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PAG LIN
1 1 DIVISION XVIII
1 2 NETWORKING FARMERS CORPORATIONS
1 3 Section 1. NEW SECTION. 490.1711 DEFINITIONS.
1 4 As used in this division, unless the context otherwise
1 5 requires:
1 6 1. "Actively engaged in farming" means the same as defined
1 7 in section 9H.1.
1 8 2. "Agricultural land" means the same as defined in
1 9 section 9H.1.
1 10 3. "Authorized entity" means an authorized farm
1 11 corporation; authorized limited liability company; limited
1 12 partnership, other than a family farm limited partnership; or
1 13 an authorized trust as defined in section 9H.1.
1 14 4. "Family farm entity" means a family farm corporation,
1 15 family farm limited liability company, family farm limited
1 16 partnership, or family trust, as defined in section 9H.1.
1 17 5. "Farm estate" means the real and personal property of a
1 18 decedent, a ward, or a trust as provided in chapter 633, if at
1 19 least sixty percent of the gross income from the estate comes
1 20 from farming.
1 21 6. "Farmers cooperative association" means the same as
1 22 defined in section 499.91.
1 23 7. "Farmers cooperative limited liability company" means
1 24 the same as defined in section 490A.1701.
1 25 8. "Farmers entity" means a networking farmers entity,
1 26 farmers cooperative limited liability company, or farmers
1 27 cooperative association.
1 28 9. "Farming" means the same as defined in section 9H.1.
1 29 10. "Livestock" means an animal belonging to the bovine,
1 30 caprine, equine, ovine, or porcine species, ostriches, rheas,
1 31 emus, farm deer as defined in section 481A.1, or poultry.
1 32 11. "Networking farmers corporation" means a corporation
1 33 organized under this chapter if all of the following
1 34 conditions are satisfied:
1 35 a. At least seventy percent of the corporation's stock is
2 1 held by qualified persons.
2 2 b. At least seventy percent of the corporation's voting
2 3 stock is held by qualified persons.
2 4 12. "Networking farmers entity" means a networking farmers
2 5 corporation, networking farmers limited partnership, or
2 6 networking farmers limited liability company.
2 7 13. "Networking farmers limited liability company" means
2 8 the same as defined in section 490A.1701.
2 9 14. "Networking farmers limited partnership" means the
2 10 same as defined in section 487.1201.
2 11 15. "Qualified person" means any of the following:
2 12 a. A natural person actively engaged in farming.
2 13 b. A general partnership as provided in chapter 486 in
2 14 which all partners are natural persons actively engaged in
2 15 farming.
2 16 c. A family farm entity.
2 17 d. A person who owns at least one hundred fifty acres of
2 18 agricultural land and receives as rent a share of the crops or
2 19 the animals raised on the land, provided that the person is a
2 20 natural person or a general partnership as provided in chapter
2 21 486 in which all persons are natural persons.
2 22 e. A farm estate.
2 23 Sec. 2. NEW SECTION. 490.1712 INTERESTS DESCRIBED.
2 24 As used in this division, the following apply:
2 25 1. A person holds an interest in agricultural land if the
2 26 person directly or indirectly owns, leases, or has a legal or
2 27 equitable interest in agricultural land.
2 28 2. A person holds an interest in a farmers entity if the
2 29 person holds an interest as any of the following:
2 30 a. A member of a farmers cooperative association.
2 31 b. A member of a farmers cooperative limited liability
2 32 company.
2 33 c. A shareholder of a networking farmers corporation.
2 34 d. A member of a networking farmers limited liability
2 35 company.
3 1 Sec. 3. NEW SECTION. 490.1713 LANDHOLDINGS RESTRICTED.
3 2 1. Notwithstanding section 9H.4, a networking farmers
3 3 corporation may hold agricultural land in this state if it
3 4 meets all of the following conditions:
3 5 a. The corporation does not hold an interest in
3 6 agricultural land of more than one thousand five hundred
3 7 acres.
3 8 b. At least seventy-five percent of the corporation's
3 9 gross income from farming is from the sale of livestock or
3 10 livestock products.
3 11 2. a. Notwithstanding section 9H.4, if a person holds an
3 12 interest in a networking farmers corporation, that interest
3 13 shall not be treated as an interest in agricultural land.
3 14 b. Notwithstanding section 9H.5, if an authorized entity
3 15 holds an interest in a networking farmers corporation, the
3 16 number of acres of agricultural land in which the corporation
3 17 holds an interest shall not be attributable to the authorized
3 18 entity when calculating the number of acres of agricultural
3 19 land that the entity may hold under section 9H.5.
3 20 3. In the event of a transfer of an interest in the
3 21 networking farmers corporation by operation of law as a result
3 22 of death, divorce, or bankruptcy, or pursuant to a security
3 23 interest, the cooperative may disregard the transfer for
3 24 purposes of determining compliance with subsection 1 for a
3 25 period of two years after the transfer.
