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Proposed New Bylaws of Wright's Farmer's Cooperative

ARTICLE I. MEMBERSHIP

 

Section 1. Qualifications. Any person, firm, partnership, corporation or association, including both landlord and tenant in share tenancies, who is a bona fide producer of agricultural products in the territory in which the association is engaged in business, and who agrees to be a patron of the association, signs a marketing agreement with the association, purchases one share of common stock, and meets such other conditions as may be prescribed by the board of directors, may become a member of the association.

All applications for membership must be approved by the board of directors. Member status is effective as of the time the board approves the application for membership.

 

[Replaces Article II, Section1]

 

Section 2. Suspension or Termination. In the event the board of directors of the association shall find, following a hearing, that any of the common stock of this association has come into the hands of any person who is not eligible for membership, or that the holder thereof has ceased to be an eligible member, or that such holder has not marketed through the association the products covered by a marketing agreement with the association, or not otherwise patronized the association for a period of one year(s), or otherwise violated the articles of incorporation, bylaws, or other agreements made with the association, the association may suspend such holder's rights as a member and terminate the membership.

 

When a membership is terminated, the association shall repurchase the member's share of common stock for par value. The holder shall return to the association the certificate evidencing the holder's share of stock. If such holder fails to deliver the certificate, the association may cancel such certificate on its books and records, and the certificate is then null and void.

 

A suspended or terminated member shall have no rights or privileges on account of any stock held, nor vote or voice in the management or affairs of the association other than the right to participate in accordance with law in case of dissolution.

 

See Minnesota Statute 308A.328, Subd. 1, “A director shall discharge the duties of the position of director in good faith, in a manner the director reasonably believes to be in the best interests of the cooperative, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”

 

[Minn. Stat. 308A.605 Member and Stockholder Violations]

 

[Replaces Article II, Section 2]

 

ARTICLE II. MEETINGS OF MEMBERS [Replaces Article I]

 

Section 1. Annual Meeting. The annual meeting of the members of this association shall be held in the State of Minnesota, during the month of August, at such time and in such place as the board of directors shall designate.

 

[Minn. Stat. 308A.611 Regular Members’ Meetings, Subd. 1 Annual Meeting]

 

Section 2. Special Meetings. Special meetings of the members of the association may be called at any time by the majority vote order of the board of directors and shall be called upon written request of at least members, or at least 20 percent (20%) of the membership.

 

[Minnesota Statute 308A.615 Special Members’ Meetings, Subd. 1]

 

Section 3. Notice of Meetings. Written notice of every regular the annual and special meeting of members shall be prepared and mailed to the last known post office address of each member not less than (15) days before such meeting. The notice shall be published in the local newspaper at least 15 days preceding the meeting.  Such notice shall state the nature of the business expected to be conducted and the time and place of the meeting. No business shall be transacted at any special meeting other than that referred to in the notice.

 

Regular and special board meetings are subject to Article III, Sections 5 & 6.

 

Minn. Stat. 308A.615, Subd. 2

 

(a) The chair or president shall give notice of a special members’ meeting by:
(1) Publication in a legal newspaper published in the county of the principal place of business of the cooperative;
(2) Publication in a magazine, periodical, or other publication of the cooperative that is regularly published by or on behalf of the cooperative and circulated generally among members; or
(3) Mailing the special members’ notice to each member personally at the person’s last known post office address, which for a member cooperative means notice mailed to the secretary of the cooperative.
(b)  The special members’ meeting notice shall state the time, place, and purpose of the special members’ meeting.
(c) The special members’ meeting notice shall be issued within ten days from and after the date of the presentation of a members’ petition, and the special members’ meeting must be held by 30 days after the date of the presentation of the members’ petition.

 

See Minnesota Statute 308A.615, Subd. 2, Notice.

 

Section 4. Voting. Unless otherwise stated in the articles of incorporation, or these bylaws, or required by applicable law, all questions shall be decided by a vote of a majority of the members voting thereon.  See Article II, Section 2, for special meeting requirements.

 

Each member shall be entitled to only one vote, regardless of the number of shares owned. Voting by mail shall not be permitted. Proxy voting is prohibited shall be allowed. Each proxy shall be in writing, and no member shall vote more than one proxy. Cumulative voting is not permitted.

 

If a membership is held by a partnership, corporation, or other legal entity, the member shall designate in writing the person who shall vote on behalf of the member. That designation shall remain in effect until written notice of a properly authorized change in the designated voter shall be received by the association.

