) If a member who is an individual dies or a court of
competent jurisdiction adjudges the member to be incompetent to
manage the member's person or property, or an order for relief
under the bankruptcy code is entered with respect to the member,
the member's executor, administrator, guardian, conservator,
trustee, or other legal representative may exercise all of the
member's rights for the purpose of settling the estate or
administering the member's property. If a member is a business
entity, trust, or other entity and is dissolved, terminated, or
placed by a court in receivership or bankruptcy, the powers of
that member may be exercised by its legal representative or
successor.
(b) If an event referred to in paragraph (a) causes the
termination of a member's membership interest and the
termination does not result in dissolution, then subject to the
articles and bylaws:
(1) as provided in section 308B.605, the terminated
member's interest will be considered to be merely that of an
assignee of the financial rights owned before the termination of
membership; and
(2) the rights to be exercised by the legal representative
of the terminated member will be limited accordingly.
Subd. 9. [LIABILITY OF SUBSCRIBERS AND MEMBERS WITH
RESPECT TO MEMBERSHIP INTERESTS.] A subscriber for membership
interests or a member of a cooperative is under no obligation to
the cooperative or its creditors with respect to the membership
interests subscribed for or owned, except to pay to the
cooperative the full consideration for which the membership
interests are issued or to be issued.
Sec. 57. [308B.615] [CERTIFICATED MEMBERSHIP INTERESTS.]
Subdivision 1. [CERTIFICATED; UNCERTIFICATED.] The
membership interests of a cooperative shall be either
certificated or uncertificated. Each holder of certificated
membership interests issued is entitled to a certificate of
membership interest.
Subd. 2. [SIGNATURE REQUIRED.] Certificates shall be
signed by an agent or officer authorized in the articles or
bylaws to sign share certificates or, in the absence of an
authorization, by the chair or records officer of the
cooperative.
Subd. 3. [SIGNATURE VALID.] If a person signs or has a
facsimile signature placed upon a certificate while the chair,
an officer, transfer agent, or records officer of a cooperative,
the certificate may be issued by the cooperative, even if the
person has ceased to have that capacity before the certificate
is issued, with the same effect as if the person had that
capacity at the date of its issue.
Subd. 4. [FORM OF CERTIFICATE.] A certificate representing
membership interests of a cooperative shall contain on its face:
(1) the name of the cooperative;
(2) a statement that the cooperative is organized under the
laws of this state and this chapter;
(3) the name of the person to whom the certificate is
issued;
(4) the number and class of membership interests, and the
designation of the series, if any, that the certificate
represents;
(5) a statement that the membership interests in the
cooperative are subject to the articles and bylaws of the
cooperative; and
(6) any restrictions on transfer, including approval of the
board, if applicable, first rights of purchase by the
cooperative, and other restrictions on transfer, which may be
stated by reference to the back of the certificate or to another
document.
Subd. 5. [LIMITATIONS SET FORTH.] A certificate
representing membership interest issued by a cooperative
authorized to issue membership interests of more than one class
or series shall set forth upon the face or back of the
certificate, or shall state that the cooperative will furnish to
any member upon request and without charge, a full statement of
the designations, preferences, limitations, and relative rights
of the membership interests of each class or series authorized
to be issued, so far as they have been determined, and the
authority of the board to determine the relative rights and
preferences of subsequent classes or series.
Subd. 6. [PRIMA FACIE EVIDENCE.] A certificate signed as
provided in subdivision 2 is prima facie evidence of the
ownership of the membership interests referred to in the
certificate.
Subd. 7. [UNCERTIFICATED MEMBERSHIP INTERESTS.] Unless
uncertificated membership interests are prohibited by the
articles or bylaws, a resolution approved by the affirmative
vote of a majority of the directors present may provide that
some or all of any or all classes and series of its membership
interests will be uncertificated membership interests. The
resolution does not apply to membership interests represented by
a certificate until the certificate is surrendered to the
cooperative. Within a reasonable time after the issuance or
transfer of uncertificated membership interests, the cooperative
shall send to the new member the information required by this
section to be stated on certificates. This information is not
required to be sent to the new holder by a publicly held
cooperative that has adopted a system of issuance, recordation,
and transfer of its membership interests by electronic or other
means not involving an issuance of certificates if the system
complies with section 17A of the Securities Exchange Act of
1934. Except as otherwise expressly provided by statute, the
rights and obligations of the holders of certificated and
uncertificated membership interests of the same class and series
are identical.
Sec. 58. [308B.621] [LOST CERTIFICATES; REPLACEMENT.]
Subdivision 1. [ISSUANCE.] A new membership interest
certificate may be issued under section 336.8-405 in place of
one that is alleged to have been lost, stolen, or destroyed.
Subd. 2. [NOT OVERISSUE.] The issuance of a new
certificate under this section does not constitute an overissue
of the membership interests it represents.
Sec. 59. [308B.625] [RESTRICTION ON TRANSFER OR
REGISTRATION OF MEMBERSHIP INTERESTS.]
Subdivision 1. [HOW IMPOSED.] A restriction on the
transfer or registration of transfer of membership interests of
a cooperative may be imposed in the articles, in the bylaws, by
a resolution adopted by the members, or by an agreement among or
other written action by a number of members or holders of other
membership interests or among them and the cooperative. A
restriction is not binding with respect to membership interests
issued prior to the adoption of the restriction, unless the
holders of those membership interests are parties to the
agreement or voted in favor of the restriction.
Subd. 2. [RESTRICTIONS PERMITTED.] A written restriction
on the transfer or registration of transfer of membership
interests of a cooperative that is not manifestly unreasonable
under the circumstances may be enforced against the holder of
the restricted membership interests or a successor or transferee
of the holder, including a pledgee or a legal representative, if
the restriction is either:
(1) noted conspicuously on the face or back of the
certificate;
(2) included in this chapter or the articles or bylaws; or
(3) included in information sent to the holders of
uncertificated membership interests.
Unless a restriction is in this chapter, the articles, bylaws,
noted conspicuously on the face or back of the certificate, or
included in information sent to the holders of uncertificated
membership interests, a restriction, even though permitted by
this section, is ineffective against a person without knowledge
of the restriction. A restriction under this section is deemed
to be noted conspicuously and is effective if the existence of
the restriction is stated on the certificate and reference is
made to a separate document creating or describing the
restriction.
CONTRIBUTIONS, ALLOCATIONS, AND DISTRIBUTIONS
Sec. 60. [308B.701] [AUTHORIZATION, FORM, AND ACCEPTANCE
OF CONTRIBUTIONS.]
Subdivision 1. [BOARD OF DIRECTORS MAY AUTHORIZE.] Subject
to any restrictions in this chapter regarding patron and
nonpatron membership interests or in the articles or bylaws, and
only when authorized by the board, a cooperative may accept
contributions, which may be patron or nonpatron membership
contributions as determined by the board under subdivisions 2
and 3, make contribution agreements under section 308B.711, and
make contribution allowance agreements under section 308B.715.
Subd. 2. [PERMISSIBLE FORMS.] A person may make a
contribution to a cooperative:
(1) by paying money or transferring the ownership of an
interest in property to the cooperative or rendering services to
or for the benefit of the cooperative; or
(2) through a written obligation signed by the person to
pay money or transfer ownership of an interest in property to
the cooperative or to perform services to or for the benefit of
the cooperative.
Subd. 3. [ACCEPTANCE OF CONTRIBUTIONS.] No purported
contribution is to be treated or considered as a contribution,
unless:
(1) the board accepts the contribution on behalf of the
cooperative and in that acceptance describes the contribution,
including terms of future performance, if any, and states the
value being accorded to the contribution; and
(2) the fact of contribution and the contribution's
accorded value are both reflected in the required records of the
cooperative.
Subd. 4. [VALUATION.] The determinations of the board as
to the amount or fair value or the fairness to the cooperative
of the contribution accepted or to be accepted by the
cooperative or the terms of payment or performance, including
under a contribution agreement in section 308B.711, and a
contribution allowance agreement in section 308B.715, are
presumed to be proper if they are made in good faith and on the
basis of accounting methods, or a fair valuation or other
method, reasonable in the circumstances. Directors who are
present and entitled to vote, and who, intentionally or without
reasonable investigation, fail to vote against approving a
consideration that is unfair to the cooperative, or overvalue
property or services received or to be received by the
cooperative as a contribution, are jointly and severally liable
to the cooperative for the benefit of the then members who did
not consent to and are damaged by the action, to the extent of
the damages of those members. A director against whom a claim
is asserted under this subdivision, except in case of knowing
participation in a deliberate fraud, is entitled to contribution
on an equitable basis from other directors who are liable under
this subdivision.
