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Senate File 299

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Bill Text

PAG LIN
  1  1                                        SENATE FILE 299
  1  2 
  1  3                             AN ACT
  1  4 RELATING TO COOPERATIVE ASSOCIATIONS AND CORPORATIONS BY 
  1  5    PROVIDING FOR OPERATIONS AND PROCEDURES, INCLUDING PRO-
  1  6    VIDING FOR MERGERS, AND PROVIDING AN EFFECTIVE DATE.
  1  7 
  1  8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  9 
  1 10    Section 1.  NEW SECTION.  490.1109  QUALIFIED MERGER.
  1 11    A corporation and a cooperative association organized under
  1 12 chapter 499 may merge as provided in section 499.69A.
  1 13    Sec. 2.  Section 499.13, Code 1997, is amended to read as
  1 14 follows:
  1 15    499.13  MEMBERSHIP – ELIGIBILITY.
  1 16    No A membership or share of common stock shall ever not be
  1 17 issued to, or held by, any party not person unless the person
  1 18 is eligible to for membership in the association under its
  1 19 articles.  Individuals A person may be made eligible only if
  1 20 they are the person is engaged in producing products a product
  1 21 marketed by the association, or if they the person customarily
  1 22 consume consumes or use uses the supplies or commodities it
  1 23 that the association handles, or use the person uses the
  1 24 services it that the association renders.  Farm tenants, and
  1 25 landlords A farm tenant or landlord who receive receives a
  1 26 share of agricultural products as rent, may be made eligible
  1 27 to for membership in an agricultural associations association
  1 28 as producers a producer.  Other associations A cooperative
  1 29 association engaged in any directly or indirectly related
  1 30 activity may be made eligible to for membership.  Federated
  1 31 associations An association may be formed whose membership is
  1 32 restricted which includes among its members cooperative
  1 33 associations or restricts its membership to cooperative
  1 34 associations.
  1 35    Sec. 3.  Section 499.16, Code 1997, is amended to read as
  2  1 follows:
  2  2    499.16  SUBSCRIPTIONS – ISSUING CERTIFICATES.
  2  3    If permitted by the association's articles permit of
  2  4 incorporation, any eligible subscriber for common stock or
  2  5 membership may vote and be treated as a member, after making
  2  6 part payment therefor for the common stock or membership in
  2  7 cash and, giving the subscriber's note for the balance, and
  2  8 satisfying any other requirement for the subscription as set
  2  9 forth in the articles.  Such subscriptions A subscription may
  2 10 be forfeited as provided in section 499.32.  No stock Stock or
  2 11 a membership certificate shall not be issued until payment for
  2 12 the stock or membership certificate is fully paid for made.
  2 13 No A subscriber shall not hold office until the subscriber's
  2 14 certificate has been issued.
  2 15    Sec. 4.  Section 499.22, Code 1997, is amended to read as
  2 16 follows:
  2 17    499.22  CAPITAL STOCK.
  2 18    Associations An association with capital stock may divide
  2 19 the shares into common and preferred stock.  Par value stock
  2 20 shall not be issued for less than par.  The general
  2 21 corporation laws shall govern the consideration for which no-
  2 22 par stock is issued.  If the articles so provide, common stock
  2 23 may be issued in two classes, voting and nonvoting.  Voting
  2 24 stock shall be issued to all agricultural producers and
  2 25 nonvoting stock to all other members.  Voting stock or
  2 26 nonvoting stock may be issued to a cooperative association as
  2 27 provided in the cooperative association's articles of
  2 28 incorporation.  Nonvoting stock shall have all privileges of
  2 29 membership except the right to vote.  Preferred stock held by
  2 30 nonmembers shall not exceed in amount that held by members.
  2 31    Sec. 5.  Section 499.36, subsections 1 and 2, Code 1997,
  2 32 are amended to read as follows:
  2 33    1.  The affairs of each association shall be managed by a
  2 34 board of not less than five directors, who.
  2 35    1A.  a.  A director must be members a member of the
  3  1 association or officers an officer or members a member of a
  3  2 member-association.  They A director shall be elected by the
  3  3 members as prescribed by the association's articles prescribe
  3  4 of incorporation.
  3  5    b.  At least five directors shall serve on the
  3  6 association's board.  The number of directors shall be
  3  7 established in accordance with the association's articles of
  3  8 incorporation or bylaws.  If a board has the power to fix or
  3  9 change the number of directors, the board may increase or
  3 10 decrease by thirty percent or less the number of directors
  3 11 last approved by the members.  Only the members may increase
  3 12 or decrease by more than thirty percent the number of
  3 13 directors last approved by the members.