3 26 Sec. 4. NEW SECTION. 490.1714 MULTIPLE INTERESTS
3 27 RESTRICTED.
3 28 A person who holds an interest in a networking farmers
3 29 corporation holding an interest in agricultural land pursuant
3 30 to section 487.1203 shall not hold an interest in another
3 31 farmers entity if the person holds a fifteen percent or
3 32 greater interest in a networking farmers corporation.
3 33 Sec. 5. NEW SECTION. 490.1715 REPORTING REQUIREMENTS.
3 34 1. A networking farmers corporation that claims it is
3 35 exempt from the restrictions of section 9H.4 pursuant to
4 1 section 490.1713 shall file an annual report with the
4 2 secretary of state on or before March 31 of each year on forms
4 3 adopted pursuant to chapter 17A and supplied by the secretary
4 4 of state.
4 5 2. The report shall be signed by the president or other
4 6 officer or authorized representative of the corporation.
4 7 3. The report shall contain information for the last year
4 8 regarding the corporation, including all of the following:
4 9 a. The name and address of the corporation.
4 10 b. The name and address of the person supervising the
4 11 daily operations on the agricultural land.
4 12 c. The name, address, and citizenship, if other than
4 13 United States citizenship, of each stockholder.
4 14 d. A certification that the corporation meets all of the
4 15 requirements of a networking farmers corporation.
4 16 e. The number of acres of agricultural land held by the
4 17 corporation, including the following:
4 18 (1) The total number of acres in the state.
4 19 (2) The number of acres in each county identified by
4 20 county name.
4 21 (3) The number of acres owned.
4 22 (4) The number of acres leased.
4 23 (5) The number of acres held other than by ownership or
4 24 lease.
4 25 (6) The number of acres used for the production of row
4 26 crops.
4 27 (7) The animal weight capacity of the livestock operation.
4 28 4. A networking farmers corporation shall be excused from
4 29 filing a report with the secretary of state during any year in
4 30 which the corporation holds an interest in less than twenty
4 31 acres of agricultural land in this state and the gross revenue
4 32 produced from all farming on the land equals less than ten
4 33 thousand dollars. If a networking farmers corporation is
4 34 excused from filing a report with the secretary of state as
4 35 provided in this subsection in the immediately prior reporting
5 1 year, the secretary of state is not required to deliver a form
5 2 to the corporation for the current reporting year, unless
5 3 requested by the corporation.
5 4 5. A report required pursuant to this section shall be in
5 5 lieu of any report which is also required by a networking
5 6 farmers corporation which qualifies as an authorized
5 7 corporation pursuant to section 9H.5A.
5 8 6. Notwithstanding chapter 22, reports required in this
5 9 section shall be confidential reports except as to the
5 10 attorney general for review and appropriate action when
5 11 necessary.
5 12 7. The secretary of state shall assist any committee of
5 13 the general assembly studying the effects of this division and
5 14 the practices this division regulates, to the same extent
5 15 required pursuant to section 9H.14.
5 16 Sec. 6. NEW SECTION. 490.1716 PENALTIES.
5 17 1. a. A networking farmers corporation violating section
5 18 490.1713 shall be assessed a civil penalty of not more than
5 19 ten thousand dollars and shall divest itself of any land held
5 20 in violation of that section within one year after judgment is
5 21 entered ordering the corporation to comply with that section.
5 22 b. A civil penalty of not more than one thousand dollars
5 23 may be imposed on a person who becomes a stockholder of a
5 24 networking farmers corporation in violation of section
5 25 490.1714. The person violating the section shall divest the
5 26 interest held by the person in a farmers entity or authorized
5 27 entity as is necessary to comply with that section.
5 28 2. The court may determine the method of divesting an
5 29 interest held by a person found to be in violation of section
5 30 490.1713 or 490.1714. A financial gain realized by a person
5 31 who disposes of an interest held in violation of those
5 32 sections shall be forfeited to the state's general fund. All
5 33 court costs and fees shall be paid by the person holding the
5 34 interest in violation of the section.
5 35 3. The courts of this state may prevent and restrain
6 1 violations of section 490.1713 or 490.1714 through the
6 2 issuance of an injunction. The attorney general or a county
6 3 attorney shall institute suits on behalf of the state to
6 4 prevent and restrain violations of section 490.1713 or
6 5 490.1714.
6 6 4. a. The failure to timely file a report or the filing
6 7 of false information in a report as provided in section
6 8 490.1715 is punishable by a civil penalty not to exceed one
6 9 thousand dollars.