Sec. 61. [308B.705] [RESTATEMENT OF VALUE OF PREVIOUS
CONTRIBUTIONS.]
Subdivision 1. [DEFINITION.] As used in this section, an
"old contribution" is a contribution reflected in the required
records of a cooperative before the time the cooperative accepts
a new contribution.
Subd. 2. [RESTATEMENT REQUIRED.] Whenever a cooperative
accepts a new contribution, the board shall restate, as required
by this section, the value of all old contributions.
Subd. 3. [RESTATEMENT AS TO PARTICULAR SERIES OR CLASS TO
WHICH NEW CONTRIBUTION PERTAINS.] (a) Unless otherwise provided
in the articles or bylaws, this subdivision sets forth the
method of restating the value of old contributions that pertain
to the same series or class to which the new contribution
pertains. To restate the value:
(1) state the value the cooperative has accorded to the new
contribution under section 308B.701, subdivision 3, clause (1);
(2) determine what percentage the value stated under clause
(1) will constitute, after the restatement required by this
subdivision, of the total value of all contributions that
pertain to the particular series or class to which the new
contribution pertains;
(3) divide the value stated under clause (1) by the
percentage determined under clause (2), yielding the total
value, after the restatement required by this subdivision, of
all contributions pertaining to the particular series or class;
(4) subtract the value stated under clause (1) from the
value determined under clause (3), yielding the total value,
after the restatement required by this subdivision, of all the
old contributions pertaining to the particular series or class;
(5) subtract the value, as reflected in the required
records before the restatement required by this subdivision, of
the old contributions from the value determined under clause
(4), yielding the value to be allocated among and added to the
old contributions pertaining to the particular series or class;
and
(6) allocate the value determined under clause (5)
proportionally among the old contributions pertaining to the
particular series or class, add the allocated values to those
old contributions, and change the required records accordingly.
(b) The values determined under clause (5) and allocated
and added under clause (6) may be positive, negative, or zero.
Subd. 4. [RESTATEMENT METHOD FOR OTHER SERIES OR CLASS.]
Unless otherwise provided in the articles or bylaws, this
subdivision sets forth the method of restating the value of old
contributions that do not pertain to the same series or class to
which the new contribution pertains. To restate the value:
(1) determine the percentage by which the restatement under
subdivision 3 has changed the total contribution value reflected
in the required records for the series or class to which the new
contribution pertains; and
(2) as to each old contribution that does not pertain to
the same series or class to which the new contribution pertains,
change the value reflected in the required records by the
percentage determined under clause (1). The percentage
determined under clause (1) may be positive, negative, or zero.
Subd. 5. [NEW CONTRIBUTIONS MAY BE AGGREGATED.] If a
cooperative accepts more than one contribution pertaining to the
same series or class at the same time, then for the purpose of
the restatement required by this section, the cooperative may
consider all the new contributions a single contribution.
Sec. 62. [308B.711] [CONTRIBUTION AGREEMENTS.]
Subdivision 1. [SIGNED WRITING.] A contribution agreement,
whether made before or after the formation of the cooperative,
is not enforceable against the would-be contributor unless it is
in writing and signed by the would-be contributor.
Subd. 2. [IRREVOCABLE PERIOD.] Unless otherwise provided
in the contribution agreement, or unless all of the would-be
contributors and, if in existence, the cooperative, consent to a
shorter or longer period, a contribution agreement is
irrevocable for a period of six months.
Subd. 3. [CURRENT AND DEFERRED PAYMENT.] A contribution
agreement, whether made before or after the formation of a
cooperative, must be paid or performed in full at the time or
times, or in the installments, if any, specified in the
contribution agreement. In the absence of a provision in the
contribution agreement specifying the time at which the
contribution is to be paid or performed, the contribution must
be paid or performed at the time or times determined by the
board, but a call made by the board for payment or performance
on contributions must be uniform for all membership interests of
the same class or for all membership interests of the same
series.
Subd. 4. [FAILURE TO PAY REMEDIES.] (a) Unless otherwise
provided in the contribution agreement, in the event of default
in the payment or performance of an installment or call when
due, the cooperative may proceed to collect the amount due in
the same manner as a debt due the cooperative. If a would-be
contributor does not make a required contribution of property or
services, the cooperative shall require the would-be contributor
to contribute cash equal to that portion of the value, as stated
in the cooperative required records, of the contribution that
has not been made.
(b) If the amount due under a contribution agreement
remains unpaid for a period of 20 days after written notice of
demand for payment has been given to the delinquent would-be
contributor, the membership interests that were subject to the
contribution agreement may be offered for sale by the
cooperative for a price in money equaling or exceeding the sum
of the full balance owed by the delinquent would-be contributor
plus the expenses incidental to the sale.
If the membership interests that were subject to the
contribution agreement are sold according to this paragraph, the
cooperative shall pay to the delinquent would-be contributor or
to the delinquent would-be contributor's legal representative
the lesser of:
(1) the excess of net proceeds realized by the cooperative
over the sum of the amount owed by the delinquent would-be
contributor plus the expenses incidental to the sale, less any
penalty stated in the contribution agreement, which may include
forfeiture of the partial contribution; and
(2) the amount actually paid by the delinquent would-be
contributor.
If the membership interests that were subject to the
contribution agreement are not sold according to this paragraph,
the cooperative may collect the amount due in the same manner as
a debt due the cooperative or cancel the contribution agreement
according to paragraph (c).
(c) If the amount due under a contribution agreement
remains unpaid for a period of 20 days after written notice of
demand for payment has been given to the delinquent would-be
contributor and the membership interests that were subject to
the defaulted contribution agreement have not been sold
according to paragraph (b), the cooperative may cancel the
contribution agreement, the cooperative may retain any portion
of the contribution agreement price actually paid as provided in
the contribution agreement, and the cooperative shall refund to
the delinquent would-be contributor or the delinquent would-be
contributor's legal representatives any portion of the
contribution agreement price as provided in the contribution
agreement.
Subd. 5. [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise
provided in the articles or bylaws, a would-be contributor's
rights under a contribution agreement may not be assigned, in
whole or in part, to a person who was not a member at the time
of the assignment, unless all the members approve the assignment
by unanimous written consent.
Sec. 63. [308B.715] [CONTRIBUTION RIGHTS AGREEMENTS.]
Subdivision 1. [AGREEMENTS PERMITTED.] Subject to any
restrictions in the articles or bylaws, a cooperative may enter
into contribution rights agreements under the terms, provisions,
and conditions fixed by the board.
Subd. 2. [WRITING REQUIRED AND TERMS TO BE STATED.] Any
contribution rights agreement must be in writing and the writing
must state in full, summarize, or include by reference all the
agreement's terms, provisions, and conditions of the rights to
make contributions.
Subd. 3. [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise
provided in the articles or bylaws, a would-be contributor's
rights under a contribution rights agreement may not be
assigned, in whole or in part, to a person who was not a member
at the time of the assignment, unless all the members approve
the assignment by unanimous written consent.
Sec. 64. [308B.721] [ALLOCATIONS AND DISTRIBUTIONS TO
MEMBERS.]
Subdivision 1. [ALLOCATION OF PROFITS AND LOSSES.] The
bylaws shall prescribe the allocation of profits and losses
between patron membership interests collectively and any other
membership interests. If the bylaws do not otherwise provide,
the profits and losses between patron membership interests
collectively and other membership interests shall be allocated
on the basis of the value of contributions to capital made by
the patron membership interests collectively and other
membership interests and accepted by the cooperative. The
allocation of profits to the patron membership interests
collectively shall not be less than 50 percent of the total
profits in any fiscal year, except that if authorized in the
original articles as filed or in articles or bylaws that are
adopted by an affirmative vote of the patron members or the
articles or bylaws are amended by the affirmative vote of the
patron members, the allocation of profits to the patron
membership interests collectively may not be less than 15
percent of the total profits in any fiscal year.
Subd. 2. [DISTRIBUTION OF CASH OR OTHER ASSETS.] The
bylaws shall prescribe the distribution of cash or other assets
of the cooperative among the membership interests of the
cooperative. If not otherwise provided in the bylaws,
distribution shall be made to the patron membership interests
collectively and other members on the basis of the value of
contributions to capital made and accepted by the cooperative,
by the patron membership interests collectively, and other
membership interests. The distributions to patron membership
interests collectively shall not be less than 50 percent of the
total distributions in any fiscal year, except that if
authorized in the articles or bylaws adopted by the affirmative
vote of the patron members, or the articles or bylaws are
amended by the affirmative vote of the patron members, the
distributions to patron membership interests collectively shall
not be less than 15 percent of the total distributions in any
year.
