H.F. 476 Section 1. NEW SECTION . 499.5B Agricultural associations —— 1 special requirements for small communities. 2 1. As used in this section: 3 a. “Community” means a city where an agricultural 4 association operates a principal business location if the 5 city has a population of less than two thousand residents. 6 Otherwise, a “community” is a township where the association 7 operates a principal business location if the township has a 8 population of less than two thousand residents. The population 9 of a community shall be determined according to the latest 10 decennial census conducted by the United States bureau of the 11 census. 12 b. “Qualified agricultural association” means an agricultural 13 association that operates a business in a community. 14 2. A qualified agricultural association shall be subject to 15 the oversight of a community investment board which is managed 16 by trustees. The trustees must be members of the association 17 who reside within the community. The trustees shall be elected 18 by members of the association who reside in the community. At 19 least three trustees shall serve on the community investment 20 board. 21 a. Those directors of the board of directors residing 22 in the community may nominate candidates to serve on the 23 community investment board. Any member who is a resident of 24 the community may submit a petition to nominate a candidate. A 25 candidate’s name shall be placed on the ballot if the petition 26 is signed by fifteen percent of the members residing in the 27 community. 28 b. The board of directors shall conduct the initial election 29 for trustees in substantially the same manner as provided 30 for the election of the directors. The board of directors 31 may create additional procedures to ensure the residency of 32 candidates and voters. A trustee shall be elected at a meeting 33 of qualified members who are entitled to vote at which a 34 majority of all shares entitled to cast a vote do vote. 35 -1- LSB 2139YH (2) 84 da/nh 1/ 3

H.F. 476 c. After the initial trustees are elected, the community 1 investment board or the members of the association who are 2 qualified to vote for the trustees may adopt amendments to 3 the association’s articles or bylaws that affect the terms 4 of office and management, as provided by amendments to the 5 articles or bylaws. However, the requirements of this chapter 6 that govern the board of directors or a director shall also 7 govern the community investment board and trustees, including 8 but not limited to the selection of officers, the removal of 9 officers and directors, voting procedures, and standards of 10 conduct. A trustee shall be compensated in the same manner as 11 a director. 12 3. The community investment board must approve all of the 13 following: 14 a. The acquisition of shares or other interest in the 15 association by persons who do not reside in the community, as 16 determined by the board. However, the board shall not approve 17 the acquisition of shares or other interest in the association 18 by such person if any of the following applies: 19 (1) The acquisition equals more than two-hundred and fifty 20 thousand dollars. 21 (2) Less than eighty percent of all shares or other 22 interests in the association are held by persons who 23 reside within twenty miles of the principal location of the 24 association’s business in the community. 25 b. The merger or consolidation of the association as 26 otherwise provided in this chapter. 27 Sec. 2. NEW SECTION . 499.64A Requirements for qualified 28 agricultural associations. 29 The board of directors of a qualified agricultural 30 association, as defined in section 499.5B, shall not 31 take action upon a merger or consolidation as provided in 32 this chapter until the community investment board for the 33 association approves the plan of merger or consolidation. 34 EXPLANATION 35 -2- LSB 2139YH (2) 84 da/nh 2/ 3

H.F. 476 This bill relates to agricultural associations organized 1 under Code chapter 499 which are located in a city or 2 township with a population of less than 2,000 residents. The 3 association is required to have a board of trustees who are 4 members of the association, who must reside in the community, 5 and who are elected from members of the association who 6 reside in the community. Any member who is a resident of the 7 community may submit a petition to nominate a candidate. A 8 candidate must be placed on the ballot upon petition of members 9 residing in the community. The community investment board must 10 approve the acquisition of shares or other interest in the 11 association by persons who do not reside in the community. The 12 board cannot approve an acquisition which equals more $250,000 13 or if less than 80 percent of all shares or other interests in 14 the association are held by persons who reside within 20 miles 15 of the principal location of the association’s business. 16 -3- LSB 2139YH (2) 84 da/nh 3/ 3