  3 14    c.  The articles of incorporation may establish a variable
  3 15 range for the size of the board by fixing a minimum and
  3 16 maximum number of directors.  If a variable range is
  3 17 established, the number of directors may be fixed or changed
  3 18 from time to time, within the minimum and maximum number, by
  3 19 the members or the board.  After shares are issued, only the
  3 20 members may change the range for the size of the board, change
  3 21 from a fixed to a variable-range-size board, or change from a
  3 22 variable-size to a fixed-size board.
  3 23    2.  a.  Unless the articles or bylaws otherwise provide,
  3 24 vacancies in if a vacancy occurs on the board shall, including
  3 25 a vacancy resulting from an increase in the number of
  3 26 directors, the vacancy may be filled by the remaining
  3 27 directors, the director thus selected to serve for the
  3 28 remainder of the vacant term. any of the following:
  3 29    (1)  The shareholders.
  3 30    (2)  The board.
  3 31    (3)  If the directors remaining in office constitute fewer
  3 32 than a quorum of the board, the directors may fill the vacancy
  3 33 by the affirmative vote of all the directors remaining in
  3 34 office.
  3 35    b.  A vacancy that will occur at a specific later date, by
  4  1 reason of a resignation effective at a later date, may be
  4  2 filled before the vacancy occurs.  The new director shall not
  4  3 take office until the vacancy occurs.
  4  4    Sec. 6.  Section 499.40, subsection 5, Code 1997, is
  4  5 amended to read as follows:
  4  6    5.  The following information regarding the directors:
  4  7    a.  Their number of directors, their.
  4  8    b.  Whether there is a fixed number or a variable range as
  4  9 provided in section 499.36.  If a variable range is
  4 10 established, the information shall include the minimum and
  4 11 maximum number.
  4 12    c.  Their qualifications and.
  4 13    d.  Their terms of office, and how.
  4 14    e.  How they shall be chosen and removed from office.
  4 15    Sec. 7.  Section 499.61, Code 1997, is amended by adding
  4 16 the following new subsections:
  4 17    NEW SUBSECTION.  3A.  "Qualified corporation" means a
  4 18 corporation organized and existing under chapter 490, which is
  4 19 structured and operated on a cooperative basis pursuant to 26
  4 20 U.S.C. } 1381(a)(2) and which meets the definitional
  4 21 requirements of an association as provided in 12 U.S.C. }
  4 22 1141j(a) or 7 U.S.C. } 291.
  4 23    NEW SUBSECTION.  3B.  "Qualified merger" means the uniting
  4 24 of one or more cooperative associations with one or more
  4 25 qualified corporations to form one cooperative association or
  4 26 qualified corporation, in such a manner that one entity
  4 27 participating in the merger continues to exist and absorbs the
  4 28 others, with the others ceasing to exist as cooperative or
  4 29 corporate entities.
  4 30    NEW SUBSECTION.  3C.  "Qualified survivor" means the
  4 31 cooperative association or qualified corporation which
  4 32 continues to exist after a qualified merger.
  4 33    Sec. 8.  Section 499.64, unnumbered paragraph 1, Code 1997,
  4 34 is amended to read as follows:
  4 35    The board of directors of each a cooperative association,
  5  1 upon approving a plan of merger or consolidation, shall, by
  5  2 motion or resolution, direct that the plan be submitted to a
  5  3 vote at a meeting of members, which may be either an annual or
  5  4 special meeting.  Written notice shall be given not less than
  5  5 twenty days prior to the meeting, either personally or by mail
  5  6 to each voting member and shareholder of record.  The notice
  5  7 shall state the time, place, and purpose of the meeting, and a
  5  8 summary of the plan of merger or consolidation shall be
  5  9 included in or enclosed with the notice.
  5 10    Sec. 9.  NEW SECTION.  499.69A  QUALIFIED MERGERS.
  5 11    1.  One or more cooperative associations and one or more
  5 12 qualified corporations may participate in a qualified merger
  5 13 as provided in this section.
  5 14    2.  Each participating cooperative association and
  5 15 qualified corporation must approve a written plan of qualified
  5 16 merger.
  5 17    a.  The plan shall set forth all of the following:
  5 18    (1)  The name of each cooperative association and qualified
  5 19 corporation participating in the qualified merger, and the
  5 20 name of the qualified survivor.
  5 21    (2)  The terms and conditions of the qualified merger.
  5 22    (3)  The manner and basis of converting the interests,
  5 23 including shares or other securities, and obligations in each
  5 24 nonsurviving cooperative association or qualified corporation
  5 25 into the interests and obligations of the qualified survivor.
  5 26    (4)  Any amendments to the articles of incorporation of the
  5 27 qualified survivor as are desired to be effected by the
  5 28 qualified merger, or a statement that no amendment is desired.