6 10 b. The secretary of state shall notify a person who the
6 11 secretary has reason to believe is required to file a report
6 12 as provided by this division and who has not filed a timely
6 13 report, that the person may be in violation of section
6 14 490.1715. The secretary of state shall include in the notice
6 15 a statement of the penalty which may be assessed if the
6 16 required report is not filed within thirty days. The
6 17 secretary of state shall refer to the attorney general any
6 18 person who the secretary has reason to believe is required to
6 19 report if, after thirty days from receipt of the notice, the
6 20 person has not filed the required report. The attorney
6 21 general may, upon referral from the secretary of state, file
6 22 an action in district court to seek the assessment of a civil
6 23 penalty of one hundred dollars for each day the report is not
6 24 filed.
6 25 SUBCHAPTER XVII
6 26 FARMERS LIMITED LIABILITY COMPANIES
6 27 Sec. 7. NEW SECTION. 490A.1701 DEFINITIONS.
6 28 As used in this subchapter, unless the context otherwise
6 29 requires:
6 30 1. "Actively engaged in farming" means the same as defined
6 31 in section 9H.1.
6 32 2. "Agricultural land" means the same as defined in
6 33 section 9H.1.
6 34 3. "Authorized entity" means an authorized farm
6 35 corporation; authorized limited liability company; limited
7 1 partnership, other than a family farm limited partnership; or
7 2 authorized trust, as defined in section 9H.1.
7 3 4. "Family farm entity" means a family farm corporation,
7 4 family farm limited liability company, family farm limited
7 5 partnership, or family trust, as defined in section 9H.1.
7 6 5. "Farm estate" means the real and personal property of a
7 7 decedent, a ward, or a trust as provided in chapter 633, if at
7 8 least sixty percent of the gross income from the estate comes
7 9 from farming.
7 10 6. "Farmers cooperative association" means the same as
7 11 defined in section 499.91.
7 12 7. "Farmers cooperative limited liability company" means a
7 13 limited liability company if all of the following apply:
7 14 a. One hundred percent of the voting membership interest
7 15 is held by associations which operate on a cooperative basis.
7 16 b. At least fifty percent of the stock and fifty percent
7 17 of the voting stock is held by farmers cooperative
7 18 associations.
7 19 8. "Farmers entity" means a networking farmers entity,
7 20 farmers cooperative limited liability company, or farmers
7 21 cooperative association.
7 22 9. "Farmers limited liability company" means a networking
7 23 farmers limited liability company or a farmers cooperative
7 24 limited liability company.
7 25 10. "Farming" means the same as defined in section 9H.1.
7 26 11. "Livestock" means an animal belonging to the bovine,
7 27 caprine, equine, ovine, or porcine species, ostriches, rheas,
7 28 emus, farm deer as defined in section 481A.1, or poultry.
7 29 12. "Networking farmers entity" means a networking farmers
7 30 corporation, networking farmers limited liability company, or
7 31 networking farmers limited partnership.
7 32 13. "Networking farmers limited liability company" means a
7 33 limited liability company organized under this chapter if all
7 34 of the following conditions are satisfied:
7 35 a. At least seventy percent of the membership interest is
8 1 held by qualified persons.
8 2 b. At least seventy percent of votes that may be cast by
8 3 members of the limited liability company is held by qualified
8 4 persons.
8 5 14. "Networking farmers limited partnership" means the
8 6 same as defined in section 487.1201.
8 7 15. "Qualified person" means any of the following:
8 8 a. A natural person actively engaged in farming.
8 9 b. A general partnership as provided in chapter 486 in
8 10 which all partners are natural persons actively engaged in
8 11 farming.
8 12 c. A family farm entity.
8 13 d. A person who owns at least one hundred fifty acres of
8 14 agricultural land and receives as rent a share of the crops or
8 15 the animals raised on the land, provided that the person is a
8 16 natural person or a general partnership as provided in chapter
8 17 486 in which all persons are natural persons.
8 18 e. A farm estate.
8 19 Sec. 8. NEW SECTION. 490.1702 INTERESTS DESCRIBED.
8 20 As used in this subchapter, the following apply:
8 21 1. A person holds an interest in agricultural land if the
8 22 person directly or indirectly owns, leases, or has a legal or
8 23 equitable interest in agricultural land.
8 24 2. A person holds an interest in a farmers entity if the
8 25 person holds an interest as any of the following:
8 26 a. A member of a farmers cooperative association.
8 27 b. A member of a farmers cooperative limited liability
8 28 company.
8 29 c. A shareholder of a networking farmers corporation.
8 30 d. A member of a networking farmers limited liability
8 31 company.
8 32 Sec. 9. NEW SECTION. 490A.1703 LANDHOLDINGS RESTRICTED.
8 33 1. Notwithstanding section 9H.4, a farmers limited
8 34 liability company may hold agricultural land in this state if
8 35 it meets all of the following conditions:
9 1 a. The farmers limited liability company does not hold an
9 2 interest in agricultural land of more than one thousand five
9 3 hundred acres.
9 4 b. At least seventy-five percent of the farmers limited
9 5 liability company's gross income from farming is from the sale
9 6 of livestock or livestock products.