Sec. 65. [308B.725] [ALLOCATIONS AND DISTRIBUTIONS TO
PATRON MEMBERS.]
Subdivision 1. [DISTRIBUTION OF NET INCOME.] A cooperative
may set aside a portion of net income allocated to the patron
membership interests as the board determines advisable to create
or maintain a capital reserve.
Subd. 2. [RESERVES.] In addition to a capital reserve, the
board may, for patron membership interests:
(1) set aside an amount not to exceed five percent of the
annual net income of the cooperative for promoting and
encouraging cooperative organization; and
(2) establish and accumulate reserves for new buildings,
machinery and equipment, depreciation, losses, and other proper
purposes.
Subd. 3. [PATRONAGE DISTRIBUTIONS.] Net income allocated
to patron members in excess of dividends on equity and additions
to reserves shall be distributed to patron members on the basis
of patronage. A cooperative may establish allocation units,
whether the units are functional, divisional, departmental,
geographic, or otherwise and pooling arrangements and may
account for and distribute net income to patrons on the basis of
allocation units and pooling arrangements. A cooperative may
offset the net loss of an allocation unit or pooling arrangement
against the net income of other allocation units or pooling
arrangements.
Subd. 4. [FREQUENCY OF DISTRIBUTION.] Distribution of net
income shall be made at least annually. The board shall present
to the members at their annual meeting a report covering the
operations of the cooperative during the preceding fiscal year.
Subd. 5. [FORM OF DISTRIBUTION.] A cooperative may
distribute net income to patron members in cash, capital
credits, allocated patronage equities, revolving fund
certificates, or its own or other securities.
Subd. 6. [ELIGIBLE NONMEMBER PATRONS.] The cooperative may
provide in the bylaws that nonmember patrons are allowed to
participate in the distribution of net income payable to patron
members on equal terms with patron members.
Subd. 7. [PATRONAGE CREDITS FOR INELIGIBLE MEMBERS.] If a
nonmember patron with patronage credits is not qualified or
eligible for membership, a refund due may be credited to the
patron's individual account. The board may issue a certificate
of interest to reflect the credited amount. After the patron is
issued a certificate of interest, the patron may participate in
the distribution of income on the same basis as a patron member.
Sec. 66. [308B.627] [MEMBER CONTROL AGREEMENTS.]
Subdivision 1. [AUTHORIZATION.] A written agreement among
persons who are then members, including a sole member, or who
have signed subscription or contribution agreements, relating to
the control of any phase of the business and affairs of the
cooperative, its liquidation, dissolution and termination, or
the relations among members or persons who have signed
subscription or contribution agreements is valid as provided in
subdivision 2. Wherever this chapter provides that a particular
result may or must be obtained through a provision in the
articles or bylaws, the same result can be accomplished through
a member control agreement valid under this section or through a
procedure established by a member control agreement valid under
this section.
Subd. 2. [VALID EXECUTION.] Other than patron member
voting control under section 308B.545 and patron member
allocation and distribution provisions under sections 308B.721
and 308B.725, a written agreement among persons described in
subdivision 1 that relates to the control of or the liquidation,
dissolution, and termination of the cooperative; the relations
among them; or any phase of the business and affairs of the
cooperative, including, without limitation, the management of
its business; the declaration and payment of distributions; the
sharing of profits and losses; the election of directors; the
employment of members by the cooperative; or the arbitration of
disputes, is valid, if the agreement is signed by all persons
who are then the members of the cooperative, whether or not the
members all have voting power, and all those who have signed
contribution agreements, regardless of whether those signatories
will, when members, have voting power.
Subd. 3. [OTHER AGREEMENTS NOT AFFECTED.] This section
does not apply to, limit, or restrict agreements otherwise
valid, nor is the procedure set forth in this section the
exclusive method of agreement among members or between the
members and the cooperative with respect to any of the matters
described.
Sec. 67. [308B.735] [DISTRIBUTION OF UNCLAIMED PROPERTY.]
Subdivision 1. [ALTERNATE PROCEDURE TO DISBURSE PROPERTY.]
A cooperative may, in lieu of paying or delivering to the state
the unclaimed property specified in its report of unclaimed
property, distribute the unclaimed property to a business entity
or organization that is exempt from taxation. A cooperative
making the election to distribute unclaimed property shall file
with the secretary of state:
(1) a verified written explanation of the proof of claim of
an owner establishing a right to receive the abandoned property;
(2) any error in the presumption of abandonment;
(3) the name, address, and exemption number of the business
entity or organization to which the property was or is to be
distributed; and
(4) the approximate date of distribution.
Subd. 2. [REPORTING AND CLAIMING PROCEDURE NOT
AFFECTED.] This subdivision does not alter the procedure
provided by law for cooperatives to report unclaimed property to
the state and the requirement that claims of owners are made to
the cooperatives for a period following the publication of lists
of abandoned property.
Subd. 3. [OWNER'S RIGHT EXTINGUISHED ON DISBURSEMENT.] The
right of an owner to unclaimed property held by a cooperative is
extinguished when the property is disbursed by the cooperative
to a tax exempt organization in accordance with this section.
MERGER
Sec. 68. [308B.801] [MERGER AND CONSOLIDATION.]
Subdivision 1. [AUTHORIZATION.] Unless otherwise
prohibited, cooperatives organized under the laws of this state,
including cooperatives organized under this chapter or chapter
308A, may merge or consolidate with each other, a Minnesota
limited liability company under the provisions of section
322B.755, or other business entities organized under the laws of
another state by complying with the provisions of this section
and the law of the state where the surviving or new business
entity will exist. A cooperative may not merge or consolidate
with a business entity organized under the laws of this state,
other than a cooperative organized under chapter 308A, unless
the law governing the business entity expressly authorizes
merger or consolidation with a cooperative. This subdivision
does not authorize a foreign business entity to do any act not
authorized by the law governing the foreign business entity.
Subd. 2. [PLAN.] To initiate a merger or consolidation of
a cooperative, a written plan of merger or consolidation shall
be prepared by the board or by a committee selected by the board
to prepare a plan. The plan shall state:
(1) the names of the constituent domestic cooperatives, the
name of any Minnesota limited liability company that is a party
to the merger, to the extent authorized under section 322B.755,
and any foreign business entities;
(2) the name of the surviving or new domestic cooperative,
Minnesota limited liability company as required by section
322B.755, or other foreign business entity;
(3) the manner and basis of converting membership or
ownership interests of the constituent domestic cooperatives,
the surviving Minnesota limited liability company as provided in
section 322B.755, or foreign business entities into membership
or ownership interests in the surviving or new domestic
cooperative, the surviving Minnesota limited liability company
as authorized in section 322B.755, or foreign business entity;
(4) the terms of the merger or consolidation;
(5) the proposed effect of the consolidation or merger on
the members and patron members of each constituent domestic
cooperative; and
(6) for a consolidation, the plan shall contain the
articles of the entity or organizational documents to be filed
with the state in which the entity is organized or, if the
surviving organization is a Minnesota limited liability company,
the articles of organization.
Subd. 3. [NOTICE.] The following shall apply to notice:
(1) the board shall mail or otherwise transmit or deliver
notice of the merger or consolidation to each member. The
notice shall contain the full text of the plan, and the time and
place of the meeting at which the plan will be considered; and
(2) a cooperative with more than 200 members may provide
the notice in the same manner as a regular members' meeting
notice.
Subd. 4. [ADOPTION OF PLAN.] (a) A plan of merger or
consolidation shall be adopted by a domestic cooperative as
provided in this subdivision.
(b) A plan of merger or consolidation is adopted if:
(1) a quorum of the members eligible to vote is registered
as being present or represented by mail vote or alternative
ballot at the meeting; and
(2) the plan is approved by the patron members, or if
otherwise provided in the articles or bylaws is approved by a
majority of the votes cast in each class of votes cast, or for a
domestic cooperative with articles or bylaws requiring more than
a majority of the votes cast or other conditions for approval,
the plan is approved by a proportion of the votes cast or a
number of total members as required by the articles or bylaws
and the conditions for approval in the articles or bylaws have
been satisfied.
(c) After the plan has been adopted, articles of merger or
consolidation stating the plan and that the plan was adopted
according to this subdivision shall be signed by the chair, vice
chair, records officer, or documents officer of each cooperative
merging or consolidating.
(d) The articles of merger or consolidation shall be filed
in the office of the secretary of state.
(e) For a merger, the articles of the surviving domestic
cooperative subject to this chapter are deemed amended to the
extent provided in the articles of merger.
(f) Unless a later date is provided in the plan, the merger
or consolidation is effective when the articles of merger or
consolidation are filed in the office of the secretary of state
or the appropriate office of another jurisdiction.
