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1 1 SUBCHAPTER 1 GENERAL PROVISIONS
1 2 Section 1. NEW SECTION. 500A.1 DEFINITIONS.
1 3 As used in this chapter, unless the context otherwise
1 4 requires:
1 5 1. "Articles" means a cooperative's articles of
1 6 incorporation,
1 7 2. "Authorized person" means any of the following:
1 8 a. A natural person or a fiduciary for a natural person
1 9 who regularly participates in physical labor or operations
1 10 management in a farming operation and files schedule F as part
1 11 of the individual's annual form 1040 or form 1041 filing with
1 12 the United States internal revenue service.
1 13 b. A family farm corporation, family farm limited
1 14 liability company, or family trust.
1 15 c. A general partnership, limited partnership, or
1 16 registered limited liability partnership composed exclusively
1 17 of natural persons or persons acting in a fiduciary capacity
1 18 for the benefit of natural persons, which has received at
1 19 least sixty percent of gross income over the immediate past
1 20 three-year period from farming.
1 21 d. A secured creditor who has obtained a cooperative's
1 22 stock pursuant to a security agreement after a default in
1 23 payment of a bona fide debt within the preceding twenty-four
1 24 months.
1 25 e. An individual or general partnership that owns land and
1 26 receives as rent a share of the crops or the animals raised on
1 27 the land.
1 28 f. An employee of a cooperative who works at least one
1 29 thousand hours for a cooperative in a calendar year.
1 30 3. "Board" means a cooperative's board of directors.
1 31 4. "Cooperative" means a cooperative corporation organized
1 32 under this chapter or that has converted to this chapter
1 33 pursuant to section 500A.28.
1 34 5. "Member" means a person who owns voting stock of a
1 35 cooperative.
2 1 6. "Shareholder" means a person who owns stock of a
2 2 cooperative, regardless of whether or not that stock has
2 3 voting rights.
2 4 7. "Voting stock" means stock that has voting rights.
2 5 Sec. 2. NEW SECTION. 500A.2 LIMITED FARMING ACTIVITIES.
2 6 1. A cooperative shall not, either directly or indirectly,
2 7 acquire or otherwise obtain or lease agricultural land if the
2 8 total agricultural land either directly or indirectly owned or
2 9 leased by the cooperative would then exceed one thousand five
2 10 hundred acres.
2 11 2. A cooperative that meets both of the following
2 12 requirements is exempt from the restrictions of section 9H.4:
2 13 a. Authorized persons as defined by section 500A.2,
2 14 subsection 2, paragraph "a", "b", "c", or "d", own a majority
2 15 of stock in the cooperative and are eligible to cast a
2 16 majority of the votes at member meetings.
2 17 b. Authorized persons own at least three-fourths of the
2 18 stock of the cooperative and are eligible to cast at least
2 19 three-fourths of the votes at member meetings.
2 20 Sec. 3. NEW SECTION. 500A.3 PURPOSES AND POWERS.
2 21 1. A cooperative organized under this chapter has the
2 22 purpose of engaging in lawful business unless a more limited
2 23 purpose is set forth in the articles.
2 24 2. Unless its articles provide otherwise, a cooperative
2 25 has perpetual duration and succession in its corporate name
2 26 and has the same powers as a natural person to do all things
2 27 necessary or convenient to carry out its business and affairs,
2 28 including without limitation all of the powers enumerated in
2 29 sections 490.302 and 490.303 as if the cooperative were a
2 30 corporation under chapter 490.
2 31 Sec. 4. NEW SECTION. 500A.4 NAME.
2 32 The name of a cooperative organized under this chapter
2 33 shall contain the word "cooperative", "coop", or "co-op", and
2 34 the name shall be distinguishable from the names of other
2 35 cooperatives organized under this chapter or different
3 1 chapters, or from foreign cooperatives authorized to do
3 2 business in this state.
3 3 Sec. 5. NEW SECTION. 500A.5 EXECUTION AND FILING OF
3 4 DOCUMENTS.
3 5 1. The secretary of state shall prescribe and furnish upon
3 6 request forms for the proper administration of this chapter.
3 7 If the secretary of state prescribes a mandatory form for a
3 8 document, the mandatory form shall be used for the document.
3 9 The cost of a mandatory form shall be one dollar.
3 10 2. Articles shall be signed by all of the incorporators
3 11 and all other documents filed with the secretary of state
3 12 shall be signed by one of the cooperative's officers. The
3 13 printed name and capacity of each signatory shall appear in
3 14 proximity to the signator's signature. The secretary of state
3 15 shall accept a document containing a copy of the signature. A
3 16 document is not required to contain a corporate seal, an
3 17 acknowledgment, or a verification.
3 18 3. The secretary of state shall collect the following
3 19 fees:
3 20 a. Twenty dollars upon the filing of original or amended
3 21 articles of incorporation or articles of merger.
3 22 b. Five dollars upon the filing of all other required
3 23 documents.
3 24 c. Fifty cents per page for copying and certifying a
3 25 document.
3 26 4. A document shall be effective at the later of the
3 27 following times:
3 28 a. The date and time of filing, as evidenced by the
3 29 secretary of state's date and time endorsement on the original
3 30 document.
3 31 b. The delayed effective time and date specified in the
3 32 document. If a delayed effective date but no time is
3 33 specified in a document, the document is effective at the
3 34 close of business on that date. A delayed effective date for
3 35 a document shall not be later than the ninetieth day after the
4 1 date the document is filed.
4 2 5. A document filed under this section may be corrected if
4 3 the document contains an incorrect statement or the execution
4 4 of the document was defective. A document shall be corrected
4 5 by filing with the secretary of state articles of correction
4 6 which describe the document to be corrected, including its
4 7 filing date or a copy of the document. The articles shall
4 8 specify and correct the incorrect statement or defective
4 9 execution. Articles of correction shall be effective on the
4 10 effective date of the document it corrects except as to
4 11 authorized persons relying on the original document that are
4 12 adversely affected by the correction. As to those authorized
4 13 persons, articles of correction are effective when filed.
4 14 6. The secretary of state shall forward for recording a
4 15 copy of each original, amended, and restated articles of
4 16 incorporation, articles of merger, articles of consolidation,
4 17 and articles of dissolution to the recorder of the county in
4 18 which the cooperative has its principal place of business, or
4 19 in the case of a merger or consolidation, to the recorders of
4 20 each of the counties in which the merging or consolidating
4 21 cooperatives have their principal places of business.
4 22 Sec. 6. NEW SECTION. 500A.6 REGISTERED OFFICE.
4 23 1. A cooperative shall continuously maintain in this state
4 24 a registered office that may be the same as one of its places
4 25 of business, and a registered agent, who may be one of the
4 26 following:
4 27 a. A natural person who resides in this state and whose
4 28 business office is identical to the cooperative's registered
4 29 office.
4 30 b. A domestic corporation or not-for-profit domestic
4 31 corporation whose business office is identical to the
4 32 cooperative's registered office.
4 33 c. A foreign corporation or not-for-profit foreign
4 34 corporation authorized to transact business in this state
4 35 whose business office is identical to the cooperative's
5 1 registered office.
5 2 2. A corporation may change its registered office or
5 3 registered agent by delivering to the secretary of state for
5 4 filing, a statement of change that sets forth all of the
5 5 following:
5 6 a. The name of the cooperative.
5 7 b. The street address of the cooperative's current
5 8 registered office.
5 9 c. If the street address of the cooperative's current
5 10 registered office is to be changed, the street address of the
5 11 cooperative's changed registered office.
5 12 d. The name of the cooperative's registered agent.
5 13 e. If the registered agent is to be changed, the name of
5 14 the current registered agent and the current agent's written
5 15 consent, either on the statement or attached to it, to the
5 16 appointment of the new registered agent.
5 17 f. That after the change or changes are made, the street
5 18 addresses of the cooperative's registered office and the
5 19 business office of the cooperative's registered agent shall be
5 20 identical.
5 21 3. If a registered agent changes the street address of the
5 22 registered agent's business office, the registered agent may
5 23 change the street address of the registered office for which
5 24 the person is the registered agent by notifying the
5 25 cooperative in writing of the change and signing, either
5 26 manually or by facsimile, and delivering to the secretary of
5 27 state for filing a statement that complies with the
5 28 requirements of this subsection and recites that the
5 29 cooperative has been notified of the change.
5 30 4. If a registered agent changes the registered agent's
5 31 business address to another place, the registered agent may
5 32 change the business address and the address of the registered
5 33 agent by filing a statement as required in subsection 3 for
5 34 each cooperative, or a single statement for all cooperatives
5 35 named in the notice, except that the statement may be signed
6 1 only by the registered agent or agents and may be non-
6 2 responsive to subsection 2, paragraph "e", and shall recite
6 3 that a copy of the statement has been mailed to each
6 4 cooperative named in the notice.
6 5 5. A cooperative may change its registered office or
6 6 registered agent in its annual report.
6 7 Sec. 7. NEW SECTION. 500A.7 RECORDS AND REPORTS.
6 8 Sections 490.1601 through 490.1622 shall apply to
6 9 cooperatives in the same manner as they apply to corporations
6 10 organized under chapter 490.
6 11 Sec. 8. NEW SECTION. 500A.8 QUO WARRANTO.
6 12 Only the attorney general may inquire into the right of a
6 13 cooperative to be organized under this chapter. If the
6 14 secretary of state believes that a cooperative is not
6 15 functioning in a manner consistent with this chapter, the
6 16 secretary of state shall notify the attorney general, who
6 17 shall bring action to wind up the cooperative's affairs if the
6 18 attorney general finds reasonable cause to do so.
6 19 SUBCHAPTER 2 ARTICLES AND BYLAWS
6 20 Sec. 9. NEW SECTION. 500A.9 INCORPORATION.
6 21 Three or more natural persons may organize a cooperative
6 22 under this chapter by executing and delivering articles of
6 23 incorporation to the secretary of state.
6 24 Sec. 10. NEW SECTION. 500A.10 ARTICLES OF INCORPORATION.
6 25 1. The articles of incorporation shall set forth all of
6 26 the following:
6 27 a. A name that satisfies the requirements of section
6 28 500A.4.
6 29 b. A statement that the articles of incorporation are
6 30 filed under this chapter.
6 31 c. The cooperative's duration, which may be perpetual.
6 32 d. The classes of stock and the authorized number of
6 33 shares of each class.
6 34 e. The quorum required for each member meeting.
6 35 f. The member voting rules.
7 1 g. The name, address, and occupation of each incorporator.
7 2 h. The names and addresses of the initial directors.
7 3 i. The street address of the cooperative's initial
7 4 registered office and the name of the cooperative's initial
7 5 registered agent at that office.
7 6 2. The articles of incorporation may set forth any other
7 7 provision not inconsistent with law.
7 8 Sec. 11. NEW SECTION. 500A.11 AMENDED AND REINSTATED
7 9 ARTICLES OF INCORPORATION.
7 10 1. A cooperative may amend its articles of incorporation
7 11 to add or change a provision that is required or permitted in
7 12 the articles or to delete a provision not required in the
7 13 articles.
7 14 2. A cooperative may restate its articles of
7 15 incorporation. A restatement of the articles shall contain
7 16 the information required by section 500A.10, subsection 1, and
7 17 may set forth other provisions not inconsistent with law.
7 18 3. If the board of directors recommends the amendment or
7 19 restatement of the cooperative's articles of incorporation to
7 20 the members, the amendment or restatement is adopted by the
7 21 members by an affirmative vote of two-thirds of the votes
7 22 cast.
7 23 4. If the board of directors does not recommend the
7 24 amendment or restatement of the cooperative's articles of
7 25 incorporation to the members, the amendment or restatement is
7 26 adopted by the members by an affirmative vote of two-thirds of
7 27 the votes cast on a ballot in which a majority of all eligible
7 28 votes are cast.
7 29 Sec. 12. NEW SECTION. 500A.12 BYLAWS.
7 30 The board of directors may adopt or amend the cooperative's
7 31 bylaws by a vote of three-fourths of the directors. The
7 32 members may adopt or amend the cooperative's bylaws by a vote
7 33 of three-fourths of the votes cast on a ballot in which a
7 34 majority of all eligible votes are cast. A bylaw provision
7 35 adopted by the members shall not be amended or repealed by the
8 1 directors.
8 2 SUBCHAPTER 3 MEMBERS
8 3 Sec. 13. NEW SECTION. 500A.13 LIABILITY OF MEMBERS.
8 4 A member is not personally liable for the acts or debts of
8 5 a cooperative.
8 6 Sec. 14. NEW SECTION. 500A.14 CALLING AND NOTICE OF
8 7 MEETINGS.
8 8 1. A cooperative shall hold an annual member meeting at
8 9 the time and place fixed in accordance with the bylaws.
8 10 2. The board of directors may call special member
8 11 meetings, and the board shall call a special member meeting
8 12 upon the written demand of twenty percent of the members.
8 13 3. A cooperative shall give each member at least ten days'
8 14 advance notice of the time, place, and the issues to be
8 15 considered at each member meeting. This notice may be given
8 16 in person or by mail to the last known address of the member,
8 17 or the notice requirement may be satisfied by the member
8 18 waiving the notice.
8 19 4. The record date for determining the members entitled to
8 20 notice of and to vote at a member meeting is the close of
8 21 business on the day before the first notices for the meeting
8 22 are required to be delivered or mailed.
8 23 Sec. 15. NEW SECTION. 500A.15 CONDUCT OF MEETINGS.
8 24 1. Only those issues included in the notice of a member
8 25 meeting may be considered at that meeting.
8 26 2. A member may vote at a member meeting in person or by
8 27 signed absentee ballot that specifies the issue and the
8 28 member's vote on that issue. If the board of directors makes
8 29 available an absentee ballot form, that form shall be used to
8 30 cast an absentee ballot on that issue.
8 31 Sec. 16. NEW SECTION. 500A.16 TERMINATION OF MEMBERSHIP.
8 32 1. The articles or bylaws may permit and regulate the
8 33 voluntary withdrawal of members and the redemption of their
8 34 stock.
8 35 2. The articles or bylaws may authorize the board to
9 1 terminate a membership for any of the following reasons:
9 2 a. The member has transferred or attempted to transfer
9 3 stock in violation of the articles or bylaws.
9 4 b. The member has failed to meet the member's commitment
9 5 to provide products to the cooperative or to buy the
9 6 cooperative's products.
9 7 c. The member is no longer an authorized person.
9 8 3. A member's right to vote at member meetings shall cease
9 9 upon notification to the member of the board's termination of
9 10 the membership. The cooperative shall redeem, without
9 11 interest, the voting stock of a terminated member within two
9 12 years after the termination decision for the value set in the
9 13 articles or bylaws.
9 14 Sec. 17. NEW SECTION. 500A.17 MEMBER INFORMATION.
9 15 The board shall adopt a policy which permits the
9 16 distribution of information to all of the members upon the
9 17 request of a member when the purpose of the request directly
9 18 concerns the action of the board. Upon receipt of such
9 19 information and the request of a member, the board shall
9 20 distribute the information to all of the members. The
9 21 cooperative may charge the requesting member the costs
9 22 incurred by the cooperative in distributing the information.
9 23 SUBCHAPTER 4 DIRECTORS AND OFFICERS
9 24 Sec. 18. NEW SECTION. 500A.18 NUMBER AND ELECTION.
9 25 1. The affairs of a cooperative shall be managed by a
9 26 board of not less than three directors.
9 27 2. The members shall elect the directors as prescribed in
9 28 the articles or bylaws.
9 29 3. Each director shall serve the term prescribed in the
9 30 articles or bylaws, and the terms may be staggered.
9 31 Sec. 19. NEW SECTION. 500A.19 VACANCIES.
9 32 1. A director may resign by delivering written notice to
9 33 the board chairperson or the board secretary. A resignation
9 34 is effective when the notice is delivered unless the notice
9 35 specifies a later effective date.
10 1 2. The members may remove one or more directors with or
10 2 without cause unless the articles provide that directors may
10 3 be removed only for cause.
10 4 3. The articles may authorize the board to remove a
10 5 director for a cause specified in the articles.
10 6 4. Unless the articles or bylaws provide otherwise, the
10 7 board may fill each vacancy for the remainder of the vacant
10 8 term. If the directors remaining in office constitute fewer
10 9 than a quorum of the board, a vacancy may be filled by the
10 10 affirmative vote of a majority of all the directors remaining
10 11 in office.
10 12 Sec. 20. NEW SECTION. 500A.20 BOARD ACTION.
10 13 1. The board of directors may hold regular or special
10 14 meetings in or out of the state. A quorum of the board
10 15 consists of a majority of the directors.
10 16 2. Unless the articles or bylaws provide otherwise:
10 17 a. Regular board meetings may be held without notice of
10 18 the date, time, place, or purpose of the meeting.
10 19 b. Special board meetings shall be preceded by at least
10 20 two days' notice of the date, time, and place of the meeting,
10 21 but the notice is not required to describe the purpose of the
10 22 special meeting.
10 23 c. The board may create one or more committees composed of
10 24 directors, and specify the duties and authority of each
10 25 committee.
10 26 d. The board may permit a director to participate in a
10 27 regular or special meeting by, or conduct the meeting through
10 28 the use of, a means of communication by which all directors
10 29 participating may simultaneously hear each other during the
10 30 meeting.
10 31 e. Action required or permitted by this chapter to be
10 32 taken at a board meeting may be taken without a meeting if the
10 33 action is taken by all members of the board. The action shall
10 34 be evidenced by one or more written consents describing the
10 35 action taken, signed by each director, and included in the
11 1 minutes or filed with the corporate records reflecting the
11 2 action taken. Action taken under this paragraph is effective
11 3 when the last director signs the consent, unless the consent
11 4 specifies a later effective date. A consent signed under this
11 5 paragraph has the effect of a meeting vote and may be
11 6 described as such in documents.
11 7 3. A director may waive notice required by this chapter,
11 8 the articles, or the bylaws before or after the date and time
11 9 stated in the notice. The waiver shall be in writing, signed
11 10 by the director entitled to the notice, and filed with the
11 11 minutes or corporate records. A director's attendance at or
11 12 participation in a meeting waives a required notice to that
11 13 director of the meeting unless the director at the beginning
11 14 of the meeting or promptly upon the director's arrival objects
11 15 to holding the meeting or transacting business at the meeting
11 16 and does not thereafter vote for or assent to action taken at
11 17 the meeting.
11 18 Sec. 21. NEW SECTION. 500A.21 DIRECTOR CONFLICT OF
11 19 INTEREST.
11 20 1. A conflict-of-interest transaction is a transaction
11 21 with the cooperative in which a director has a direct or
11 22 indirect interest. A conflict-of-interest transaction is not
11 23 voidable by the cooperative solely because of the director's
11 24 interest in the transaction if one of the following is true:
11 25 a. The material facts of the transaction and the
11 26 director's interest were disclosed or known to the board or a
11 27 board committee and the board or board committee authorized,
11 28 approved, or ratified the transaction.
11 29 b. The material facts of the transaction and the
11 30 director's interest were disclosed or known to the
11 31 shareholders entitled to vote and the shareholders authorized,
11 32 approved, or ratified the transaction.
11 33 2. For purposes of this section, a director of the
11 34 cooperative has an indirect interest in a transaction if
11 35 either of the following applies:
12 1 a. Another entity in which the director has a material
12 2 financial interest is a party to the transaction.
12 3 b. Another entity of which the director is a director,
12 4 officer, or trustee is a party to the transaction.
12 5 3. For purposes of subsection 1, paragraph "a", a
12 6 conflict-of-interest transaction is authorized, approved, or
12 7 ratified if the transaction receives the affirmative vote of a
12 8 majority of the directors on the board or on a board committee
12 9 who have no direct or indirect interest in the transaction.
12 10 However, a transaction shall not be authorized, approved, or
12 11 ratified under this section by a single director. If a
12 12 majority of the directors who have no direct or indirect
12 13 interest in the transaction vote to authorize, approve, or
12 14 ratify the transaction, a quorum is present for the purpose of
12 15 taking action under this section. The presence of, or a vote
12 16 cast by, a director with a direct or indirect interest in the
12 17 transaction does not affect the validity of any action taken
12 18 under subsection 1, paragraph "a", if the transaction is
12 19 otherwise authorized, approved, or ratified as provided in
12 20 subsection 1.
12 21 4. For purposes of subsection 1, paragraph "b", a
12 22 conflict-of-interest transaction is authorized, approved, or
12 23 ratified if the transaction receives a majority of the votes
12 24 entitled to be counted under this subsection. Shares owned by
12 25 or voted under the control of a director who has a direct or
12 26 indirect interest in the transaction, and shares owned by or
12 27 voted under the control of an entity described in subsection
12 28 2, paragraph "a", shall not be counted in a vote of members to
12 29 determine whether to authorize, approve, or ratify a conflict-
12 30 of-interest transaction under subsection 1, paragraph "b".
12 31 The vote of those shares, however, is counted in determining
12 32 whether the transaction is approved under other sections of
12 33 this chapter. A majority of the votes, whether or not the
12 34 shareholders are present, that are entitled to be counted in a
12 35 vote on the transaction under this subsection constitutes a
13 1 quorum for the purpose of taking action under this section.
13 2 Sec. 22. NEW SECTION. 500A.22 OFFICERS.
13 3 A cooperative has the officers described in its bylaws or
13 4 appointed by the board of directors in accordance with the
13 5 bylaws. The bylaws or the board shall delegate to one of the
13 6 officers responsibility for preparing minutes of the
13 7 directors' and members' meetings and for authenticating
13 8 records of the cooperative. Each officer has the authority
13 9 and shall perform the duties set forth in the bylaws or, to
13 10 the extent consistent with the bylaws, the duties prescribed
13 11 by the board. The same natural person may simultaneously hold
13 12 more than one office.
13 13 Sec. 23. NEW SECTION. 500A.23 STANDARDS OF CONDUCT.
13 14 1. A natural person shall discharge the person's duties as
13 15 a director or officer in conformity with all of the following:
13 16 a. In good faith.
13 17 b. With the care an ordinary prudent person in a like
13 18 position would exercise under similar circumstances.
13 19 c. In a manner the natural person reasonably believes to
13 20 be in the best interests of the cooperative.
13 21 2. In discharging the director's or officer's duties, a
13 22 director or officer is entitled to rely on information,
13 23 opinions, reports, or statements, including financial
13 24 statements and other financial data, if prepared or presented
13 25 by any of the following:
13 26 a. One or more officers or employees of the cooperative
13 27 whom the director or officer reasonably believes to be
13 28 reliable and competent in the matters presented.
13 29 b. Legal counsel, public accountants, or other persons as
13 30 to matters the director or officer reasonably believes are
13 31 within the person's professional or expert competence.
13 32 c. A board committee of which the natural person is not a
13 33 member if the director or officer reasonably believes the
13 34 committee merits confidence.
13 35 3. A director or officer is not acting in good faith if
14 1 the director or officer has knowledge concerning the matter in
14 2 question that makes reliance otherwise permitted by subsection
14 3 2 unwarranted.
14 4 4. A director or officer is not liable for an action taken
14 5 as a director or officer, or a failure to take an action, if
14 6 the director or officer performed the duties of office in
14 7 compliance with this section, or if, and to the extent that,
14 8 liability for such an action or failure to act has been
14 9 limited by the articles pursuant to section 500A.24.
14 10 Sec. 24. NEW SECTION. 500A.24 PERSONAL LIABILITY.
14 11 The articles may contain a provision eliminating or
14 12 limiting the personal liability of a director or officer to
14 13 the cooperative or its shareholders for monetary damages for
14 14 breach of fiduciary duty as a director or officer, provided
14 15 that the provision does not eliminate or limit the liability
14 16 of a director or officer for a breach of the duty of loyalty
14 17 to the cooperative or its shareholders, for acts or omissions
14 18 not in good faith or which involve intentional misconduct or a
14 19 knowing violation of law, or for a transaction from which the
14 20 director or officer derives an improper personal benefit. A
14 21 provision of the articles shall not eliminate or limit the
14 22 liability of a director or officer for an act or omission
14 23 occurring prior to the date when the provision limiting
14 24 liability in the articles becomes effective.
14 25 Sec. 25. NEW SECTION. 500A.25 INDEMNIFICATION.
14 26 A cooperative may indemnify a present or former director,
14 27 officer, employee, or agent in the manner and in the instances
14 28 authorized in sections 490.850 through 490.858 as if the
14 29 cooperative were a corporation organized under chapter 490,
14 30 provided that where these sections provide for action by the
14 31 shareholders these sections are applicable to actions by the
14 32 members, and where these sections refer to the corporation
14 33 these sections shall be applicable to a cooperative.
14 34 SUBCHAPTER 5 CAPITAL STRUCTURE
14 35 Sec. 26. NEW SECTION. 500A.26 ISSUANCE AND TRANSFER OF
15 1 STOCK.
15 2 1. A cooperative may issue the number of shares of each
15 3 class authorized by its articles. A cooperative may issue
15 4 fractional shares. Stock may be represented by certificates
15 5 or by an entry on the cooperative's stock record books.
15 6 2. The articles or bylaws may specify rules for the
15 7 transfer of stock. Unless so authorized, stock is not
15 8 transferable except to the cooperative.
15 9 3. A cooperative may acquire its own stock and shares so
15 10 acquired constitute authorized but unissued shares.
15 11 Sec. 27. NEW SECTION. 500A.27 DISTRIBUTION OF NET
15 12 SAVINGS.
15 13 The board shall annually dispose of the cooperative's
15 14 earnings in excess of its operating expenses as follows:
15 15 1. If the articles authorize the payment of dividends on a
15 16 class of stock, the directors may declare dividends pursuant
15 17 to the articles. Dividends shall not exceed eight percent of
15 18 the value of the stock in any fiscal year.
15 19 2. To provide a reasonable reserve for depreciation,
15 20 obsolescence, bad debts, or contingent losses or expenses.
15 21 3. To increase the retained savings of a cooperative to
15 22 the extent determined by the board to be necessary based on
15 23 its evaluation of the future needs and competitive position of
15 24 the cooperative.
15 25 4. The cooperative shall have an unconditional binding
15 26 obligation to distribute to the members all remaining net
15 27 savings. These net savings shall be allocated to each member
15 28 in proportion to the business the member did with the
15 29 cooperative during the preceding fiscal year. The net savings
15 30 may be separately calculated for two or more categories of
15 31 businesses, and allocated to the members on the basis of
15 32 business done within each of these categories. Net savings
15 33 shall be distributed in the form of cash or stock, or a
15 34 combination of cash and stock, as determined by the board.
15 35 5. The members may control the amount that is allocated
16 1 under subsection 2 or 3.
16 2 SUBCHAPTER 6 CONVERSION, MERGER, SALE, AND
16 3 DISSOLUTION
16 4 Sec. 28. NEW SECTION. 500A.28 EXISTING CORPORATION.
16 5 1. As used in this section:
16 6 a. "Dissenting member" means a voting member who votes in
16 7 opposition to the plan of conversion and who makes a demand
16 8 for payment not later than the deadline for members to cast
16 9 ballots on the vote to approve the plan of conversion.
16 10 b. "Issue price" means the amount paid for an interest in
16 11 the cooperative.
16 12 2. An association organized under chapter 497, 498, or 499
16 13 may reorganize under this chapter pursuant to the following
16 14 procedures:
16 15 a. The board shall adopt a plan of conversion that
16 16 specifies the changes in the articles of incorporation to
16 17 comply with this chapter, the effect of the conversion on the
16 18 association's outstanding members' equity, and the option or
16 19 options available to the equity holders who do not want to
16 20 continue their investment in the association.
16 21 b. The members shall approve the plan of conversion by the
16 22 vote of two-thirds of the votes cast on a ballot in which a
16 23 majority of all eligible votes are cast.
16 24 3. The cooperative shall redeem all of the members' equity
16 25 held by dissenting members at its issue price within sixty
16 26 days after the conversion to regulation under this chapter is
16 27 effective. At the time of redemption, the cooperative shall
16 28 pay to each dissenting member in cash the amount paid in cash
16 29 initially by that member for the member's interest in the
16 30 association. The cooperative shall pay the remainder of the
16 31 issue price without interest in annual equal payments, with
16 32 the final payment being made not later than ten years after
16 33 the conversion becomes effective. The cooperative shall
16 34 reflect the unpaid portion as a liability in the records of
16 35 the cooperative. The cooperative shall pay the unpaid portion
17 1 to the estate of a dissenting member who is a natural person
17 2 who dies before the entire issue price has been paid with the
17 3 same priority as if the natural person was a member at the
17 4 time of death.
17 5 4. An equity holder who is not a voting member shall have
17 6 the same rights as a dissenting member if the equity holder
17 7 makes a demand for payment not later than the deadline for
17 8 members to cast ballots on the vote to approve the plan of
17 9 conversion.
17 10 5. The association shall notify all equity holders of
17 11 their rights pursuant to subsection 3 at the same time the
17 12 association notifies the members of the member meeting to vote
17 13 on a plan of conversion.
17 14 Sec. 29. NEW SECTION. 500A.29 MERGER AND CONSOLIDATION.
17 15 A cooperative organized under this chapter may merge or
17 16 consolidate with one or more other cooperatives organized
17 17 under this chapter. Sections 499.61 through 499.70 shall
17 18 apply to such a merger or consolidation as if the cooperative
17 19 were a cooperative association organized under chapter 499.
17 20 Sec. 30. NEW SECTION. 500A.30 SALE OF ASSETS.
17 21 1. A cooperative, on the terms and conditions and for
17 22 consideration determined by the board, may mortgage, pledge,
17 23 or otherwise encumber a portion or all of its property.
17 24 2. A cooperative may sell, lease, exchange, or otherwise
17 25 dispose of all, or substantially all, of its property, with or
17 26 without the good will, on the terms and conditions and for
17 27 consideration determined by the board, which consideration may
17 28 include the preferred stock of another cooperative, if the
17 29 board recommends the proposed transaction to the members, and
17 30 the members approve it by the vote of two-thirds of the votes
17 31 cast on a ballot in which a majority of all eligible votes are
17 32 cast. The board may condition its submission of the proposed
17 33 transaction on any basis.
17 34 Sec. 31. NEW SECTION. 500A.31 DISSOLUTION.
17 35 Sections 490.1401 through 490.1440 shall apply to
18 1 cooperatives in the same manner as they apply to corporations
18 2 organized under chapter 490.
18 3 EXPLANATION
18 4 Section 9H.4 of the corporate farming law limits the number
18 5 of stockholders in an authorized farm corporation, including
18 6 cooperatives, to 25 stockholders. In addition, section 9H.4
18 7 allows only farm corporations, family farm corporations,
18 8 partnerships, some types of trusts, or natural persons to
18 9 engage in livestock or poultry production.
18 10 This bill establishes a new chapter of the Code, chapter
18 11 500A. The bill grants an exemption from section 9H.4 in two
18 12 areas to allow for the establishment of a new type of
18 13 cooperative. The first exemption allows farmers to pool their
18 14 resources in numbers greater than 25 stockholders to establish
18 15 a cooperative. A farmer is defined in the bill as a "natural
18 16 person" who files schedule F indicating income derived from
18 17 farming, on the person's federal income tax return. The
18 18 second exemption allows the involvement in a cooperative of
18 19 other authorized farm entities such as a family farm
18 20 corporation, family farm limited liability company, family
18 21 trust, a partnership that receives more than 60 percent of its
18 22 gross income from farming or which function as crop or animal
18 23 share landlords, secured creditors, and employees of the
18 24 cooperative. A cooperative is prohibited from acquiring or
18 25 leasing agricultural land if the total agricultural land owned
18 26 or leased by the cooperative would then exceed 1,500 acres.
18 27 The bill requires that in order to qualify for an exemption
18 28 to section 9H.4, a cooperative shall meet both requirements of
18 29 a two-prong test. The first prong requires that the majority
18 30 of a cooperative's stock is owned by a combination of farmers
18 31 or other authorized farm entities. The second prong requires
18 32 that at least three-fourths of a cooperative's stock is owned
18 33 by a combination of farmers, crop or animal share landlords,
18 34 secured creditors, and employees of the cooperative. The bill
18 35 allows a maximum of 25 percent of a cooperative's stock to be
19 1 owned by outside entities. The cooperative's stock represents
19 2 investment in and ownership of the cooperative.
19 3 The bill requires the board of directors and the members of
19 4 a cooperative to enforce the required percentages of stock
19 5 ownership. The bill authorizes the attorney general to wind
19 6 up the affairs of a cooperative that is not functioning in a
19 7 manner consistent with the requirements of the bill.
19 8 The bill establishes the manner in which a cooperative
19 9 shall be organized and operated. Provisions govern naming the
19 10 cooperative, executing and filing documents, registering an
19 11 office and an agent, establishing articles of incorporation
19 12 and bylaws, conducting meetings, terminating a member of the
19 13 cooperative, electing a board of directors, issuing and
19 14 transferring stock, and distributing the net savings of the
19 15 cooperative.
19 16 The bill prohibits transactions in which a director has a
19 17 conflict of interest unless the conflict of interest was
19 18 disclosed to and approved by the board of directors or voting
19 19 shareholders. The bill allows the articles of incorporation
19 20 to limit the monetary liability of a director or officer for a
19 21 breach of a fiduciary duty as a director or officer, but
19 22 prohibits the articles of incorporation from limiting the
19 23 liability of a director or officer who otherwise violates the
19 24 director's or officer's duty of good faith to the cooperative
19 25 through illegal or intentional misconduct, or wrongfully
19 26 profits from transactions of the cooperative.
19 27 The bill allows an association organized under chapter 497,
19 28 498, or 499 to convert itself into a cooperative organized
19 29 pursuant to this bill. The bill allows for the merger and
19 30 consolidation of one or more cooperatives organized pursuant
19 31 to the bill. The bill establishes the manner for selling the
19 32 assets of and dissolving a cooperative.
19 33 LSB 3602XL 76
19 34 kah/sc/14.1
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