9 7 2. a. Notwithstanding section 9H.4, the following shall
9 8 apply:
9 9 (1) If a person holds an interest in a networking farmers
9 10 limited liability company, that interest shall not be treated
9 11 as an interest in agricultural land.
9 12 (2) Except as provided in section 499.93, if a person
9 13 holds an interest in a farmers cooperative limited liability
9 14 company, that interest shall not be treated as an interest in
9 15 agricultural land.
9 16 b. Notwithstanding section 9H.5, if an authorized entity
9 17 holds an interest in a farmers limited liability company, the
9 18 number of acres of agricultural land in which the limited
9 19 liability company holds an interest shall not be attributable
9 20 to the authorized entity when calculating the number of acres
9 21 of agricultural land that the authorized entity may hold under
9 22 section 9H.5.
9 23 3. In the event of a transfer of an interest in the
9 24 farmers limited liability company by operation of law as a
9 25 result of death, divorce, or bankruptcy, or pursuant to a
9 26 security interest, the networking farmers limited liability
9 27 company may disregard the transfer for purposes of determining
9 28 compliance with subsection 1 for a period of two years after
9 29 the transfer.
9 30 Sec. 10. NEW SECTION. 490A.1704 MULTIPLE INTERESTS
9 31 RESTRICTED.
9 32 A person who holds an interest in a networking farmers
9 33 limited liability company holding an interest in agricultural
9 34 land pursuant to section 490A.1703 shall not hold an interest
9 35 in another farmers entity, if the person holds a fifteen
10 1 percent or greater interest in a networking farmers limited
10 2 liability company.
10 3 Sec. 11. NEW SECTION. 490A.1705 REPORTING REQUIREMENTS.
10 4 1. A farmers limited liability company that claims it is
10 5 exempt from the restrictions of section 9H.4 pursuant to
10 6 section 490A.1703 shall file an annual report with the
10 7 secretary of state on or before March 31 of each year on forms
10 8 adopted pursuant to chapter 17A and supplied by the secretary
10 9 of state.
10 10 2. The report shall be signed by the manager or authorized
10 11 representative of the farmers limited liability company.
10 12 3. The report shall contain information for the last year
10 13 regarding the farmers limited liability company, including all
10 14 of the following:
10 15 a. The name and address of the limited liability company.
10 16 b. The name and address of the person supervising the
10 17 daily operations on the agricultural land.
10 18 c. The name, address, and citizenship, if other than
10 19 United States citizenship, of each member.
10 20 d. A certification that the farmers limited liability
10 21 company meets all of the requirements of a networking farmers
10 22 limited liability company or a farmers cooperative limited
10 23 liability company.
10 24 e. The number of acres of agricultural land held by the
10 25 farmers limited liability company, including the following:
10 26 (1) The total number of acres in the state.
10 27 (2) The number of acres in each county identified by
10 28 county name.
10 29 (3) The number of acres owned.
10 30 (4) The number of acres leased.
10 31 (5) The number of acres held other than by ownership or
10 32 lease.
10 33 (6) The number of acres used for the production of row
10 34 crops.
10 35 (7) The animal weight capacity of the livestock
11 1 operations.
11 2 4. A farmers limited liability company shall be excused
11 3 from filing a report with the secretary of state during any
11 4 year in which the farmers limited liability company holds an
11 5 interest in less than twenty acres of agricultural land in
11 6 this state and the gross revenue produced from all farming on
11 7 the land equals less than ten thousand dollars. If a farmers
11 8 limited liability company is excused from filing a report with
11 9 the secretary of state as provided in this subsection in the
11 10 immediately prior reporting year, the secretary of state is
11 11 not required to deliver a form to the farmers limited
11 12 liability company for the current reporting year, unless
11 13 requested by the farmers limited liability company.
11 14 5. A report required pursuant to this section shall be in
11 15 lieu of any report which is also required by a farmers limited
11 16 liability company which qualifies as an authorized limited
11 17 liability company pursuant to section 9H.5A.
11 18 6. Notwithstanding chapter 22, reports required in this
11 19 section shall be confidential reports except as to the
11 20 attorney general for review and appropriate action when
11 21 necessary.
11 22 7. The secretary of state shall assist any committee of
11 23 the general assembly studying the effects of this subchapter
11 24 and the practices this subchapter regulates, to the same
11 25 extent required pursuant to section 9H.14.
11 26 Sec. 12. NEW SECTION. 490A.1706 PENALTIES.
11 27 1. a. A farmers limited liability company violating
11 28 section 490A.1703 shall be assessed a civil penalty of not
11 29 more than ten thousand dollars and shall divest itself of any
11 30 land held in violation of that section within one year after
11 31 judgment is entered ordering the limited liability company to
11 32 comply with that section.
11 33 b. A civil penalty of not more than one thousand dollars
11 34 may be imposed on a person who becomes a member of a
11 35 networking farmers limited liability company in violation of
12 1 section 490A.1704. The person violating the section shall
12 2 divest the interest held by the person in a farmers entity or
12 3 authorized entity as is necessary to comply with that section.