(g) The secretary of state shall issue a certificate of
organization of the merged or consolidated cooperative.
Subd. 5. [EFFECT OF MERGER.] For a merger that does not
involve a Minnesota limited liability company, the following
shall apply to the effect of a merger:
(a) After the effective date, the domestic cooperative,
Minnesota limited liability company, if party to the plan, and
any foreign business entity that is a party to the plan become a
single entity. For a merger, the surviving business entity is
the business entity designated in the plan. For a
consolidation, the new domestic cooperative, the Minnesota
limited liability company, if any, and any foreign business
entity is the business entity provided for in the plan. Except
for the surviving or new domestic cooperative, Minnesota limited
liability company, or foreign business entity, the separate
existence of each merged or consolidated domestic or foreign
business entity that is a party to the plan ceases on the
effective date of the merger or consolidation.
(b) The surviving or new domestic cooperative, Minnesota
limited liability company, or foreign business entity possesses
all of the rights and property of each of the merged or
consolidated business entities and is responsible for all their
obligations. The title to property of the merged or
consolidated domestic cooperative or foreign business entity is
vested in the surviving or new domestic cooperative, Minnesota
limited liability company, or foreign business entity without
reversion or impairment of the title caused by the merger or
consolidation.
(c) If a merger involves a Minnesota limited liability
company, this subdivision is subject to the provisions of
section 322B.755.
Sec. 69. [308B.805] [MERGER OF SUBSIDIARY.]
Subdivision 1. [WHEN AUTHORIZED; CONTENTS OF PLAN.] (a)
For purposes of this section, "subsidiary" means a domestic
cooperative, a Minnesota limited liability company, or a foreign
cooperative, and "cooperative" means a domestic cooperative. A
Minnesota limited liability company may only participate in a
merger under this section to the extent authorized under section
322B.755. A parent domestic cooperative or a subsidiary that is
a domestic cooperative may complete the merger of a subsidiary
as provided in this section, provided however, if either the
parent or the subsidiary is a business entity organized under
the laws of this state, the merger of the subsidiary is not
authorized under this section unless the law governing the
business entity expressly authorizes merger with a cooperative.
A parent cooperative owning at least 90 percent of the
outstanding ownership interests of each class and series of a
subsidiary directly, or indirectly through related
organizations, other than classes or series that, absent this
section, would otherwise not be entitled to vote on the merger,
may merge the subsidiary into itself or into any other
subsidiary at least 90 percent of the outstanding ownership
interests of each class and series of which is owned by the
parent cooperative directly, or indirectly through related
organizations, other than classes or series that, absent this
section, would otherwise not be entitled to vote on the merger,
without a vote of the members of itself or any subsidiary or may
merge itself, or itself and one or more of the subsidiaries,
into one of the subsidiaries under this section. A resolution
approved by the affirmative vote of a majority of the directors
of the parent cooperative present shall set forth a plan of
merger that contains:
(1) the name of the subsidiary or subsidiaries, the name of
the parent, and the name of the surviving cooperative;
(2) the manner and basis of converting the membership
interests of the subsidiary or subsidiaries or parent into
securities of the parent, subsidiary, or of another cooperative
or, in the whole or in part, into money or other property;
(3) if the parent is a constituent cooperative but is not
the surviving cooperative in the merger, a provision for the pro
rata issuance of membership interests of the surviving
cooperative to the holders of membership interests of the parent
on surrender of any certificates for shares of the parent; and
(4) if the surviving cooperative is a subsidiary, a
statement of any amendments to the articles of the surviving
cooperative that will be part of the merger.
(b) If the parent is a constituent cooperative and the
surviving cooperative in the merger, it may change its
cooperative name, without a vote of its members, by the
inclusion of a provision to that effect in the resolution of
merger setting forth the plan of merger that is approved by the
affirmative vote of a majority of the directors of the parent
present. Upon the effective date of the merger, the name of the
parent shall be changed.
(c) If the parent is a constituent cooperative but is not
the surviving cooperative in the merger, the resolution is not
effective unless it is also approved by the affirmative vote of
the holders of a majority of the voting power of all membership
interests of the parent entitled to vote at a regular or special
meeting if the parent is a cooperative, or in accordance with
the laws under which it is organized if the parent is a foreign
business entity or cooperative.
Subd. 2. [NOTICE TO MEMBERS OF SUBSIDIARY.] Notice of the
action, including a copy of the plan of merger, shall be given
to each member, other than the parent and any subsidiary of each
subsidiary that is a constituent cooperative in the merger
before, or within ten days after, the effective date of the
merger.
Subd. 3. [ARTICLES OF MERGER; CONTENTS OF ARTICLES.]
Articles of merger shall be prepared that contain:
(1) the plan of merger;
(2) the number of outstanding membership interests of each
series and class of each subsidiary that is a constituent
cooperative in the merger, other than the series or classes
that, absent this section, would otherwise not be entitled to
vote on the merger, and the number of membership interests of
each series and class of the subsidiary or subsidiaries, other
than series or classes that, absent this section, would
otherwise not be entitled to vote on the merger, owned by the
parent directly, or indirectly through related organizations;
and
(3) a statement that the plan of merger has been approved
by the parent under this section.
Subd. 4. [ARTICLES SIGNED, FILED.] The articles of merger
shall be signed on behalf of the parent and filed with the
secretary of state.
Subd. 5. [CERTIFICATE.] The secretary of state shall issue
a certificate of merger to the parent or its legal
representative or, if the parent is a constituent cooperative
but is not the surviving cooperative in the merger, to the
surviving cooperative or its legal representative.
Subd. 6. [NONEXCLUSIVITY.] A merger among a parent and one
or more subsidiaries or among two or more subsidiaries of a
parent may be accomplished under section 308B.801 instead of
this section, in which case this section does not apply.
Sec. 70. [308B.835] [ABANDONMENT.]
Subdivision 1. [ABANDONMENT BY MEMBERS OR PLAN.] After a
plan of merger has been approved by the members entitled to vote
on the approval of the plan and before the effective date of the
plan, the plan may be abandoned by the same vote that approved
the plan.
Subd. 2. [ABANDONMENT OF MERGER.] (a) A merger may be
abandoned:
(1) if the members of each of the constituent domestic
cooperatives entitled to vote on the approval of the plan have
approved the abandonment at a meeting by the affirmative vote of
the holders of a majority of the voting power of the membership
interests entitled to vote; if the merger is with a domestic
cooperative and a Minnesota limited liability company or foreign
business entity, if abandonment is approved in such manner as
may be required by section 322B.755 for the involvement of a
Minnesota limited liability company, or for a foreign business
entity by the laws of the state under which the foreign business
entity is organized; and the members of a constituent domestic
cooperative are not entitled to vote on the approval of the
plan, the board of the constituent domestic cooperative has
approved the abandonment by the affirmative vote of a majority
of the directors present;
(2) if the plan itself provides for abandonment and all
conditions for abandonment set forth in the plan are met; or
(3) under paragraph (b).
(b) A plan of merger may be abandoned before the effective
date of the plan by a resolution of the board of any constituent
domestic cooperative abandoning the plan of merger approved by
the affirmative vote of a majority of the directors present,
subject to the contract rights of any other person under the
plan. If a plan of merger is with a domestic or foreign
business entity, the plan of merger may be abandoned before the
effective date of the plan by a resolution of the foreign
business entity adopted according to the laws of the state under
which the foreign business entity is organized, subject to the
contract rights of any other person under the plan. If the plan
of merger is with a Minnesota limited liability company, the
plan of merger may be abandoned by the Minnesota limited
liability company as provided in section 322B.755, subject to
the contractual rights of any other person under the plan.
(c) If articles of merger have been filed with the
secretary of state, but have not yet become effective, the
constituent organizations, in the case of abandonment under
paragraph (a), clause (1), the constituent organizations or any
one of them, in the case of abandonment under paragraph (a),
clause (2), or the abandoning organization in the case of
abandonment under paragraph (b), shall file with the secretary
of state articles of abandonment that contain:
(1) the names of the constituent organizations;
(2) the provisions of this section under which the plan is
abandoned; and
(3) if the plan is abandoned under paragraph (b), the text
of the resolution abandoning the plan.
DISSOLUTION
Sec. 71. [308B.901] [METHODS OF DISSOLUTION.]
A cooperative may be dissolved by the members or by order
of the court.
Sec. 72. [308B.905] [WINDING UP.]