  5 29    (5)  The date that the qualified merger becomes effective,
  5 30 if the date is different than the date when a certificate of
  5 31 merger is to be issued for a cooperative association, or if
  5 32 the date is different than the date when the articles of
  5 33 merger are filed with the secretary of state for a qualified
  5 34 corporation.
  5 35    (6)  Other provisions relating to the qualified merger as
  6  1 are deemed necessary or desirable.
  6  2    b.  A proposed plan for a qualified merger complying with
  6  3 the requirements of this section shall be approved as follows:
  6  4    (1)  For a cooperative association which is a party to the
  6  5 proposed qualified merger, the cooperative association shall
  6  6 approve the plan as provided in this chapter.
  6  7    (2)  For a qualified corporation which is a party to the
  6  8 proposed qualified merger, the qualified corporation shall
  6  9 approve the plan as provided in chapter 490.
  6 10    c.  After the proposed plan for the qualified merger is
  6 11 approved, a cooperative association or qualified corporation
  6 12 may abandon the merger in the manner provided in the plan,
  6 13 prior to the filing of the articles of merger.
  6 14    3.  After a proposed plan of the qualified merger is
  6 15 approved, the qualified survivor shall deliver articles of
  6 16 merger for the qualified merger to the secretary of state for
  6 17 filing.  The articles of merger shall be executed by each
  6 18 cooperative association and qualified corporation which is a
  6 19 party to the qualified merger.  The articles of merger shall
  6 20 set forth all of the following:
  6 21    a.  The name of each cooperative association and qualified
  6 22 corporation which is a party to the qualified merger.
  6 23    b.  The plan for the qualified merger.
  6 24    c.  The effective date of the qualified merger, if later
  6 25 than the date of filing the articles of merger.
  6 26    d.  The name of the qualified survivor.
  6 27    e.  A statement that the plan for the qualified merger was
  6 28 approved by each participating cooperative association and
  6 29 qualified corporation in a manner required for the cooperative
  6 30 association and qualified corporation as provided in this
  6 31 section.
  6 32    4.  For a surviving cooperative association, a qualified
  6 33 merger becomes effective upon the filing of the articles of
  6 34 merger with the secretary of state and the issuance of a
  6 35 certificate of merger pursuant to section 499.68 or the date
  7  1 stated in the articles of merger, whichever is later.  For a
  7  2 surviving qualified corporation, a qualified merger becomes
  7  3 effective upon the filing of the articles of merger with the
  7  4 secretary of state pursuant to section 490.1105 or the date
  7  5 stated in the articles, whichever is later.
  7  6    5.  The effect of a qualified merger for a qualified
  7  7 survivor which is a cooperative association shall be as
  7  8 provided for in this chapter.  The effect of a qualified
  7  9 merger for a qualified survivor which is a qualified
  7 10 corporation shall be as provided for corporations under
  7 11 chapter 490.
  7 12    6.  The provisions governing the right of a shareholder or
  7 13 member of a cooperative association to object to a merger or
  7 14 the right of a member to dissent and obtain payment of the
  7 15 fair value of an interest in the cooperative association in
  7 16 the case of a merger as provided in this chapter shall apply
  7 17 to a qualified merger.  The provisions governing the right of
  7 18 a shareholder of a corporation to dissent from and obtain
  7 19 payment of the fair value of the shareholder's shares in the
  7 20 case of a merger as provided in division XIII of chapter 490
  7 21 shall apply to a qualified merger.
  7 22    7.  A foreign cooperative association may participate in a
  7 23 qualified merger as provided in this section, if the foreign
  7 24 cooperative association complies with the requirements for a
  7 25 cooperative association under this section and the
  7 26 requirements for a foreign cooperative association under
  7 27 section 499.69.  A foreign corporation may participate in a
  7 28 qualified merger as provided in this section if it complies
  7 29 with the requirements of a qualified corporation under this
  7 30 section and the requirements for a foreign corporation under
  7 31 section 490.1107.
  7 32    Sec. 10.  EFFECTIVE DATE.  This Act, being deemed of
  7 33 immediate importance, takes effect upon enactment.  
  7 34 
  7 35 
  8  1                                                             
  8  2                               MARY E. KRAMER
  8  3                               President of the Senate
  8  4 
  8  5 
  8  6                                                             
  8  7                               RON J. CORBETT
  8  8                               Speaker of the House
  8  9 
  8 10    I hereby certify that this bill originated in the Senate and
  8 11 is known as Senate File 299, Seventy-seventh General Assembly.
  8 12 
  8 13 
  8 14                                                             
  8 15                               MARY PAT GUNDERSON
  8 16                               Secretary of the Senate
  8 17 Approved                , 1997
  8 18 
  8 19 
  8 20                         
  8 21 TERRY E. BRANSTAD
  8 22 Governor
     
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