Section 5. Quorum. (__) members or percent Ten Percent (10%) of the membership, whichever is a larger number, shall constitute a quorum at any properly called annual or special membership meeting when the total number of members for a cooperative number 500 or less members.  If and when the number of shareholders shall exceed five hundred (500), fifty shareholders (50) shall constitute a quorum.  [Current Section 5 (Presiding Officer) is deleted and replaced by Quorum]  In determining a quorum at any meeting on a question submitted to a vote by mail, shareholders/members present in person as well as those represented by mail ballots shall be counted.

 

[Minn. Stat. 308A.631 Quorum]

 

ARTICLE III. DIRECTORS AND OFFICERS

 

Section 1. Number and Qualification of Directors. The association shall have a board of directors of seven (7) members. Each director elected shall be a member of this association in good standing – meaning you must be a regular patron and an existing shareholder.

 

[Minn. Stat. 308A.305, Number of Directors]

 

No person shall be eligible to be a director if that person is in competition with, or is affiliated with any enterprise that is in competition with, the association. If a majority of the board of directors of the association finds at any time following a hearing that any director is so engaged or affiliated that person shall thereupon cease to be a director.

No director after having served for____ (__) consecutive full term(s) shall be eligible to succeed himself or herself, but after a lapse of____ (__) year(s) shall again be eligible.

 

Section 2. Election of Directors. At the first annual meeting of the members of this association, directors shall be elected to succeed the incorporating directors. ____director(s) shall be elected for one (1) year; ____directors for two (2) years and Seven (7) directors shall be elected for three (3) year terms. At each annual meeting thereafter, new directors shall be elected, for a term of three (3) years each, to succeed those directors whose terms are expiring.

 

If allowed to vote by mail, Minn. Stat. 308A.311, Subd. 4, Vote by mail or electronic means, will apply.

 

[Minn. Stat. 308A.311 Subd. 2., Election at regular meeting]

 

All directors shall be elected by secret ballot, and the nominee(s) receiving the greatest number of votes shall be elected.

 

Section 3. Election of Officers. The board of directors shall meet within seven (7) ten (10) days after the first election and within seven (7) ten (10) days after each annual election and shall elect by ballot a president, vice president, secretary, and treasurer, each of whom shall hold office until the election and qualification of a successor, unless earlier removed by death, resignation, or for cause.

 

The president and vice president shall be members of the board of directors. The secretary and treasurer need not be directors or members of the association.

[Replaces Article 3 Section 3]

 

Section 4. Vacancies. Whenever a vacancy occurs in the board of directors, other than from the expiration of a term of office, the remaining directors shall appoint a member to fill the vacancy until the next regular meeting of the members. If the term of the vacating director does not expire at that regular member meeting, a special election shall be held to select a director to fill the year or years remaining in that term.

 

The offices of the secretary and treasurer may be combined and termed “secretary-treasurer.”

 

If one or more officer positions become vacant, such offices shall be filled by the board of directors, through election by ballot, at either a regular or special meeting of the board.

 

Directors and officers shall hold office until their successor’s term begins.

 

[Minn. Stat. 308A.315 Filling Vacancies]

 

[Replaces Article 3 Section 2]

 

Section 5. Regular Board Meetings. In addition to the meetings mentioned above, regular meetings of the board of directors shall be held the third Sunday of the month monthly, or at such other times and at such places as the board may determine.  Schedule changes must be approved at the regular board meeting or by posting the change at least 14 days preceding the new scheduled meeting.

 

[Replaces Article I, Section 7]

 

Section 6. Special Board Meetings. A special meeting of the board of directors shall be held whenever called by the president or by a majority of the directors. Only the business specified in the written notice shall be transacted at a special meeting. Each call for a special meeting shall be in writing, shall be signed by the person or persons calling the meeting, shall be addressed and delivered to the secretary, and shall state the time and place of such meeting.

Special board meetings are distinct from special meetings for members as addressed in Article 2, Section 2.  The board must call a special meeting as soon as possible, meeting notification requirements, when 20% of members have petitioned for it.

 

[Replaces Article I, Section 2]

 

Section 7. Notice of Board Meetings. Oral or written notice of each meeting of the board of directors shall be given each director by, or under the supervision of, the secretary of the association not less than 24 hours prior to the time of meeting. But such notice may be waived by all the directors, and their appearance at a meeting shall constitute a waiver of notice.

 

Section 8. Quorum. A majority of the board of directors shall constitute a quorum at any meeting of the board.

 

Section 9. Reimbursement and Compensation. The association shall reimburse directors for all reasonable, actual expenses incurred in carrying out their duties and responsibilities.  The compensation, if any, of the members of the board of directors shall be determined by the members of the association at any annual or special meeting of the association.  No member of the board of directors, or member of the immediate family of any board member, shall occupy any position in the association on regular salary.

 

All expenses must be approved by a majority of the board at the regular meeting and recorded in the minutes.

 

Current members of the board of directors shall receive $25 per month.

 

Compensation of the secretary-treasurer shall be set by the board of directors.

 

[Replaces Article III, Section 4]

 

Section 10. Removal of Directors. Whenever any director shall fail to meet the qualifications as described in Section 1 of this Article, or fails to attend three (3) consecutive board meetings, either regular or special, without just cause and provided that notice of such meetings has been given in accordance with these bylaws, then it shall be the duty of the board to remove said director and to fill the vacancy in accordance with Section 4 of this Article.

 

Members, through petition noting the charges and signed by at least ____(__ ) members or __ 20 percent (20%) of the membership.  , whichever is a greater number, may request the removal of any member of the board. Such director shall be notified in writing of the charges and given an opportunity to be heard at a membership meeting of the association. The notification must be by certified mail with return receipt and must allow for at least 10 days’ notice.  A delivery attempt constitutes the initial day.   Removal of a director shall require a vote of the majority of members voting   The vote will count all names on the petition as well as the ballots of those in attendance. Any vacancy resulting from such action shall be filled by nomination and vote of members at such meeting.

 

See Minnesota Statute 308A.321 that states “Members may remove a director at a members’ meeting for cause related to the duties of the position of director and fill the vacancy caused by the removal.”

 

[Directors’ limited liability and restrictions is outlined in Minn. Stat. 308A.325, Subd. 1 & 2]

 

[Replaces Article III, Section 5]

 

ARTICLE IV. DUTIES OF DIRECTORS

 

Section 1. Management of Business. The board of directors shall have general supervision and control of the business and the affairs of the association and shall make all rules and regulations not inconsistent with law, the articles of incorporation, or bylaws for the management of the business and the guidance of the members, officers, employees, and agents of the association.

 

No member of the Board of Directors, or his or her relation, shall be employed or voluntarily employed as either manager or employee.

[Minn. Stat. 308A.328 Standard of Conduct, Subd. 1, Standard and liability]

 

Section 2. Employment of Manager. The board of directors shall have power to employ, define duties, fix compensation, and dismiss a manager with or without cause at any time. The board shall authorize the employment of such other employees, agents, and counsel as it from time to time deems necessary or advisable in the interest of the association. The manager shall have charge of the business of the association under the direction of the board of directors.

The manager, not the board, runs the day-to-day business operations of the cooperative. This includes hiring and firing other employees. If the board is dissatisfied with the way the cooperative is conducting its affairs, it should exercise its authority to replace the manager, but it should not take on the manager's responsibilities.

 

Section 3. Bonds and Insurance. The board of directors shall require the manager and all other officers, agents, and employees charged by the association with responsibility for the custody of any of its funds or negotiable instruments to give adequate bonds. Such bonds, unless cash security is given, shall be furnished by a responsible bonding company and approved by the board of directors, and the cost thereof shall be paid by the association.

 

The board of directors shall provide for the adequate insurance of the property of the association, or property which may be in the possession of the association, or stored by it, and not otherwise adequately insured, and, in addition, adequate insurance covering liability for accidents to all employees and the public.

 

Section 4. Accounting System and Audits. The board of directors shall have installed an accounting system which shall be adequate to meet the requirements of the business and shall require proper records to be kept of all business transactions.

 

At least once in each year the board of directors shall secure the services of a competent and disinterested public auditor or accountant, who shall make a careful audit of the books and accounts of the association and render a report in writing thereon, which report shall be submitted to the directors and the manager of the association and made available to the members of the association.

 

This report shall include at least a balance sheet showing the true assets and liabilities of the association, and an operating statement for the fiscal period under review.

 

Section 5. Depository. The board of directors shall select one or more banks to act as depositories of the funds of the association and determine the manner of receiving, depositing, and disbursing the funds of the association and the form of checks and the person or persons by whom they shall be signed, with the power to change such banks and the person or persons signing such checks and the form thereof at will.

 

Section 6. Committees. The board may, at its discretion, appoint from its own membership an executive committee of 5 members, and determine their tenure of office and their powers and duties. The board may delegate to the executive committee all or any stated portion of the functions and powers of the board, subject to the general direction, approval, and control of the board. Copies of the minutes of any meeting of the executive committee shall be mailed to all directors within seven (7) days following such meeting.

 

The board of directors may, at its discretion, appoint such other committees as it deems appropriate.

 

ARTICLE V. DUTIES OF OFFICERS

 

Section 1. Duties of President. The president shall (1) preside over all meetings of the association and of the board of directors; (2) call special meetings of the board of directors; (3) appoint such committees as the board of directors may deem advisable for the proper conduct of the cooperative; and (4) perform all acts and duties usually performed by a presiding officer.

 

Section 2. Duties of Vice President. In the absence or disability of the president, the vice president shall perform the duties of the president, provided, however, that in case of death, resignation, or disability of the president, the board of directors may declare the office vacant and elect any eligible person president.

 

Section 3. Duties of Secretary. The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. The secretary shall sign papers pertaining to the association as authorized or directed by the board of directors. The secretary shall serve all notices required by law and by these bylaws and shall make a full report of all matters and business pertaining to the office to the members at the annual meeting. The secretary shall keep the corporate seal and all books of blank certificates, complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal; shall keep complete stock ownership records; shall make all reports required by law; and shall perform such other duties as may be required by the association or the board of directors. Upon the election of a successor, the secretary shall turn over all books and other property belonging to the association.

 

Section 4. Duties of Treasurer. The treasurer shall be responsible for the keeping and disbursing of all monies of the association, and shall keep accurate books of accounts of all transactions of the association. The treasurer shall perform such duties with respect to the finances of the association as may be prescribed by the board of directors. At the expiration of his term of office, the treasurer shall promptly turn over to his successor all monies, property, books, records, and documents pertaining to his office or belonging to the association.

 

[Minn. Stat. 308A.401 Officers, Subd. 1, Required officers]

 

ARTICLE VI. OPERATION AT COST AND MEMBERS' CAPITAL

 

Section 1. Operation at Cost. The association shall at all times be operated on a cooperative service-at-cost basis for the mutual benefit of its member patrons.

 

Section 2. Margin Allocation – Not Applicable. . In order to induce patronage and to assure that this association will operate on a service-at-cost basis in all its transactions with its members, the association is obligated to account on a patronage basis to all member patrons on an annual basis for all amounts received from business conducted with members on a patronage basis, over and above the cost of providing such services, making reasonable additions to reserves, and redeeming capital credits. Such allocation shall be on the basis on the volume (dollar value) of product marketed through (purchased from) the association.

The association is hereby obligated to pay all such amounts to the patrons in cash or by credits to a capital account of each member patron.

 

Section 3. Per-Unit Retains. Not Applicable.  Each member also agrees to provide capital in such amounts as determined by the board of directors based on physical units of product marketed through the association. Such per-unit retains shall be allocated to the member's capital credit account.

 

Section 4. Dividends. No dividends shall be paid on any capital credits.

 

Section 5. Records and Documentation. The books and records of the association shall be set up and kept in such a manner that at the end of each fiscal year, the amount of capital, if any, so furnished by each member is clearly reflected and credited in an appropriate record to the capital account of each member.

The association shall, within 8-1/2 months after the close of each fiscal year, notify each member of the capital so credited to the member's account. The notice shall be in the form of a written notice of allocation or per-unit retain (shares) certificate (as those terms are used in Subchapter T of the Internal Revenue Code) or other appropriate written document. The board shall have discretion to issue such notices and certificates in either "qualified" or "nonqualified" form as permitted by the Internal Revenue Code and other applicable law.

 

Section 6. Fiscal Year. The fiscal year of this association shall commence on the first day of June and end on the last day of May.

 

ARTICLE VII. EQUITY REDEMPTION

 

Section 1. Regular Redemption, Revolving Fund. If at any time the board of directors determines that the financial condition of the association will not be impaired thereby, capital credited to members' accounts may be redeemed in full or in part. Any such redemption of capital shall be made in order of priority according to the year in which the capital was furnished and credited, the capital first received by the association being the first redeemed.

 

Section 2. Discretionary Special Redemptions. Notwithstanding any other provision of these bylaws, the board, at its absolute discretion, shall have the power to retire any capital credited to members' accounts on such terms and conditions as may be agreed upon by the parties in any instance in which the interests of the association and its members are deemed to be furthered thereby and funds are determined by the board to be available for such purposes.

 

ARTICLE VIII. CONSENT

 

Not Applicable:  Patronage refunds have not been established.  Each person who hereafter applies for and is accepted to membership in this association, and each member of this association on the effective date of this bylaw who continues as a member after such date, shall, by such act alone, consent that the amount of any distributions with respect to his patronage occurring after the effective date of this bylaw, which are made in qualified written notices of allocation or qualified per-unit retain certificates (as defined in 26 U.S.C. 1388), and which are received by him from the cooperative, will be taken into account by him at their stated dollar amounts in the manner provided in 26 U.S.C. 1385(a) in the taxable year in which such written notices of allocation and per-unit retain certificates are received by him.

 

Written notification of the adoption of this Article, a statement of its significance, and a copy of the provision shall be given separately to each member and prospective member before membership in the association.

 

ARTICLE IX. NONMEMBER BUSINESS

 

This association may conduct business with nonmembers on either a patronage or nonpatronage basis. However, this association shall not market the products of nonmembers in an amount the value of which exceeds the value of the products marketed for members. It shall not purchase supplies and equipment for nonmembers in an amount the value of which exceeds the value of the supplies and equipment purchased for members. It shall not purchase supplies and equipment for persons who are neither members nor producers of agricultural products in an amount the value of which exceeds fifteen percent (15%) of all its purchases. Business done for the United States or any of its agencies shall be disregarded in determining the limitations imposed by this section.  The board of directors shall do what is best for the cooperative, regardless of shareholder/patron standing.

 

ARTICLE X. NONPATRONAGE INCOME

 

The nonpatronage income of the association shall be its gross receipts derived from all sources which under law do not qualify as patronage income, less all expenses properly attributable to the production of such nonpatronage sourced income and all income taxes payable on such receipts by the association. Nonpatronage income shall be used in behalf of the association and its members in accordance with such lawful purposes, including assignment to an unallocated reserve account and allocation in whole or in part to members, as may be determined by the board of directors.

 

ARTICLE XI. LOSSES

 

Section 1. Patronage Losses. Not Applicable.  In the event the association suffers a loss during any year on business conducted with or for patrons, such loss may be apportioned among the patrons during the year of loss so that such loss will, to the extent practicable, be borne by the patrons of the loss year on an equitable basis. The board shall have full authority to prescribe the basis on which capital furnished by patrons may be reduced or such loss otherwise equitably apportioned among the patrons. In the event of a patronage loss in one or more departments or divisions of the operation of this association, but not so much as to cause an overall loss for the fiscal year, such loss or losses may be prorated against each of the remaining profitable departments on the basis of their respective percentage of the net margins during such fiscal year.

 

Section 2. Nonpatronage Losses. If in any fiscal year the association shall incur a loss other than on patronage operations, such loss may be charged against any reserve accumulated from nonpatronage earnings in prior years.

 

Section 3. General Provisions. The board shall have no authority to make assessments against members.

 

This section shall not be construed to deprive the association of the right to carry backward or forward losses from any source whatsoever in accordance with the Internal Revenue Code or state taxing statutes.

 

ARTICLE XII. DISSOLUTION AND PROPERTY INTEREST OF MEMBERS

 

Upon dissolution, after all debts and liabilities of the association shall have been paid, all shares of preferred stock and common stock redeemed, and all capital furnished through patronage shall have been retired without priority on a pro rata basis, the remaining property and assets of the association shall be distributed among the members and former members in the proportion which the aggregate patronage of each member bears to the total patronage of all such members insofar as practicable, unless otherwise provided by law.

 

[Minn. Stat. 308A.911 Voluntary Dissolution by Members]

 

ARTICLE XIII. INDEMNIFICATION

 

The association shall indemnify its officers, directors, employees, and agents to the fullest extent possible under the provisions of the applicable State law, as it may be amended from time to time.

 

The association may purchase liability insurance coverage for any person serving as an officer, director, employee or agent to the extent permitted by applicable State law.

 

ARTICLE XIV. AMENDMENTS

 

If notice of the character of the amendment proposed has been given in the notice of meeting, these bylaws may be altered or amended at any regular or special meeting of the members by the affirmative vote of 20% of the members present or voting by proxy.