Subdivision 1. [COLLECTION AND PAYMENT OF DEBTS.] After
the notice of intent to dissolve has been filed with the
secretary of state, the board, or the officers acting under the
direction of the board shall proceed as soon as possible:
(1) to collect or make provision for the collection of all
debts due or owing to the cooperative, including unpaid
subscriptions for shares; and
(2) to pay or make provision for the payment of all debts,
obligations, and liabilities of the cooperative according to
their priorities.
Subd. 2. [TRANSFER OF ASSETS.] After the notice of intent
to dissolve has been filed with the secretary of state, the
board may sell, lease, transfer, or otherwise dispose of all or
substantially all of the property and assets of the dissolving
cooperative without a vote of the members.
Subd. 3. [DISTRIBUTION TO MEMBERS.] Tangible and
intangible property, including money, remaining after the
discharge of the debts, obligations, and liabilities of the
cooperative shall be distributed to the members and former
members as provided in the articles or bylaws, unless otherwise
provided by law. If previously authorized by the members, the
tangible and intangible property of the cooperative may be
liquidated and disposed of at the discretion of the board.
Sec. 73. [308B.911] [REVOCATION OF DISSOLUTION
PROCEEDINGS.]
Subdivision 1. [AUTHORITY TO REVOKE.] Dissolution
proceedings may be revoked before the articles of dissolution
are filed with the secretary of state.
Subd. 2. [REVOCATION BY MEMBERS.] The chair may call a
members' meeting to consider the advisability of revoking the
dissolution proceedings. The question of the proposed
revocation shall be submitted to the members at the members'
meeting called to consider the revocation. The dissolution
proceedings are revoked if the proposed revocation is approved
at the members' meeting by a majority of the members of the
cooperative or for a cooperative with articles or bylaws
requiring a greater number of members, the number of members
required by the articles or bylaws.
Subd. 3. [FILING WITH THE SECRETARY OF STATE.] Revocation
of dissolution proceedings is effective when a notice of
revocation is filed with the secretary of state. After the
notice is filed, the cooperative may resume business.
Sec. 74. [308B.915] [STATUTE OF LIMITATIONS.]
The claim of a creditor or claimant against a dissolving
cooperative is barred if the claim has not been enforced by
initiating legal, administrative, or arbitration proceedings
concerning the claim by two years after the date the notice of
intent to dissolve is filed with the secretary of state.
Sec. 75. [308B.921] [ARTICLES OF DISSOLUTION.]
Subdivision 1. [CONDITIONS TO FILE.] Articles of
dissolution of a cooperative shall be filed with the secretary
of state after payment of the claims of all known creditors and
claimants has been made or provided for and the remaining
property has been distributed by the board. The articles of
dissolution shall state:
(1) that all debts, obligations, and liabilities of the
cooperative have been paid or discharged or adequate provisions
have been made for them or time periods allowing claims have run
and other claims are not outstanding;
(2) that the remaining property, assets, and claims of the
cooperative have been distributed among the members or under a
liquidation authorized by the members; and
(3) that legal, administrative, or arbitration proceedings
by or against the cooperative are not pending or adequate
provision has been made for the satisfaction of a judgment,
order, or decree that may be entered against the cooperative in
a pending proceeding.
Subd. 2. [DISSOLUTION EFFECTIVE ON FILING.] The
cooperative is dissolved when the articles of dissolution have
been filed with the secretary of state.
Subd. 3. [CERTIFICATE.] The secretary of state shall issue
to the dissolved cooperative or its legal representative a
certificate of dissolution that contains:
(1) the name of the dissolved cooperative;
(2) the date the articles of dissolution were filed with
the secretary of state; and
(3) a statement that the cooperative is dissolved.
Sec. 76. [308B.925] [APPLICATION FOR COURT-SUPERVISED
VOLUNTARY DISSOLUTION.]
After a notice of intent to dissolve has been filed with
the secretary of state and before a certificate of dissolution
has been issued, the cooperative or, for good cause shown, a
member or creditor may apply to a court within the county where
the registered address is located to have the dissolution
conducted or continued under the supervision of the court.
Sec. 77. [308B.931] [COURT-ORDERED REMEDIES OR
DISSOLUTION.]
Subdivision 1. [CONDITIONS FOR RELIEF.] A court may grant
equitable relief that it deems just and reasonable in the
circumstances or may dissolve a cooperative and liquidate its
assets and business:
(1) in a supervised voluntary dissolution that is applied
for by the cooperative;
(2) in an action by a member when it is established that:
(i) the directors or the persons having the authority
otherwise vested in the board are deadlocked in the management
of the cooperative's affairs and the members are unable to break
the deadlock;
(ii) the directors or those in control of the cooperative
have acted fraudulently, illegally, or in a manner unfairly
prejudicial toward one or more members in their capacities as
members, directors, or officers;
(iii) the members of the cooperative are so divided in
voting power that, for a period that includes the time when two
consecutive regular members' meetings were held, they have
failed to elect successors to directors whose terms have expired
or would have expired upon the election and qualification of
their successors;
(iv) the cooperative assets are being misapplied or wasted;
or
(v) the period of duration as provided in the articles has
expired and has not been extended as provided in this chapter;
and
(3) in an action by a creditor when:
(i) the claim of the creditor against the cooperative has
been reduced to judgment and an execution on the judgment has
been returned unsatisfied;
(ii) the cooperative has admitted in writing that the claim
of the creditor against the cooperative is due and owing and it
is established that the cooperative is unable to pay its debts
in the ordinary course of business; or
(iii) in an action by the attorney general to dissolve the
cooperative in accordance with this chapter when it is
established that a decree of dissolution is appropriate.
Subd. 2. [CONDITION OF COOPERATIVE OR ASSOCIATION.] In
determining whether to order equitable relief or dissolution,
the court shall take into consideration the financial condition
of the cooperative but may not refuse to order equitable relief
or dissolution solely on the grounds that the cooperative has
accumulated operating net income or current operating net income.
Subd. 3. [DISSOLUTION AS REMEDY.] In deciding whether to
order dissolution of the cooperative, the court shall consider
whether lesser relief suggested by one or more parties, such as
a form of equitable relief or a partial liquidation, would be
adequate to permanently relieve the circumstances established
under subdivision 1, clause (2), item (ii) or (iii). Lesser
relief may be ordered if it would be appropriate under the facts
and circumstances of the case.
Subd. 4. [EXPENSES.] If the court finds that a party to a
proceeding brought under this section has acted arbitrarily,
vexatiously, or otherwise not in good faith, the court may in
its discretion award reasonable expenses, including attorney
fees and disbursements to any of the other parties.
Subd. 5. [VENUE.] Proceedings under this section shall be
brought in a court within the county where the registered
address of the cooperative is located.
Subd. 6. [PARTIES.] It is not necessary to make members
parties to the action or proceeding unless relief is sought
against them personally.
Sec. 78. [308B.935] [PROCEDURE IN INVOLUNTARY OR
COURT-SUPERVISED VOLUNTARY DISSOLUTION.]
Subdivision 1. [ACTION BEFORE HEARING.] In dissolution
proceedings before a hearing can be completed the court may:
(1) issue injunctions;
(2) appoint receivers with all powers and duties that the
court directs;
(3) take actions required to preserve the cooperative's
assets wherever located; and
(4) carry on the business of the cooperative.
Subd. 2. [ACTION AFTER HEARING.] After a hearing is
completed, upon notice to parties to the proceedings and to
other parties in interest designated by the court, the court may
appoint a receiver to collect the cooperative's assets,
including amounts owing to the cooperative by subscribers on
account of an unpaid portion of the consideration for the
issuance of shares. A receiver has authority, subject to the
order of the court, to continue the business of the cooperative
and to sell, lease, transfer, or otherwise dispose of the
property and assets of the cooperative either at public or
private sale.
Subd. 3. [DISCHARGE OF OBLIGATIONS.] The assets of the
cooperative or the proceeds resulting from a sale, lease,
transfer, or other disposition shall be applied in the following
order of priority:
(1) the costs and expense of the proceedings, including
attorney fees and disbursements;
(2) debts, taxes, and assessments due the United States,
this state, and other states in that order;
(3) claims duly proved and allowed to employees under the
provisions of the Workers' Compensation Act except that claims
under this clause may not be allowed if the cooperative carried
workers' compensation insurance, as provided by law, at the time
the injury was sustained;
(4) claims, including the value of all compensation paid in
a medium other than money, proved and allowed to employees for
services performed within three months preceding the appointment
of the receiver, if any; and
(5) other claims proved and allowed.
Subd. 4. [REMAINDER TO MEMBERS.] After payment of the
expenses of receivership and claims of creditors are proved, the
remaining assets, if any, may be distributed to the members or
distributed under an approved liquidation plan.