12 4 2. The court may determine the method of divesting an
12 5 interest held by a person found to be in violation of section
12 6 490A.1703 or 490A.1704. A financial gain realized by a person
12 7 who disposes of an interest held in violation of those
12 8 sections shall be forfeited to the state's general fund. All
12 9 court costs and fees shall be paid by the person holding the
12 10 interest in violation of the section.
12 11 3. The courts of this state may prevent and restrain
12 12 violations of section 490A.1703 or 490A.1704 through the
12 13 issuance of an injunction. The attorney general or a county
12 14 attorney shall institute suits on behalf of the state to
12 15 prevent and restrain violations of section 490A.1703 or
12 16 490A.1704.
12 17 4. a. The failure to timely file a report or the filing
12 18 of false information in a report as provided in section
12 19 490A.1705 is punishable by a civil penalty not to exceed one
12 20 thousand dollars.
12 21 b. The secretary of state shall notify a person who the
12 22 secretary has reason to believe is required to file a report
12 23 as provided by this subchapter and who has not filed a timely
12 24 report, that the person may be in violation of section
12 25 490A.1705. The secretary of state shall include in the notice
12 26 a statement of the penalty which may be assessed if the
12 27 required report is not filed within thirty days. The
12 28 secretary of state shall refer to the attorney general any
12 29 person who the secretary has reason to believe is required to
12 30 report if, after thirty days from receipt of the notice, the
12 31 person has not filed the required report. The attorney
12 32 general may, upon referral from the secretary of state, file
12 33 an action in district court to seek the assessment of a civil
12 34 penalty of one hundred dollars for each day the report is not
12 35 filed.
13 1 SUBCHAPTER II
13 2 FARMERS COOPERATIVE ASSOCIATIONS
13 3 Sec. 13. NEW SECTION. 499.91 DEFINITIONS.
13 4 As used in this subchapter, unless the context otherwise
13 5 requires:
13 6 1. "Actively engaged in farming" means the same as defined
13 7 in section 9H.1.
13 8 2. "Agricultural land" means the same as defined in
13 9 section 9H.1.
13 10 3. "Authorized entity" means an authorized farm
13 11 corporation; authorized limited liability company; limited
13 12 partnership, other than a family farm limited partnership; or
13 13 authorized trust, as defined in section 9H.1.
13 14 4. "Family farm entity" means a family farm corporation,
13 15 family farm limited liability company, family farm limited
13 16 partnership, or family trust, as defined in section 9H.1.
13 17 5. "Farm estate" means the real and personal property of a
13 18 decedent, a ward, or a trust as provided in chapter 633, if at
13 19 least sixty percent of the gross income from the estate comes
13 20 from farming.
13 21 6. "Farmers cooperative association" means an association
13 22 organized under this chapter, if seventy percent of the
13 23 association's voting stock is held by qualified persons.
13 24 7. "Farmers cooperative limited liability company" means
13 25 the same as defined in section 490A.1701.
13 26 8. "Farmers entity" means a networking farmers entity,
13 27 farmers cooperative limited liability company, or farmers
13 28 cooperative association.
13 29 9. "Farming" means the same as defined in section 9H.1.
13 30 10. "Livestock" means an animal belonging to the bovine,
13 31 caprine, equine, ovine, or porcine species, ostriches, rheas,
13 32 emus, farm deer as defined in section 481A.1, or poultry.
13 33 11. "Networking farmers entity" means a networking farmers
13 34 corporation, networking farmers limited liability company, or
13 35 networking farmers limited partnership.
14 1 12. "Networking farmers limited liability company" means
14 2 the same as defined in section 490A.1701.
14 3 13. "Networking farmers limited partnership" means the
14 4 same as defined in section 487.1201.
14 5 14. "Qualified person" means any of the following:
14 6 a. A natural person actively engaged in farming.
14 7 b. A general partnership as provided in chapter 486 in
14 8 which all partners are natural persons actively engaged in
14 9 farming.
14 10 c. A family farm entity.
14 11 d. A person who owns at least one hundred fifty acres of
14 12 agricultural land and receives as rent a share of the crops or
14 13 the animals raised on the land, provided that the person is a
14 14 natural person or a general partnership as provided in chapter
14 15 486 in which all persons are natural persons.
14 16 e. A farm estate.
14 17 Sec. 14. NEW SECTION. 499.92 INTERESTS DESCRIBED.
14 18 As used in this subchapter, the following apply:
14 19 1. A person holds an interest in agricultural land if the
14 20 person directly or indirectly owns, leases, or has a legal or
14 21 equitable interest in agricultural land.
14 22 2. A person holds an interest in a farmers entity if the
14 23 person holds an interest as any of the following:
14 24 a. A member of a farmers cooperative association.
14 25 b. A member of a farmers cooperative limited liability
14 26 company.
14 27 c. A shareholder of a networking farmers corporation.
14 28 d. A member of a networking farmers limited liability
14 29 company.
14 30 Sec. 15. NEW SECTION. 499.93 LANDHOLDINGS RESTRICTED.
14 31 1. Notwithstanding section 9H.4, a farmers cooperative
14 32 association may hold agricultural land in this state if it
14 33 meets all of the following conditions:
14 34 a. The farmers cooperative association does not hold an
14 35 interest in agricultural land of more than one thousand five
15 1 hundred acres.
15 2 b. At least seventy-five percent of the farmers
15 3 cooperative association's gross income from farming is from
15 4 the sale of livestock or livestock products.
15 5 2. a. Notwithstanding section 9H.4, if a person holds an
15 6 interest in a farmers cooperative association, that interest
15 7 shall not be treated as an interest in agricultural land.
15 8 b. Notwithstanding section 9H.5, if an authorized entity
15 9 holds an interest in a farmers cooperative association, the
15 10 number of acres of agricultural land in which the association
15 11 holds an interest shall not be attributable to the authorized
15 12 entity when calculating the number of acres of agricultural
15 13 land that the entity may hold under section 9H.5.
15 14 3. a. If a farmers cooperative association is a member of
15 15 a networking farmers cooperative limited liability company as
15 16 provided in section 490A.1701, the association shall be deemed
15 17 to hold an interest in agricultural land held by the limited
15 18 liability company in proportion to the interest that the
15 19 association holds in the limited liability company. The
15 20 association's proportionate interest shall be calculated by
15 21 multiplying the number of acres of agricultural land held by
15 22 the networking farmers cooperative limited liability company
15 23 by the percentage interest in the limited liability company
15 24 held by the association as a member.
15 25 b. If a farmers cooperative association holds an interest
15 26 in a networking farmers entity, that interest shall not be
15 27 treated as an interest in agricultural land.
15 28 4. In the event of a transfer of an interest in a farmers
15 29 cooperative association by operation of law as a result of
15 30 death, divorce, or bankruptcy, or pursuant to a security
15 31 interest, the association may disregard the transfer for
15 32 purposes of determining compliance with subsection 1 for a
15 33 period of two years after the transfer.
15 34 Sec. 16. NEW SECTION. 499.94 MULTIPLE INTERESTS
15 35 RESTRICTED.
16 1 A person who holds an interest in a farmers cooperative
16 2 association holding an interest in agricultural land pursuant
16 3 to section 499.93 shall not hold an interest in another
16 4 farmers entity if the person holds a fifteen percent or
16 5 greater interest in a farmers cooperative association.
16 6 Sec. 17. NEW SECTION. 499.95 REPORTING REQUIREMENTS.
16 7 1. A farmers cooperative association that claims that it
16 8 is exempt from the restrictions of section 9H.4 pursuant to
16 9 section 499.93 shall file an annual report with the secretary
16 10 of state on or before March 31 of each year on forms adopted
16 11 pursuant to chapter 17A and supplied by the secretary of
16 12 state.
16 13 2. The report shall be signed by the president or an
16 14 authorized representative of the farmers cooperative
16 15 association.
16 16 3. The report shall contain information for the last year
16 17 regarding the farmers cooperative association, including all
16 18 of the following:
16 19 a. The name and address of the farmers cooperative
16 20 association.
16 21 b. The name and address of the person supervising the
16 22 daily operations on the agricultural land.
16 23 c. The name, address, and citizenship, if other than
16 24 United States citizenship, of each member.
16 25 d. A certification that the farmers cooperative
16 26 association meets all of the requirements of a farmers
16 27 cooperative association.
16 28 e. The number of acres of agricultural land held by the
16 29 farmers cooperative association, including the following:
16 30 (1) The total number of acres in the state.
16 31 (2) The number of acres in each county identified by
16 32 county name.
16 33 (3) The number of acres owned.
16 34 (4) The number of acres leased.
16 35 (5) The number of acres held other than by ownership or
17 1 lease.
17 2 (6) The number of acres used for the production of row
17 3 crops.
17 4 (7) The animal weight capacity of the livestock operation.
17 5 4. A farmers cooperative association shall be excused from
17 6 filing a report with the secretary of state during any year in
17 7 which the farmers cooperative association holds an interest in
17 8 less than twenty acres of agricultural land in this state and
17 9 the gross revenue produced from all farming on the land equals
17 10 less than ten thousand dollars. If the farmers cooperative
17 11 association is excused from filing a report with the secretary
17 12 of state as provided in this subsection in the immediately
17 13 prior reporting year, the secretary of state is not required
17 14 to deliver a form to the farmers cooperative association for
17 15 the current reporting year, unless requested by the
17 16 association.
17 17 5. A report required pursuant to this section shall be in
17 18 lieu of any report which is also required by a farmers
17 19 cooperative association which qualifies as an authorized
17 20 corporation pursuant to section 9H.5A.
17 21 6. Notwithstanding chapter 22, reports required in this
17 22 section shall be confidential reports except as to the
17 23 attorney general for review and appropriate action when
17 24 necessary.
17 25 7. The secretary of state shall assist any committee of
17 26 the general assembly studying the effects of this subchapter
17 27 and the practices this subchapter regulates, to the same
17 28 extent required pursuant to section 9H.14.
17 29 Sec. 18. NEW SECTION. 499.96 PENALTIES.
17 30 1. a. A farmers cooperative association violating section
17 31 499.93 shall be assessed a civil penalty of not more than ten
17 32 thousand dollars and shall divest itself of any land held in
17 33 violation of that section within one year after judgment is
17 34 entered ordering the association to comply with that section.
17 35 b. A civil penalty of not more than one thousand dollars
18 1 may be imposed on a person who becomes a member of a farmers
18 2 cooperative association in violation of section 499.94. The
18 3 person violating the section shall divest the interest held by
18 4 the person in a farmers entity or authorized entity as is
18 5 necessary to comply with that section.
18 6 2. The court may determine the method of divesting an
18 7 interest held by a person found to be in violation of section
18 8 499.93 or 499.94. A financial gain realized by a person who
18 9 disposes of an interest held in violation of those sections
18 10 shall be forfeited to the state's general fund. All court
18 11 costs and fees shall be paid by the person holding the
18 12 interest in violation of the section.
18 13 3. The courts of this state may prevent and restrain
18 14 violations of section 499.93 or 499.94 through the issuance of
18 15 an injunction. The attorney general or a county attorney
18 16 shall institute suits on behalf of the state to prevent and
18 17 restrain violations of section 499.93 or 499.94.
18 18 4. a. The failure to timely file a report or the filing
18 19 of false information in a report filed pursuant to section
18 20 499.95 is punishable by a civil penalty not to exceed one
18 21 thousand dollars.
18 22 b. The secretary of state shall notify a person who the
18 23 secretary has reason to believe is required to file a report
18 24 as provided by section 499.95 and who has not filed a timely
18 25 report, that the person may be in violation of section 499.95.
18 26 The secretary of state shall include in the notice a statement
18 27 of the penalty which may be assessed if the required report is
18 28 not filed within thirty days. The secretary of state shall
18 29 refer to the attorney general any person who the secretary has
18 30 reason to believe is required to report under this chapter if,
18 31 after thirty days from receipt of the notice, the person has
18 32 not filed the required report. The attorney general may, upon
18 33 referral from the secretary of state, file an action in
18 34 district court to seek the assessment of a civil penalty of
18 35 one hundred dollars for each day the report is not filed.
19 1 EXPLANATION
19 2 This bill allows several types of entities to hold
19 3 agricultural land in this state. Generally, Code section 9H.5
19 4 prohibits entities, such as corporations, limited liability
19 5 companies, limited partnerships, and cooperative associations,
19 6 from holding agricultural land. Chapter 9H provides several
19 7 exceptions to this prohibition. Specifically, the chapter
19 8 provides that two types of entities can hold agricultural
19 9 land: family farm entities and authorized entities.
19 10 There is no restriction on the amount of agricultural land
19 11 that a family farm entity may hold or the number of entities
19 12 that a person can join as a stockholder. A family farm entity
19 13 can be organized as a family farm corporation, family farm
19 14 limited liability company, family farm limited partnership, or
19 15 family trust. A family farm entity must meet certain
19 16 qualifications. For example, a family farm corporation must
19 17 be founded for the purpose of farming and the ownership of
19 18 agricultural land, a majority of the voting stock must be held
19 19 by relatives and a majority of the voting stockholders must be
19 20 relatives, all of the stockholders must be natural persons,
19 21 and 60 percent of the corporation's gross revenues over the
19 22 last consecutive three-year period must come from farming.
19 23 Similar requirements apply to other types of family farm
19 24 entities.
19 25 An authorized entity can be organized as an authorized farm
19 26 corporation, authorized limited liability company, authorized
19 27 trust, or limited partnership. An authorized entity such as
19 28 an authorized corporation must also meet certain
19 29 qualifications. An authorized corporation must be founded for
19 30 the purpose of farming and the ownership of agricultural land,
19 31 it must be composed of 25 or fewer stockholders, and the
19 32 stockholders must be natural persons. These same types of
19 33 qualifications apply to other authorized entities, other than
19 34 limited partnerships. However, an authorized entity,
19 35 including a limited partnership, is prohibited from holding
20 1 more than 1,500 acres of agricultural land. A person cannot
20 2 hold an interest in two or more authorized entities.
20 3 This bill amends several chapters providing for the
20 4 organization of corporations, limited liability companies, and
20 5 cooperative associations by providing that these entities can
20 6 hold agricultural land if they meet certain qualifications.
20 7 An entity which meets these qualifications is referred to as a
20 8 farmers entity. A farmers entity can be a networking farmers
20 9 entity (meaning it can be organized as a networking farmers
20 10 corporation, or a networking farmers limited liability
20 11 company), a farmers cooperative limited liability company, or
20 12 a farmers cooperative association.
20 13 The qualifications for each of these entities are similar.
20 14 For example, to qualify as a networking farmers corporation,
20 15 70 percent of all stock must be held by qualified persons who
20 16 are natural persons actively engaged in farming, a general
20 17 partnership, a family farm corporation or similar entity,
20 18 natural person or general partnership that receives rent on a
20 19 share basis, or a farm estate. In addition, at least 70
20 20 percent of the corporation's voting stock must be held by
20 21 qualified persons. The same qualifications apply to
20 22 networking farmers limited liability companies. In the case
20 23 of farmers cooperative associations, there is a requirement
20 24 that 70 percent of the cooperative's voting stock be held by
20 25 qualified persons. However, there is no requirement that a
20 26 percentage of all stock be held by qualified persons. The
20 27 bill also provides for a special kind of limited liability
20 28 company composed of cooperative associations, referred to as a
20 29 farmers cooperative limited liability company. In that case,
20 30 all of the membership interest must be held by cooperative
20 31 associations and 50 percent of the voting interest must be
20 32 held by farmers cooperative associations.
20 33 The bill provides that a farmers entity such a qualifying
20 34 corporation (i.e., a networking farmers corporation) may hold
20 35 up to 1,500 acres of agricultural land as long as 75 percent
21 1 of the entity's gross income from farming comes from the sale
21 2 of livestock or livestock products.
21 3 The bill provides that if a person holds an interest in a
21 4 farmers entity such as a networking farmers corporation, the
21 5 person's own interest in agricultural land is treated
21 6 separately. For example, an authorized corporation holding
21 7 1,500 acres of land can own shares in a networking farmers
21 8 corporation which also holds 1,500 acres of land. There is
21 9 one exception. In counting land held by a farmers cooperative
21 10 association which is a member of a farmers cooperative limited
21 11 liability company, the bill requires that some land held by
21 12 the limited liability company is attributable to the
21 13 association. The amount attributable equals the amount
21 14 calculated by multiplying the number of acres of land held by
21 15 the company by the percentage interest in the company held by
21 16 the association. The bill contains an antipyramiding
21 17 provision which limits the number of farmers entities to which
21 18 a person can belong. A person cannot hold an interest in
21 19 another farmers entity, if the person's interest in the
21 20 corporation is 15 percent or more. There is one exception. A
21 21 cooperative association can hold an interest in multiple
21 22 farmers cooperative limited liability companies. However, as
21 23 discussed, land owned by the limited liability company is to
21 24 some extent attributable to a farmers cooperative limited
21 25 liability company.
21 26 The bill provides a number of reporting requirements for
21 27 farmers entities. The entity must file an annual report with
21 28 the secretary of state on or before March 31 of each year.
21 29 The report is similar to reports required to be filed by
21 30 authorized entities, like authorized corporations under
21 31 chapter 9H. The report must contain information for the last
21 32 year regarding the corporation, including information about
21 33 the activities of the entity, the entity's land holdings, and
21 34 agricultural commodities produced on the land. The bill
21 35 excuses an entity from filing a report during any year in
22 1 which the entity holds an interest in less than 20 acres of
22 2 agricultural land or the entity files a duplicate report as an
22 3 authorized entity. The reports are confidential.
22 4 A farmers entity such as a networking farmers corporation
22 5 and a person holding an interest in a farmers entity such as a
22 6 shareholder are subject to penalties for violating the bill's
22 7 provisions. The entity can be assessed a civil penalty of not
22 8 more than $10,000 and must divest itself of any land held in
22 9 violation of the bill's acreage restrictions. A civil penalty
22 10 of not more than $1,000 may be imposed on a person who holds
22 11 interest in several entities in violation of the bill's
22 12 antipyramiding rule. The person in violation must divest the
22 13 interest held by the person in a farmers entity or authorized
22 14 entity as is necessary to comply with the section. A
22 15 financial gain realized by a person who disposes of an
22 16 interest held in violation of the bill is forfeited to the
22 17 state's general fund. The bill authorizes courts to issue
22 18 injunctions. The attorney general or a county attorney is
22 19 authorized to institute suits on behalf of the state to
22 20 prevent and restrain violations of the bill. The failure to
22 21 timely file a report or the filing of false information in a
22 22 report is punishable by a civil penalty not to exceed $1,000,
22 23 following notice to correct a deficiency by the secretary of
22 24 state.
22 25 LSB 3560SC 77
22 26 da/sc/14
Text: SSB02013 Text: SSB02015 Text: SSB02000 - SSB02099 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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