Sec. 79. [308B.941] [RECEIVER QUALIFICATIONS AND POWERS.]
Subdivision 1. [QUALIFICATIONS.] A receiver shall be a
natural person or a domestic business entity or a foreign
business entity authorized to transact business in this state.
A receiver shall give a bond as directed by the court with the
sureties required by the court.
Subd. 2. [POWERS.] A receiver may sue and defend in all
courts as receiver of the cooperative. The court appointing the
receiver has exclusive jurisdiction of the cooperative and its
property.
Sec. 80. [308B.945] [DISSOLUTION ACTION BY ATTORNEY
GENERAL; ADMINISTRATIVE DISSOLUTION.]
Subdivision 1. [CONDITIONS TO BEGIN ACTION.] A cooperative
may be dissolved involuntarily by a decree of a court in this
state in an action filed by the attorney general it if is
established that:
(1) the articles and certificate of organization were
procured through fraud;
(2) the cooperative was organized for a purpose not
permitted by this chapter or prohibited by state law;
(3) the cooperative has flagrantly violated a provision of
this chapter, has violated a provision of this chapter more than
once, or has violated more than one provision of this chapter;
or
(4) the cooperative has acted, or failed to act, in a
manner that constitutes surrender or abandonment of the
cooperative's franchise, privileges, or enterprise.
Subd. 2. [NOTICE TO COOPERATIVE.] An action may not be
commenced under subdivision 1 until 30 days after notice to the
cooperative by the attorney general of the reason for the filing
of the action. If the reason for filing the action is an act
that the cooperative has done, or omitted to do, and the act or
omission may be corrected by an amendment of the articles or
bylaws or by performance of or abstention from the act, the
attorney general shall give the cooperative 30 additional days
to make the correction before filing the action.
Sec. 81. [308B.951] [FILING CLAIMS IN COURT-SUPERVISED
DISSOLUTION PROCEEDINGS.]
Subdivision 1. [FILING UNDER OATH.] In proceedings to
dissolve a cooperative, the court may require all creditors and
claimants of the cooperative to file their claims under oath
with the court administrator or with the receiver in a form
prescribed by the court.
Subd. 2. [DATE TO FILE A CLAIM.] If the court requires the
filing of claims, the court shall:
(1) set a date, by order, at least 120 days after the date
the order is filed as the last day for the filing of claims; and
(2) prescribe the notice of the fixed date that shall be
given to creditors and claimants.
Subd. 3. [FIXED DATE OR EXTENSION FOR FILING.] Before the
fixed date, the court may extend the time for filing claims.
Creditors and claimants failing to file claims on or before the
fixed date may be barred, by order of court, from claiming an
interest in or receiving payment out of the property or assets
of the cooperative.
Sec. 82. [308B.955] [DISCONTINUANCE OF COURT-SUPERVISED
DISSOLUTION PROCEEDINGS.]
The involuntary or supervised voluntary dissolution of a
cooperative may be discontinued at any time during the
dissolution proceedings if it is established that cause for
dissolution does not exist. The court shall dismiss the
proceedings and direct the receiver, if any, to redeliver to the
cooperative its remaining property and assets.
Sec. 83. [308B.961] [COURT-SUPERVISED DISSOLUTION ORDER.]
Subdivision 1. [CONDITIONS FOR DISSOLUTION ORDER.] In an
involuntary or supervised voluntary dissolution after the costs
and expenses of the proceedings and all debts, obligations, and
liabilities of the cooperative have been paid or discharged and
the remaining property and assets have been distributed to its
members or, if its property and assets are not sufficient to
satisfy and discharge the costs, expenses, debts, obligations,
and liabilities, when all the property and assets have been
applied so far as they will go to their payment according to
their priorities, the court shall enter an order dissolving the
cooperative.
Subd. 2. [DISSOLUTION EFFECTIVE ON FILING ORDER.] When the
order dissolving the cooperative or association has been
entered, the cooperative or association is dissolved.
Sec. 84. [308B.965] [FILING COURT'S DISSOLUTION ORDER.]
After the court enters an order dissolving a cooperative,
the court administrator shall cause a certified copy of the
dissolution order to be filed with the secretary of state. The
secretary of state may not charge a fee for filing the
dissolution order.
Sec. 85. [308B.971] [BARRING OF CLAIMS.]
Subdivision 1. [CLAIMS BARRED.] A person who is or becomes
a creditor or claimant before, during, or following the
conclusion of dissolution proceedings, who does not file a claim
or pursue a remedy in a legal, administrative, or arbitration
proceeding during the pendency of the dissolution proceeding or
has not initiated a legal, administrative, or arbitration
proceeding before the commencement of the dissolution
proceedings and all those claiming through or under the creditor
or claimant, are forever barred from suing on that claim or
otherwise realizing upon or enforcing it, except as provided in
this section.
Subd. 2. [CERTAIN UNFILED CLAIMS ALLOWED.] Within one year
after articles of dissolution have been filed with the secretary
of state under this chapter or a dissolution order has been
entered, a creditor or claimant who shows good cause for not
having previously filed the claim may apply to a court in this
state to allow a claim:
(1) against the cooperative to the extent of undistributed
assets; or
(2) if the undistributed assets are not sufficient to
satisfy the claim, the claim may be allowed against a member to
the extent of the distributions to members in dissolution
received by the member.
Subd. 3. [OMITTED CLAIMS ALLOWED.] Debts, obligations, and
liabilities incurred during dissolution proceedings shall be
paid or provided for by the cooperative before the distribution
of assets to a member. A person to whom this kind of debt,
obligation, or liability is owed but is not paid may pursue any
remedy against the offenders, directors, or members of the
cooperative before the expiration of the applicable statute of
limitations. This subdivision does not apply to dissolution
under the supervision or order of a court.
Sec. 86. [308B.975] [RIGHT TO SUE OR DEFEND AFTER
DISSOLUTION.]
After a cooperative has been dissolved, any of its former
officers, directors, or members may assert or defend, in the
name of the cooperative, a claim by or against the cooperative.
ARTICLE 2
SECURITIES; CROSS-REFERENCES
Section 1. Minnesota Statutes 2002, section 80A.14,
subdivision 17, is amended to read:
Subd. 17. [SALE, SELL.] (1) "Sale" or "sell" includes
every contract of sale of, contract to sell, or disposition of,
a security or interest in a security for value.
(2) "Offer" or "offer to sell" includes every attempt or
offer to dispose of, or solicitation of an offer to buy, a
security or interest in a security for value.
(3) Any security given or delivered with, or as a bonus on
account of, any purchase of securities or any other thing is
considered to constitute part of the subject of the purchase and
to have been offered and sold for value.
(4) A purported gift of assessable stock is considered to
involve an offer and sale.
(5) Every sale or offer of a warrant or right to purchase
or subscribe to another security of the same or another issuer,
as well as every sale or offer of a security which gives the
holder a present or future right or privilege to convert into
another security of the same or another issuer, is considered to
include an offer of the other security.
(6) The terms defined in this subdivision do not include
(i) any bona fide pledge or loans; (ii) any stock dividend,
whether the corporation or other entity distributing the
dividend is the issuer of the stock or not; or (iii) a dividend
on equity distributed by a cooperative organized under chapter
308B.
Sec. 2. Minnesota Statutes 2002, section 80A.15,
subdivision 2, is amended to read:
Subd. 2. [TRANSACTIONS EXEMPTED.] The following
transactions are exempted from sections 80A.08 and 80A.16:
(a) Any sales, whether or not effected through a
broker-dealer, provided that:
(1) no person shall make more than ten sales of securities
in Minnesota of the same issuer pursuant to this exemption,
exclusive of sales according to clause (2), during any period of
12 consecutive months; provided further, that in the case of
sales by an issuer, except sales of securities registered under
the Securities Act of 1933 or exempted by section 3(b) of that
act, (i) the seller reasonably believes that all buyers are
purchasing for investment, and (ii) the securities are not
advertised for sale to the general public in newspapers or other
publications of general circulation or otherwise, or by radio,
television, electronic means or similar communications media, or
through a program of general solicitation by means of mail or
telephone; or
(2) no issuer shall make more than 25 sales of its
securities in Minnesota according to this exemption, exclusive
of sales pursuant to clause (1), during any period of 12
consecutive months; provided further, that the issuer meets the
conditions in clause (1) and, in addition meets the following
additional conditions: (i) files with the commissioner, ten
days before a sale according to this clause, a statement of
issuer on a form prescribed by the commissioner; and (ii) no
commission or other remuneration is paid or given directly or
indirectly for soliciting any prospective buyers in this state
in connection with a sale according to this clause except
reasonable and customary commissions paid by the issuer to a
broker-dealer licensed under this chapter.
(b) Any nonissuer distribution of an outstanding security
if (1) either Moody's, Fitch's, or Standard & Poor's Securities
Manuals, or other recognized manuals approved by the
commissioner contains the names of the issuer's officers and
directors, a balance sheet of the issuer as of a date not more
than 18 months prior to the date of the sale, and a profit and
loss statement for the fiscal year preceding the date of the
balance sheet, and (2) the issuer or its predecessor has been in
active, continuous business operation for the five-year period
next preceding the date of sale, and (3) if the security has a
fixed maturity or fixed interest or dividend provision, the
issuer has not, within the three preceding fiscal years,
defaulted in payment of principal, interest, or dividends on the
securities.
(c) The execution of any orders by a licensed broker-dealer
for the purchase or sale of any security, pursuant to an
unsolicited offer to purchase or sell; provided that the
broker-dealer acts as agent for the purchaser or seller, and has
no direct material interest in the sale or distribution of the
security, receives no commission, profit, or other compensation
from any source other than the purchaser and seller and delivers
to the purchaser and seller written confirmation of the
transaction which clearly itemizes the commission, or other
compensation.
(d) Any nonissuer sale of notes or bonds secured by a
mortgage lien if the entire mortgage, together with all notes or
bonds secured thereby, is sold to a single purchaser at a single
sale.
(e) Any judicial sale, exchange, or issuance of securities
made pursuant to an order of a court of competent jurisdiction.
(f) The sale, by a pledge holder, of a security pledged in
good faith as collateral for a bona fide debt.
(g) Any offer or sale to a bank, savings institution, trust
company, insurance company, investment company as defined in the
Investment Company Act of 1940, or other financial institution
or institutional buyer, or to a broker-dealer, whether the
purchaser is acting for itself or in some fiduciary capacity.
(h) An offer or sale of securities by an issuer made in
reliance on the exemptions provided by Rule 505 or 506 of
Regulation D promulgated by the Securities and Exchange
Commission, Code of Federal Regulations, title 17, sections
230.501 to 230.508, subject to the conditions and definitions
provided by Rules 501 to 503 of Regulation D, if the offer and
sale also satisfies the conditions and limitations in clauses
(1) to (10).
(1) The exemption under this paragraph is not available for
the securities of an issuer if any of the persons described in
Rule 252(c) to (f) of Regulation A promulgated by the Securities
and Exchange Commission, Code of Federal Regulations, title 17,
sections 230.251 to 230.263:
(i) has filed a registration statement that is the subject
of a currently effective order entered against the issuer, its
officers, directors, general partners, controlling persons, or
affiliates, according to any state's law within five years
before the filing of the notice required under clause (5),
denying effectiveness to, or suspending or revoking the
effectiveness of, the registration statement;
(ii) has been convicted, within five years before the
filing of the notice required under clause (5), of a felony or
misdemeanor in connection with the offer, sale, or purchase of a
security or franchise, or a felony involving fraud or deceit,
including but not limited to forgery, embezzlement, obtaining
money under false pretenses, larceny, or conspiracy to defraud;
(iii) is subject to an effective administrative order or
judgment entered by a state securities administrator within five
years before the filing of the notice required under clause (5),
that prohibits, denies, or revokes the use of an exemption from
securities registration, that prohibits the transaction of
business by the person as a broker-dealer or agent, that is
based on fraud, deceit, an untrue statement of a material fact,
or an omission to state a material fact; or
(iv) is subject to an order, judgment, or decree of a court
entered within five years before the filing of the notice
required under clause (5), temporarily, preliminarily, or
permanently restraining or enjoining the person from engaging in
or continuing any conduct or practice in connection with the
offer, sale, or purchase of a security, or the making of a false
filing with a state.
A disqualification under paragraph (h) involving a
broker-dealer or agent is waived if the broker-dealer or agent
is or continues to be licensed in the state in which the
administrative order or judgment was entered against the person
or if the broker-dealer or agent is or continues to be licensed
in this state as a broker-dealer or agent after notifying the
commissioner of the act or event causing disqualification.
The commissioner may waive a disqualification under
paragraph (h) upon a showing of good cause that it is not
necessary under the circumstances that use of the exemption be
denied.
A disqualification under paragraph (h) may be waived if the
state securities administrator or agency of the state that
created the basis for disqualification has determined, upon a
showing of good cause, that it is not necessary under the
circumstances that an exemption from registration of securities
under the state's laws be denied.
It is a defense to a violation of paragraph (h) based upon
a disqualification if the issuer sustains the burden of proof to
establish that the issuer did not know, and in the exercise of
reasonable care could not have known, that a disqualification
under paragraph (h) existed.
(2) This exemption must not be available to an issuer with
respect to a transaction that, although in technical compliance
with this exemption, is part of a plan or scheme to evade
registration or the conditions or limitations explicitly stated
in paragraph (h).
(3) No commission, finder's fee, or other remuneration
shall be paid or given, directly or indirectly, for soliciting a
prospective purchaser, unless the recipient is appropriately
licensed, or exempt from licensure, in this state as a
broker-dealer.
(4) Nothing in this exemption is intended to or should be
in any way construed as relieving issuers or persons acting on
behalf of issuers from providing disclosure to prospective
investors adequate to satisfy the antifraud provisions of the
securities law of Minnesota.
(5) The issuer shall file with the commissioner a notice on
form D as adopted by the Securities and Exchange Commission
according to Regulation D, Code of Federal Regulations, title
17, section 230.502. The notice must be filed not later than 15
days after the first sale in this state of securities in an
offering under this exemption. Every notice on form D must be
manually signed by a person duly authorized by the issuer and
must be accompanied by a consent to service of process on a form
prescribed by the commissioner.
(6) A failure to comply with a term, condition, or
requirement of paragraph (h) will not result in loss of the
exemption for an offer or sale to a particular individual or
entity if the person relying on the exemption shows that: (i)
the failure to comply did not pertain to a term, condition, or
requirement directly intended to protect that particular
individual or entity, and the failure to comply was
insignificant with respect to the offering as a whole; and (ii)
a good faith and reasonable attempt was made to comply with all
applicable terms, conditions, and requirements of paragraph (h),
except that, where an exemption is established only through
reliance upon this provision, the failure to comply shall
nonetheless constitute a violation of section 80A.08 and be
actionable by the commissioner.
(7) The issuer, upon request by the commissioner, shall,
within ten days of the request, furnish to the commissioner a
copy of any and all information, documents, or materials
furnished to investors or offerees in connection with the offer
and sale according to paragraph (h).
(8) Neither compliance nor attempted compliance with the
exemption provided by paragraph (h), nor the absence of an
objection or order by the commissioner with respect to an offer
or sale of securities undertaken according to this exemption,
shall be considered to be a waiver of a condition of the
exemption or considered to be a confirmation by the commissioner
of the availability of this exemption.
(9) The commissioner may, by rule or order, increase the
number of purchasers or waive any other condition of this
exemption.
(10) The determination whether offers and sales made in
reliance on the exemption set forth in paragraph (h) shall be
integrated with offers and sales according to other paragraphs
of this subdivision shall be made according to the integration
standard set forth in Rule 502 of Regulation D promulgated by
the Securities and Exchange Commission, Code of Federal
Regulations, title 17, section 230.502. If not subject to
integration according to that rule, offers and sales according
to paragraph (h) shall not otherwise be integrated with offers
and sales according to other exemptions set forth in this
subdivision.
(i) Any offer (but not a sale) of a security for which a
registration statement has been filed under sections 80A.01 to
80A.31, if no stop order or refusal order is in effect and no
public proceeding or examination looking toward an order is
pending; and any offer of a security if the sale of the security
is or would be exempt under this section. The commissioner may
by rule exempt offers (but not sales) of securities for which a
registration statement has been filed as the commissioner deems
appropriate, consistent with the purposes of sections 80A.01 to
80A.31.
(j) The offer and sale by a cooperative organized under
chapter 308A or under the laws of another state, of its
securities when the securities are offered and sold only to its
members, or when the purchase of the securities is necessary or
incidental to establishing membership in the cooperative, or
when such securities are issued as patronage dividends. This
paragraph applies to a cooperative organized under the laws of
another state only if the cooperative has filed with the
commissioner a consent to service of process under section
80A.27, subdivision 7, and has, not less than ten days prior to
the issuance or delivery, furnished the commissioner with a
written general description of the transaction and any other
information that the commissioner requires by rule or otherwise.
(l) The issuance and delivery of any securities of one
corporation to another corporation or its security holders in
connection with a merger, exchange of shares, or transfer of
assets whereby the approval of stockholders of the other
corporation is required to be obtained, provided, that the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
by rule prescribes not less than ten days prior to the issuance
and delivery. For purposes of this paragraph, a corporation
includes a cooperative organized under chapter 308B, and the
approval of stockholders applies to members of such a
cooperative.
(m) Any transaction between the issuer or other person on
whose behalf the offering is made and an underwriter or among
underwriters.
(n) The distribution by a corporation of its or other
securities to its own security holders as a stock dividend or as
a dividend from earnings or surplus or as a liquidating
distribution; or upon conversion of an outstanding convertible
security; or pursuant to a stock split or reverse stock
split. For purposes of this paragraph, a corporation includes a
cooperative organized under chapter 308B, and the term "stock"
applies to interests in such a cooperative.
(o) Any offer or sale of securities by an affiliate of the
issuer thereof if: (1) a registration statement is in effect
with respect to securities of the same class of the issuer and
(2) the offer or sale has been exempted from registration by
rule or order of the commissioner.
(p) Any transaction pursuant to an offer to existing
security holders of the issuer, including persons who at the
time of the transaction are holders of convertible securities,
nontransferable warrants, or transferable warrants exercisable
within not more than 90 days of their issuance, if: (1) no
commission or other remuneration (other than a standby
commission) is paid or given directly or indirectly for
soliciting any security holder in this state; and (2) the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
may by rule prescribe no less than ten days prior to the
transaction.
(q) Any nonissuer sales of any security, including a
revenue obligation, issued by the state of Minnesota or any of
its political or governmental subdivisions, municipalities,
governmental agencies, or instrumentalities.
(r) Any transaction as to which the commissioner by rule or
order finds that registration is not necessary in the public
interest and for the protection of investors.
(s) An offer or sale of a security issued in connection
with an employee's stock purchase, savings, option, profit
sharing, pension, or similar employee benefit plan, if the
following conditions are met:
(1) the issuer, its parent corporation or any of its
majority-owned subsidiaries offers or sells the security
according to a written benefit plan or written contract relating
to the compensation of the purchaser; and
(2) the class of securities offered according to the plan
or contract, or if an option or right to purchase a security,
the class of securities to be issued upon the exercise of the
option or right, is registered under section 12 of the
Securities Exchange Act of 1934, or is a class of securities
with respect to which the issuer files reports according to
section 15(d) of the Securities Exchange Act of 1934; or
(3) the issuer fully complies with the provisions of Rule
701 as adopted by the Securities and Exchange Commission, Code
of Federal Regulations, title 12, section 230.701.
The issuer shall file not less than ten days before the
transaction, a general description of the transaction and any
other information that the commissioner requires by rule or
otherwise or, if applicable, a Securities and Exchange Form S-8.
Annually, within 90 days after the end of the issuer's fiscal
year, the issuer shall file a notice as provided with the
commissioner.
(t) Any sale of a security of an issuer that is a pooled
income fund, a charitable remainder trust, or a charitable lead
trust that has a qualified charity as the only charitable
beneficiary.
(u) Any sale by a qualified charity of a security that is a
charitable gift annuity if the issuer has a net worth, otherwise
defined as unrestricted fund balance, of not less than $300,000
and either: (1) has been in continuous operation for not less
than three years; or (2) is a successor or affiliate of a
qualified charity that has been in continuous operation for not
less than three years.
(v) The offer and sale by a cooperative organized under
chapter 308B of its securities when the securities are offered
and sold only to its existing members or when the purchase of
the securities is necessary or incidental to establishing patron
membership in the cooperative, or when such securities are
issued as patronage dividends. This paragraph applies when
securities are issued as patronage dividends or otherwise only
when:
(1) the issuer, prior to the completion of the sale of such
securities, provides each offeree or purchaser disclosure
materials, which to the extent material to an understanding of
the issuer, its business, and the securities being offered
substantially meet the disclosure conditions and limitations
found in rule 502(b) of regulation d promulgated by the
Securities and Exchange Commission, Code of Federal Regulations,
title 17, section 230.502; and
(2) within 15 days after the completion of the first sale
in each offering completed in reliance upon this exemption, the
cooperative has filed with the commissioner a consent to service
of process under section 80A.27, subdivision 7, and has
furnished the commissioner with a written general description of
the transaction and any other information that the commissioner
requires by rule or otherwise.
A cooperative may, at or about the same time as offers or sales
are being completed in reliance upon this exemption from
registration and as part of a common plan of financing, offer or
sell its securities in reliance upon any other exemption from
registration available under this chapter. The offer or sale of
securities in reliance upon this paragraph shall not be
considered or deemed a part of or be integrated with any offer
or sale of securities conducted by the cooperative in reliance
upon any other exemption from registration available under this
chapter, nor shall offers or sales of securities by the
cooperative in reliance upon any other exemption from
registration available under this chapter be considered or
deemed a part of or be integrated with any offer or sale
conducted by the cooperative in reliance upon this paragraph.
Sec. 3. Minnesota Statutes 2002, section 322B.70,
subdivision 1, is amended to read:
Subdivision 1. [MERGER.] With or without a business
purpose, a limited liability company may merge:
(1) with another limited liability company pursuant to a
plan of merger approved in the manner provided in sections
322B.71 to 322B.75;
(2) with a domestic corporation under a plan of merger
approved in the manner provided in sections 322B.71 to 322B.75,
and in chapter 302A; and
(3) with any foreign corporation or foreign limited
liability company pursuant to a plan of merger approved in the
manner provided in section 322B.76; and
(4) with one or more cooperatives organized under chapter
308A or 308B, in the manner provided by and subject to the
limitations in section 322B.755.
Sec. 4. [322B.755] [MERGER OF DOMESTIC COOPERATIVE INTO A
DOMESTIC LIMITED LIABILITY COMPANY.]
Subdivision 1. [DEFINITION.] As used in this section,
"domestic cooperative" means a cooperative organized under
chapter 308A or 308B.
Subd. 2. [AUTHORIZATION; LIMITATIONS.] (a) A limited
liability company may merge with a domestic cooperative only as
provided by this section. A limited liability company may merge
with one or more domestic cooperatives if:
(1) only one limited liability company and only one or more
domestic cooperatives are parties to the merger;
(2) when the merger becomes effective, the separate
existence of each domestic cooperative ceases and the limited
liability company is the surviving organization;
(3) as to each domestic cooperative, the plan of merger is
initiated and adopted, and the merger is effectuated, as
provided in section 308B.801; and
(4) as to the limited liability company, the plan of merger
complies with section 322B.71, the plan of merger is approved as
provided in section 322B.72, and the articles of merger are
prepared, signed, and filed as provided in section 322B.73.
(b) For purposes of a merger authorized by this section:
(1) the term "constituent organization" as used in sections
322B.71, subdivision 1, clause (1); 322B.71, subdivision 1,
clause (3), item (i); 322B.73; and 322B.75, includes a domestic
cooperative;
(2) the term "constituent organization" as used in section
322B.72 does not include a domestic cooperative;
(3) the term "ownership interests" as used in section
322B.71, subdivision 1, clause (3), item (i), includes
membership interests in a domestic cooperative;
(4) notwithstanding sections 322B.71, subdivision 1, clause
(1), item (i); 322B.71, subdivision 1, clause (4); 322B.75,
subdivision 2, clause (1); 322B.75, subdivision 2, clause (4),
item (i); and 322B.75, subdivision 2, clause (5), the surviving
organization must be the limited liability company;
(5) section 322B.75, subdivision 2, clause (3), does not
apply;
(6) the term "ownership interests" includes membership
interests in a domestic cooperative and the term "owners"
includes members of a domestic cooperative; and
(7) "dissenters rights" includes dissenters rights under
the law governing the domestic cooperative.
Subd. 3. [ABANDONMENT.] Section 308B.835 governs the
abandonment by a domestic cooperative of a merger authorized by
this section. Section 322B.74 governs the abandonment by a
limited liability company of a merger authorized by this
section, except that for the purposes of a merger authorized by
this section:
(1) the term "constituent organization" as used in section
322B.74, subdivision 1, clause (1), does not include a domestic
cooperative;
(2) the requirement stated in section 322B.74, subdivision
1, clause (1), as to a domestic corporation does not apply and
instead the abandonment must have been approved by the domestic
cooperative in the manner provided in chapter 308B;
(3) the reference in section 322B.74, subdivision 2, to a
domestic corporation does not apply and instead the abandonment
by the domestic cooperative may be accomplished as provided in
chapter 308B; and
(4) the term "constituent organization" as used in section
322B.74, subdivision 3, includes a domestic cooperative.
Presented to the governor May 23, 2003
Signed by the governor May 25, 2003, 9:54 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes