WORKING DRAFT

HB0021 - Cooperative marketing associations.

2001

State of Wyoming

01LSO-0039.E1

ENGROSSED

HOUSE BILL NO. HB0021

Cooperative marketing associations.

Sponsored by: Joint Agriculture, Public Lands and Water
Resources Interim Committee

A BILL

for

1 AN ACT relating to agriculture; providing for processing
2 cooperative marketing associations; providing certain
3 requirements for the organization, administration and
4 operation of cooperative marketing associations as
5 specified; providing definitions; making conforming
6 amendments; and providing for an effective date.

8 Be It Enacted by the Legislature of the State of Wyoming:

10 Section 1. W.S. 17-10-201 through 17-10-253 are
11 created to read:

13 ARTICLE 2

14 PROCESSING COOPERATIVE

Page 1

1 17-10-201. Title.

3 This act may be cited as the "Wyoming Processing
4 Cooperative law."

6 17-10-202. Definitions.

8 (a) As used in this article:

10 (i) "Address" means mailing address, including a
11 zip code. In the case of a registered address, the term
12 means the mailing address and the actual office location,
13 which may not be a post office box;

15 (ii) "Articles" means the articles of
16 organization of a cooperative as originally filed and
17 subsequently amended;

19 (iii) "Association" means an organization
20 conducting business on a cooperative plan under the laws of
21 this state or another state that is chartered to conduct
22 business under other laws of this state or another state;

Page 2

1 (iv) "Board" means the board of directors of a
2 cooperative;

4 (v) "Business entity" means a company, limited
5 liability company, limited liability partnership or other
6 legal entity, whether domestic or foreign, association or
7 body vested with the power or function of a legal entity;

9 (vi) "Cooperative" means an association
10 organized under this article conducting business on a
11 cooperative plan as provided under this article;

13 (vii) "Domestic business entity" means a
14 business entity organized under the laws of this state;

16 (viii) "Filed with the secretary of state" means
17 that a document meeting the applicable requirements of this
18 article, signed and accompanied by the required filing fee,
19 has been delivered to the secretary of state of this state.
20 The secretary of state shall endorse on the document the
21 word "Filed" or a similar word determined by the secretary
22 of state and the month, day, and year of filing, record the
23 document in the office of the secretary of state, and

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1 return a document to the person or entity who delivered it
2 for filing;

4 (ix) "Foreign business entity" means a business
5 entity that is not a domestic business entity;

7 (x) "Member" means a person or entity reflected
8 on the books of the cooperative as the owner of governance
9 rights of a membership interest of the cooperative and
10 includes patron and nonpatron members;

12 (xi) "Membership interest" means a member's
13 interest in a cooperative consisting of a member's
14 financial rights, a member's right to assign financial
15 rights, a member's governance rights and a member's right
16 to assign governance rights. Membership interest includes
17 patron membership interests and nonpatron membership
18 interests;

20 (xii) "Members' meeting" means a regular or
21 special members' meeting;

23 (xiii) "Nonpatron membership interest" means a

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1 membership interest that does not require the holder to
2 conduct patronage business for or with the cooperative to
3 receive financial rights or distributions;

5 (xiv) "Patron" means a person or entity who
6 conducts patronage business with the cooperative;

8 (xv) "Patronage" means business, transactions,
9 or services done for or with the cooperative as defined by
10 the cooperative;

12 (xvi) "Patron member" means a member holding a
13 patron membership interest;

15 (xvii) "Patron membership interest" means the
16 membership interest requiring the holder to conduct
17 patronage business for or with the cooperative, as
18 specified by the cooperative to receive financial rights or
19 distributions;

21 (xviii) "Signed" means that the signature of a
22 person has been written on a document, and, with respect to
23 a document required by this article to be filed with the

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1 secretary of state, means that the document has been signed
2 by a person authorized to do so by this article, the
3 articles or bylaws, or by a resolution approved by the
4 directors or the members. A signature on a document may be
5 a facsimile affixed, engraved, printed, placed, stamped
6 with indelible ink, transmitted by facsimile or
7 electronically or in any other manner reproduced on the
8 document;

10 (xix) "The act" means W.S. 17-10-201 through
11 17-10-253.

13 17-10-203. Filing fee.

15 Unless otherwise provided, the filing fee for documents
16 filed under this article with the secretary of state shall
17 be subject to the provisions of W.S. 17-16-122.

19 17-10-204. Registered agent; change of registered
20 office or registered agent.

22 (a) Each cooperative shall have and continuously
23 maintain in this state:

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2 (i) A registered office which may be, but need
3 not be, the same as its place of business;

5 (ii) A registered agent, which agent may be
6 either an individual resident in this state whose business
7 office is identical with such registered office, or a
8 domestic corporation, or a foreign corporation authorized
9 to transact business in this state, having a business
10 office identical with such registered office.

12 (b) A cooperative may change its registered office or
13 agent, or both, upon filing in the office of the secretary
14 of state a statement setting forth:

16 (i) The name of the cooperative;

18 (ii) The address of its then registered office;

20 (iii) If the address of its registered office be
21 changed, the address to which the registered office is to
22 be changed;

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1 (iv) The name of its then registered agent;

3 (v) If its registered agent be changed, the name
4 of its successor registered agent;

6 (vi) That the address of its registered office
7 and the address of the business office of its registered
8 agent, as changed, will be identical;

10 (vii) That the change was authorized by
11 affirmative vote of a majority of the board of directors of
12 the cooperative.

14 (c) The statement shall be signed and delivered to
15 the secretary of state. If the secretary of state finds
16 that the statement conforms to the provisions of this act,
17 he shall file the statement in his office, and upon filing
18 the change of address of the registered office or the
19 appointment of a new registered agent or both, as the case
20 may be is effective.

22 (d) Any registered agent of a cooperative may resign
23 as agent upon filing a written notice thereof, signed with

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1 one (1) original and one (1) exact or conformed copy, with
2 the secretary of state, who shall forthwith mail a copy
3 thereof to the cooperative at its principal mailing address
4 as defined and prescribed by the secretary of state. The
5 appointment of the agent shall terminate upon the
6 expiration of thirty (30) days after receipt of notice by
7 the secretary of state.

9 (e) If any cooperative has failed for thirty (30)
10 days to appoint and maintain a registered agent in this
11 state, or has failed for thirty (30) days after change of
12 its registered office or registered agent to file in the
13 office of the secretary of state a statement of the change
14 it shall be deemed to be transacting business within this
15 state without authority and to have forfeited any
16 franchises, rights or privileges acquired under the laws
17 thereof and the forfeiture shall be made effective in the
18 following manner. The secretary of state shall mail by
19 certified mail a notice of its failure to comply with
20 aforesaid provisions. Unless compliance is made within
21 thirty (30) days of the delivery of notice, the cooperative
22 shall be deemed defunct and to have forfeited its
23 certificate of organization acquired under the laws of this

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1 state. Provided, that any defunct cooperative may at any
2 time within two (2) years after the forfeiture of its
3 certificate, in the manner herein provided, be revived and
4 reinstated, by filing the necessary statement under this
5 act and paying a reinstatement fee established by the
6 secretary of state by rule, together with a penalty of one
7 hundred dollars ($100.00). The reinstatement fee shall not
8 exceed the costs of providing the reinstatement service.
9 The cooperative shall retain its registered name during the
10 two (2) year reinstatement period under this section.

12 17-10-205. Organizational purpose.

14 A cooperative may be formed and organized on a cooperative
15 plan as provided under this article to market, process, or
16 otherwise change the form or marketability of crops,
17 livestock and other agricultural products, including
18 manufacturing and further processing of those products and
19 other purposes that are necessary or convenient to
20 facilitate the production or marketing of agricultural
21 products by patron members and other purposes that are
22 related to the business of the cooperative.

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1 17-10-206. Organizers.

3 A cooperative may be organized by one (1) or more
4 organizers who shall be adult natural persons, who may act
5 for themselves as individuals or as the agents of other
6 entities. The organizers forming the cooperative need not
7 be members of the cooperative.

9 17-10-207. Cooperative name.

11 (a) The name of a cooperative shall distinguish the
12 cooperative upon the records in the office of the secretary
13 of state from the name of a domestic business entity or a
14 foreign business entity, authorized or registered to do
15 business in this state or a name the right to which is, at
16 the time of organization, reserved or provided for by law.

18 (b) The cooperative name shall be reserved for the
19 cooperative during its existence.

21 17-10-208. Articles of organization.

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1 (a) The organizers shall prepare the articles, which
2 shall include:

4 (i) The name of the cooperative;

6 (ii) The purpose of the cooperative;

8 (iii) The principal place of business for the
9 cooperative and the name and address of its registered
10 agent in this state;

12 (iv) The period of duration for the cooperative,
13 if the duration is not to be perpetual;

15 (v) The capital structure of the cooperative
16 including a statement of the classes and relative rights,
17 preferences, and restrictions granted to or imposed upon
18 each class of member interests, the rights to share in
19 profits or distributions of the cooperative, and the
20 authority to issue member interests, which may be
21 designated to be determined by the board;

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1 (vi) A provision designating the voting and
2 governance rights, including which membership interests
3 have voting power and any limitations or restrictions on
4 the voting power, which shall be in accordance with the
5 provisions of this article;

7 (vii) A statement that patron membership
8 interests with voting power shall be restricted to one (1)
9 vote for each member regardless of the amount of patron
10 membership interests held in the affairs of the cooperative
11 or a statement describing the allocation of voting power
12 allocated as prescribed in this article;

14 (viii) A statement that membership interests
15 held by a member are transferable only with the approval of
16 the board or as provided in the bylaws;

18 (ix) The names, post office addresses, and terms
19 of office of the directors of the first board;

21 (x) A statement as to how profits and losses
22 will be allocated and cash will be distributed between
23 patron membership interests collectively and nonpatron

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1 membership interests collectively, a statement that net
2 income allocated to a patron membership interests as
3 determined by the board in excess of dividends and
4 additions to reserves shall be distributed on the basis of
5 patronage, and that the records of the cooperative shall
6 include the interests of patron membership interests and
7 nonpatron membership interests which may be further
8 described in the bylaws, of any classes, and in the
9 reserves; and

11 (xi) The registered address of the cooperative.

13 (b) The articles shall contain the provisions in
14 subsection (a) of this section, except that the names, post
15 office addresses of the directors of the first board may be
16 omitted after their successors have been elected by the
17 members or the articles are amended in their entirety.

19 (c) The articles may contain any other lawful
20 provision.

22 (d) The articles shall be signed by the organizers.

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1 (e) The original articles shall be filed with the
2 secretary of state. The fee for filing the articles with
3 the secretary of state shall be subject to the provisions
4 of W.S. 17-16-122.

6 (f) When the articles of organization have been filed
7 with the secretary of state and the required fee has been
8 paid to the secretary of state, it shall be presumed that:

10 (i) All conditions precedent that are required
11 to be performed by the organizers have been complied with;

13 (ii) The organization of the cooperative has
14 been chartered by the state as a separate legal entity; and

16 (iii) The secretary of state shall issue a
17 certificate of organization to the cooperative.

19 17-10-209. Amendment of articles.

21 (a) The articles of a cooperative shall be amended as
22 follows:

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1 (i) The board by majority vote shall pass a
2 resolution stating the text of the proposed amendment. The
3 text of the proposed amendment and an attached mail ballot,
4 if the board has provided for a mail ballot in the
5 resolution or alternative method approved by the board and
6 stated in the resolution, shall be mailed or distributed
7 with a regular or special meeting notice to each member.
8 The notice shall designate the time and place of the
9 meeting for the proposed amendment to be considered and
10 voted on;

12 (ii) If a quorum of the members is registered as
13 being present or represented by alternative vote at the
14 meeting, the proposed amendment is adopted:

16 (A) If approved by a majority of the votes
17 cast; or

19 (B) For a cooperative with articles or
20 bylaws requiring more than majority approval or other
21 conditions for approval, the amendment is approved by a
22 proportion of the votes cast or a number of total members

Page 16

1 as required by the articles or bylaws and the conditions
2 for approval in the articles or bylaws have been satisfied.

4 (b) After an amendment has been adopted by the
5 members, the amendment shall be signed by the chair,
6 vice-chair, records officer, or assistant records officer
7 and a copy of the amendment filed in the office of the
8 secretary of state.

10 (c) A certificate shall be prepared stating:

12 (i) The vote and meeting of the board adopting a
13 resolution of the proposed amendment;

15 (ii) The notice given to members of the meeting
16 at which the amendment was adopted;

18 (iii) The quorum registered at the meeting; and

20 (iv) The vote cast adopting the amendment.

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1 (d) The certificate shall be signed by the chair,
2 vice-chair, records officer or financial officer and filed
3 with the records of the cooperative.

5 (e) A majority of directors may amend the articles if
6 the cooperative does not have any members with voting
7 rights.

9 17-10-210. Amendment of organizational documents to
10 be governed by this article.

12 (a) A business entity organized and doing business
13 under other statutes of this state or under the laws of
14 other states that has or will conduct business as a
15 cooperative may become subject to this article by amending
16 its organizational documents to conform to the requirements
17 of articles of organization under this article.

19 (b) A business entity organized under other statutes
20 of this state may amend its articles in the manner provided
21 under the statute that it is governed by for the adoption
22 of amendments to comply with the provisions of this article
23 and file the amended articles with the secretary of state

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1 to be a cooperative governed under this article. The status
2 of the business entity under the other statutes terminates
3 with the filing of articles to be governed under this
4 article.

6 (c) A business entity organized under laws of other
7 states shall amend its organizational documents in the
8 manner required by the laws of the state where it was
9 organized to comply with the provisions of this article,
10 including a statement that the business entity will
11 terminate its status of organization under the laws of the
12 other state. After the organizational documents are
13 amended, the business entity shall file a certified copy of
14 the organizational documents as amended with the secretary
15 of state to comply with the provisions of this article with
16 the fees and requirements prescribed for filing articles.
17 After filing, the business entity is a cooperative in this
18 state organized under and subject to the provisions of this
19 article. The cooperative shall complete the process of
20 termination or dissolution of the business entity as
21 organized in the other state.

23 17-10-211. Existence.

Page 19

2 (a) The existence of a cooperative shall begin when
3 the articles are filed with the secretary of state.

5 (b) A cooperative shall have a perpetual duration
6 unless the cooperative provides for a limited period of
7 duration in the articles of organization.

9 17-10-212. Bylaws.

11 (a) A cooperative shall have bylaws governing the
12 cooperative's business affairs, structure, the
13 qualifications, classification, rights and obligations of
14 members, and the classifications, allocations and
15 distributions of membership interests.

17 (b) The bylaws of a cooperative may be adopted or
18 amended by the directors as provided in subsection (c) of
19 this section, or at a regular or special members' meeting
20 if:

22 (i) The notice of the meeting contains a
23 statement that the bylaws or restated bylaws will be voted

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1 upon and copies are included with the notice, or copies are
2 available upon request from the cooperative and summary
3 statement of the proposed bylaws or amendment is included
4 with the notice;

6 (ii) A quorum is registered as being present or
7 represented by mail or alternative voting method if the
8 mail or alternative voting method is authorized by the
9 board; and

11 (iii) The bylaws or amendment is approved by a
12 majority vote cast, or for a cooperative with articles or
13 bylaws requiring more than majority approval or other
14 conditions for approval, the bylaws or amendment is
15 approved by a proportion of the vote cast or a number of
16 the total members as required by the articles or bylaws and
17 the conditions for approval in the articles or bylaws have
18 been satisfied.

20 (c) Until the next annual or special members'
21 meeting, the majority of directors may adopt and amend
22 bylaws for the cooperative that are consistent with
23 subsection (d) of this section which may be further amended

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1 or repealed by the members at an annual or special members'
2 meeting.

4 (d) Bylaws may contain any provision relating to the
5 management or regulation of the affairs of the cooperative
6 that are not inconsistent with law or the articles, and
7 shall include the following:

9 (i) The number of directors, and the
10 qualifications, manner of election, powers, duties, and
11 compensation, if any, of directors;

13 (ii) The qualifications of members and any
14 limitations on their number;

16 (iii) The manner of admission, withdrawal,
17 suspensions, and expulsion of members;

19 (iv) Generally the governance rights, financial
20 rights, assignability of governance and financial rights,
21 and other rights, privileges and obligations of members and
22 their membership interests, which may be further described
23 in member control agreements.

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2 17-10-213. Powers.

4 (a) In addition to other powers, a cooperative as an
5 agent or otherwise:

7 (i) May perform every act and thing necessary or
8 proper to the conduct of the cooperative's business or the
9 accomplishment of the purposes of the cooperative;

11 (ii) Has other rights, powers, or privileges
12 granted by the laws of this state to other cooperatives,
13 except those that are inconsistent with the express
14 provisions of this article; and

16 (iii) Has the powers given in this section.

18 (b) A cooperative may buy, sell, or deal in its own
19 products, the products of the cooperative's individual
20 members, patrons or nonmembers, the products of another
21 cooperative association, or of its members or patrons, or
22 the products of another person or entity. A cooperative may

Page 23

1 negotiate the price at which the products the cooperative
2 is selling may be sold.

4 (c) A cooperative may enter into or become a party to
5 a contract or agreement for the cooperative or for the
6 cooperative's individual members or patrons or between the
7 cooperative and its members.

9 (d) A cooperative may purchase and hold, lease,
10 mortgage, encumber, sell, exchange and convey as a legal
11 entity real estate, buildings and personal property as the
12 business of the cooperative may require including the sale
13 or other disposition of assets required by the business of
14 the cooperative as determined by the board.

16 (e) A cooperative may erect buildings or other
17 structures or facilities on the cooperative's owned or
18 leased property or on a right-of-way legally acquired by
19 the cooperative.

21 (f) A cooperative may issue bonds or other evidence
22 of indebtedness and may borrow money to finance the
23 business of the cooperative.

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2 (g) A cooperative may make advances to the
3 cooperative's members or patrons on products delivered by
4 the members or patrons to the cooperative.

6 (h) A cooperative may accept deposits of money from
7 other cooperatives, associations or members from which it
8 is constituted.

10 (j) A cooperative may loan or borrow money to or from
11 individual members, cooperatives or associations from which
12 it is constituted with security that it considers
13 sufficient in dealing with the members, cooperatives, or
14 associations.

16 (k) A cooperative may purchase, acquire, hold, or
17 dispose of the ownership interests of another business
18 entity whether organized under the laws of this state or
19 another state and assume all rights, interests, privileges,
20 responsibilities and obligations arising out of the
21 ownership interests.

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1 (m) A cooperative may acquire and hold ownership
2 interests in another business entity organized under the
3 laws of this state or another state of the United States,
4 including a business entity organized:

6 (i) As a federation of associations;

8 (ii) For the purpose of forming a district,
9 state, or national marketing, sales or service agency; or

11 (iii) For the purpose of acquiring marketing
12 facilities at terminal or other markets in this state or
13 other states.

15 (n) A cooperative may purchase, own, and hold
16 ownership interests, memberships, interests in nonstock
17 capital, evidences of indebtedness of any domestic business
18 entity or foreign business entity when reasonably necessary
19 or incidental to accomplish the purposes stated in the
20 articles.

22 (o) A cooperative may exercise any and all fiduciary
23 powers in relations with members, cooperatives,

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1 associations or business entities from which it is
2 constituted.

4 (p) A cooperative may take, receive, and hold real
5 and personal property, including the principal and interest
6 of money or other funds and rights in a contract, in trust
7 for any purpose not inconsistent with the purposes of the
8 cooperative in its articles and may exercise fiduciary
9 powers in relation to taking, receiving, and holding the
10 real and personal property.

12 17-10-214. Agricultural product marketing contracts.

14 (a) A cooperative and its patron member or patron may
15 make and execute a marketing contract, requiring the patron
16 member or patron to sell a specified portion of his
17 agricultural product or specified commodity produced from a
18 certain area exclusively to or through the cooperative or
19 facility established by the cooperative.

21 (b) If a sale is contracted to the cooperative, the
22 sale shall transfer title to the product absolutely, except
23 for a recorded lien or security interest, to the

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1 cooperative on delivery of the product or at another
2 specified time if expressly provided in the contract. The
3 contract may allow the cooperative to sell or resell the
4 product of its patron member or patron with or without
5 taking title to the product, and pay the resale price to
6 the patron member or patron, after deducting all necessary
7 selling, overhead and other costs and expenses, including
8 other proper reserves and interest.

10 (c) A single term of a marketing contract shall not
11 exceed ten (10) years, but a marketing contract may be made
12 self-renewing for periods not exceeding five (5) years
13 each, subject to the right of either party to terminate by
14 giving written notice of the termination during a period of
15 the current term as specified in the contract.

17 (d) The bylaws or the marketing contract, or both,
18 may set a specific sum as liquidated damages to be paid by
19 the patron member or patron to the cooperative for breach
20 of any provision of the marketing contract regarding the
21 sale or delivery or withholding of a product and may
22 provide that the member or patron shall pay the costs,
23 premiums for bonds, expenses and fees if an action is

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1 brought on the contract by the cooperative. The remedies
2 for breach of contract are valid and enforceable in the
3 courts of this state. The provisions shall be enforced as
4 liquidated damages and are not to be considered or regarded
5 as a penalty.

7 (e) If there is a breach or threatened breach of a
8 marketing contract by a patron member or patron, the
9 cooperative is entitled to an injunction to prevent the
10 further breach of the contract and to a decree of specific
11 performance of the contract. Pending the adjudication of
12 the action after filing a certified complaint showing the
13 breach or threatened breach and filing a sufficient bond,
14 the cooperative is entitled to a temporary restraining
15 order and preliminary injunction against the patron member
16 or patron.

18 (f) Any person who knowingly induces or attempts to
19 induce any member or patrons of a cooperative organized
20 under this article to breach his marketing contract with
21 the cooperative, or who maliciously and knowingly spreads
22 false reports about the finances or management thereof,
23 shall be guilty of a misdemeanor and subject to a fine of

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1 not less than one hundred dollars ($100.00), and not more
2 than one thousand dollars ($1,000.00), for each such
3 offense; provided, that this section shall not apply to a
4 bona fide creditor of such cooperative, or the agent or
5 attorney of any such bona fide creditor, endeavoring to
6 make collections of the indebtedness.

8 (g) In addition to the penalty provided in subsection
9 (f) of this section, the person, corporation or other
10 entity may be liable to the cooperative for civil damages
11 for any violation of the provisions of subsection (f) of
12 this section. Each violation shall constitute a separate
13 offense and is subject to the penalties in this subsection
14 and subsection (f) of this section.

16 17-10-215. Board governs cooperative.

18 A cooperative shall be governed by its board.

20 17-10-216. Number of directors.

22 The board shall have not less than three (3) directors.

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1 17-10-217. Election of directors.

3 (a) Directors shall be elected for the term, at the
4 time, and in the manner provided in this section and the
5 bylaws. A majority of the directors shall be members and at
6 least one (1) director shall be elected exclusively by the
7 members holding patron membership interests. The voting
8 authority of the directors may be allocated according to
9 allocation units or equity classifications of the
10 cooperative provided that at least one-half (1/2) of the
11 voting power on general matters of the cooperative shall be
12 allocated to one (1) or more directors elected by members
13 holding patron membership interests or in the alternative
14 the one (1) or more directors elected by the members
15 holding patron membership interests shall have an equal or
16 shall not have a minority voting power on general matters
17 of the cooperative.

19 (b) Directors shall be elected at the regular
20 members' meeting for the terms of office prescribed in the
21 bylaws. Except for directors elected at district meetings,
22 all directors shall be elected at the regular members'
23 meeting.

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2 (c) For a cooperative with districts or other units,
3 members may elect directors on a district or unit basis if
4 provided in the bylaws. The directors may be nominated or
5 elected at district meetings if provided in the bylaws.
6 Directors who are nominated at district meetings shall be
7 elected at the annual regular members' meeting by vote of
8 the entire membership, unless the bylaws provide that
9 directors who are nominated at district meetings are to be
10 elected by vote of the members of the district at the
11 annual regular members' meeting.

13 (d) The following shall apply to alternative voting:

15 (i) A member may not vote other than by their
16 presence at a meeting for a director unless alternative
17 voting is authorized for election of directors by the
18 articles or bylaws;

20 (ii) The ballot shall be in a form prescribed by
21 the board;

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1 (iii) The member shall mark the ballot for the
2 candidate chosen and mail the ballot to the cooperative in
3 a sealed plain envelope inside another envelope bearing the
4 member's name, or shall vote in the alternative manner
5 prescribed by the board;

7 (iv) If the ballot of the member is received by
8 the cooperative on or before the date of the regular
9 members' meeting, the ballot shall be accepted and counted
10 as the vote of the absent member.

12 (e) If a member of a cooperative is not a natural
13 person, and the bylaws do not provide otherwise, the member
14 may appoint or elect one (1) or more natural persons to be
15 eligible for election as a director to the board.

17 17-10-218. Filling vacancies.

19 If a patron member director's position becomes vacant for a
20 director that was elected by patron members, the board
21 shall appoint a patron member of the cooperative to fill
22 the director's position until the next regular or special
23 members' meeting. If the vacating director was not a patron

Page 33

1 member, the board shall appoint a patron member to fill the
2 vacant position. At the next regular or special members'
3 meeting, the members or patron members shall elect a
4 director to fill the unexpired term of the vacant
5 director's position.

7 17-10-219. Removal of directors.

9 The members electing a director may remove the director at
10 a members' meeting for cause related to the duties of the
11 position of director and fill the vacancy caused by the
12 removal.

14 17-10-220. Limitation of director's liability.

16 (a) A director's personal liability to the
17 cooperative or members for monetary damages for breach of
18 fiduciary duty as a director may be eliminated or limited
19 in the articles except as provided in subsection (b) of
20 this section.

22 (b) The articles may not eliminate or limit the
23 liability of a director:

Page 34

2 (i) For a breach of the director's duty of
3 loyalty to the cooperative or its members;

5 (ii) For acts or omissions that are not in good
6 faith or involve intentional misconduct or a knowing
7 violation of law;

9 (iii) For a transaction from which the director
10 derived an improper personal benefit; or

12 (iv) For an act or omission occurring before the
13 date when the provision in the articles eliminating or
14 limiting liability becomes effective.

16 17-10-221. Officers.

18 (a) The board shall elect:

20 (i) A chair; and

22 (ii) One (1) or more vice-chairs.

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1 (b) The board shall elect or appoint:

3 (i) A records officer; and

5 (ii) A financial officer.

7 (c) The board may elect additional officers as the
8 articles or bylaws authorize or require.

10 (d) The offices of records officer and financial
11 officer may be combined.

13 (e) The chair and first vice-chair shall be directors
14 and members. The financial officer, records officer, and
15 additional officers need not be directors or members.

17 (f) The board may employ a chief executive officer to
18 manage the day-to-day affairs and business of the
19 cooperative.

21 (g) Other than the chief executive officer, members
22 may remove an officer at a members' meeting for cause

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1 related to the duties of the position of the officer and
2 fill the vacancy caused by the removal.

4 17-10-222. Membership interests.

6 (a) The authorized amount and divisions of patron
7 membership interests and nonpatron membership interests may
8 be increased or decreased or established or altered, in
9 accordance with the restrictions in this article by
10 amending the articles at a regular members' meeting or at a
11 special members' meeting called for the purpose of the
12 amendment.

14 (b) Authorized membership interests may be issued on
15 terms and conditions prescribed in the articles, bylaws, or
16 as determined by the board. The cooperative shall disclose
17 to any person or entity acquiring membership interests to
18 be issued by the cooperative, the organization, capital
19 structure and business prospects and risks of the
20 cooperative, the nature of the governance and financial
21 rights of the membership interest being acquired and of
22 other classes of membership and membership interests. The
23 cooperative shall notify all members of the membership

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1 interests being offered by the cooperative. A membership
2 interest may not be issued until the subscription price of
3 the membership interest has been paid for in cash or a cash
4 equivalent or property with the agreed upon value of the
5 property to be contributed.

7 (c) The patron membership interests collectively
8 shall have not less than fifteen percent (15%) of the
9 cooperative's financial rights to profit allocations and
10 distributions.

12 (d) After issuance by the cooperative, membership
13 interests in a cooperative may only be sold or transferred
14 with the approval of the board.

16 (e) The cooperative may solicit and issue nonpatron
17 membership interests on terms and conditions determined by
18 the board and disclosed in the articles, bylaws or by
19 separate disclosure to the members. Each member acquiring
20 nonpatron membership interests shall sign a member control
21 agreement which shall describe the rights and obligations
22 of the member as it relates to the nonpatron membership
23 interests, the financial and governance rights, the

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1 transferability of the nonpatron membership interests, the
2 division and allocations of profits and losses among the
3 membership interests and membership classes, and financial
4 rights upon liquidation. If the bylaws do not otherwise
5 provide for the allocation of the profits and losses
6 between patron membership interests and nonpatron
7 membership interests, then the allocation of profits and
8 losses among nonpatron membership interests individually
9 and patron membership interests collectively shall be
10 allocated on the basis of the value of contributions to
11 capital made according to the patron membership interests
12 collectively and the nonpatron membership interests
13 individually to the extent the contributions have been
14 accepted by the cooperative. Distributions of cash or other
15 assets of the cooperative shall be allocated among the
16 membership interests as provided in the articles and
17 bylaws, subject to the provisions of this article. If not
18 otherwise provided, distributions shall be made on the
19 basis of value of the capital contributions of the patron
20 membership interests collectively and the nonpatron
21 membership interests to the extent the contributions have
22 been accepted by the cooperative.

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1 (f) The bylaws may provide that the cooperative or
2 the patron members, individually or collectively, have the
3 first privilege of purchasing the membership interests of
4 any class of patron member's membership interests offered
5 for sale. The first privilege to purchase patron membership
6 interests may be satisfied by notice to other patron
7 members that the patron membership interests are for sale
8 and a procedure by which patron members may proceed to
9 attempt to purchase and acquire the patron membership
10 interests. A patron membership interest acquired by the
11 cooperative may be held to be reissued or may be retired
12 and cancelled.

14 (g) Subject to the provisions in the bylaws, a member
15 may dissent from and obtain payment for the fair value of
16 the member's nonpatron membership interests in the
17 cooperative if the articles or bylaws are amended in a
18 manner that materially and adversely affects the rights and
19 preferences of the nonpatron membership interests of the
20 dissenting member. The dissenting member shall file a
21 notice of intent to demand fair value of the membership
22 interest with the records officer of the cooperative within
23 thirty (30) days after the amendment of the bylaws and

Page 40

1 notice of the amendment to members, otherwise the right of
2 the dissenting member to demand payment of fair value for
3 the membership interest is deemed to be waived. If a
4 proposed amendment of the articles or bylaws shall be
5 approved by the members, a member who is entitled to
6 dissent and who wishes to exercise dissenter's rights shall
7 file a notice to demand fair value of the membership
8 interest with the records officer of the cooperative before
9 the vote on the proposed action and shall not vote in favor
10 of the proposed action, otherwise the right to demand fair
11 value for the membership interest by the dissenting member
12 is deemed waived. After receipt of the dissenting member's
13 demand notice and approval of the amendment, the
14 cooperative has sixty (60) days to rescind the amendment or
15 otherwise the cooperative shall remit the fair value for
16 the one (1) member's interest to the dissenting member by
17 one hundred eighty (180) days after receipt of the notice.
18 Upon receipt of the fair value for the membership interest,
19 the member has no further member rights in the cooperative.

21 17-10-223. Grouping of members.

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1 (a) A cooperative may group members and patron
2 members in districts, units or another basis if and as
3 authorized in its articles and bylaws which may include
4 authorization for the board to determine the groupings.

6 (b) The board may do things necessary to implement
7 the use of districts or units including setting the time
8 and place and prescribing the rules of conduct for holding
9 meetings by districts or units to elect delegates to
10 members' meetings.

12 17-10-224. Member violations; liability for
13 cooperative debts.

15 (a) A member who knowingly, intentionally, or
16 repeatedly violates a provision of the articles, bylaws,
17 member control agreement or marketing contract with the
18 cooperative, may be required by the board to surrender the
19 financial rights of membership interest of any class owned
20 by the member.

22 (b) The cooperative shall refund to the member for
23 the surrendered financial rights of membership interest the

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1 lesser of the book value or market value of the financial
2 right of the membership interest payable in not more than
3 seven (7) years from the date of surrender or the board may
4 transfer all of any patron member's financial rights to a
5 class of financial rights held by members who are not
6 patron members, or to a certificate of interest which
7 carries liquidation rights on par with membership interests
8 and is redeemed within seven (7) years after the transfer
9 as provided in the certificate.

11 (c) Membership interests required to be surrendered
12 may be reissued or be retired and cancelled by the board.

14 (d) A member who knowingly, intentionally or
15 repeatedly violates a provision of the articles, bylaws,
16 member control agreement, or a marketing contract, may be
17 required by the board to surrender voting power in the
18 cooperative.

20 (e) A member is not, merely on the account of that
21 status, personally liable for the acts, debts, liabilities,
22 or obligations of a cooperative. A member is liable for any
23 unpaid subscription for the membership interest, unpaid

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1 membership fees, or a debt for which the member has
2 separately contracted with the cooperative.

4 17-10-225. Regular members' meetings.

6 (a) Regular members' meetings shall be held annually
7 at a time determined by the board, unless otherwise
8 provided for in the bylaws.

10 (b) The regular members' meeting shall be held at the
11 principal place of business of the cooperative or at
12 another conveniently located place as determined by the
13 bylaws or the board.

15 (c) The officers shall submit reports to the members
16 at the regular members' meeting covering the business of
17 the cooperative for the previous fiscal year that show the
18 condition of the cooperative at the close of the fiscal
19 year.

21 (d) All directors shall be elected at the regular
22 members' meeting for the terms of office prescribed in the

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1 bylaws, except for directors elected at district or unit
2 meetings.

4 (e) The cooperative shall give notice of regular
5 members' meetings by mailing the regular members' meeting
6 notice to each member at the member's last known post
7 office address or by other notification approved by the
8 board and agreed to by the members. The regular members'
9 meeting notice shall be published or otherwise given by
10 approved method at least two (2) weeks before the date of
11 the meeting or mailed at least fifteen (15) days before the
12 date of the meeting.

14 17-10-226. Special members' meetings.

16 (a) Special members' meetings of the members may be
17 called by:

19 (i) A majority vote of the board; or

21 (ii) The written petition of at least twenty
22 percent (20%) of the patron members, twenty percent (20%)

Page 45

1 of the nonpatron members or twenty percent (20%) of all
2 members collectively are submitted to the chair.

4 (b) The cooperative shall give notice of a special
5 members' meeting by mailing the special members' meeting
6 notice to each member personally at the person's last known
7 post office address or an alternative method approved by
8 the board and the member individually or the members
9 generally. For a member that is an entity, notice mailed or
10 delivered by an alternative method shall be to an officer
11 of the entity. The special members' meeting notice shall
12 state the time, place, and purpose of the special members'
13 meeting. The special members' meeting notice shall be
14 issued within ten (10) days from and after the date of the
15 presentation of a members' petition, and the special
16 members' meeting shall be held within thirty (30) days
17 after the date of the presentation of the members'
18 petition.

20 17-10-227. Certification of meeting notice.

22 (a) After mailing special or regular members' meeting
23 notices or otherwise delivering the notices, the

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1 cooperative shall execute a certificate containing the date
2 of mailing or delivery of the notice and a statement that
3 the special or regular members' meeting notices were mailed
4 or delivered as prescribed by law.

6 (b) The certificate shall be made a part of the
7 record of the meeting.

9 17-10-228. Failure to receive meeting notice.

11 Failure of a member to receive a special or regular
12 members' meeting notice does not invalidate an action that
13 is taken by the members at a members' meeting.

15 17-10-229. Quorum.

17 (a) The quorum for a members' meeting to transact
18 business shall be:

20 (i) Ten percent (10%) of the total number of
21 members for a cooperative with five hundred (500) or less
22 members; or

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1 (ii) Fifty (50) members for cooperatives with
2 more than five hundred (500) members.

4 (b) In determining a quorum at a meeting, on a
5 question submitted to a vote by mail or an alternative
6 method, members present in person or represented by mail
7 vote or the alternative voting method shall be counted. The
8 attendance of a sufficient number of members to constitute
9 a quorum shall be established by a registration of the
10 members of the cooperative present at the meeting. The
11 registration shall be verified by the chair or the records
12 officer of the cooperative and shall be reported in the
13 minutes of the meeting.

15 (c) An action by a cooperative is not valid or legal
16 in the absence of a quorum at the meeting at which the
17 action was taken.

19 17-10-230. Member voting rights.

21 (a) A patron member of a cooperative is only entitled
22 to one (1) vote on an issue to be voted upon by members
23 holding patron membership interests, except that a patron

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1 member of a cooperative described in W.S. 17-10-231 may be
2 entitled to more than one (1) vote as provided in that
3 section. On any matter of the cooperative, the entire
4 patron members voting power shall be voted collectively
5 based upon the vote of the majority of patron members
6 voting on the issue. A nonpatron member has the voting
7 rights in accordance to his nonpatron membership interests
8 as granted in the bylaws, subject to the provisions of this
9 article.

11 (b) A member or delegate may exercise voting rights
12 on any matter that is before the members as prescribed in
13 the articles or bylaws at a members' meeting from the time
14 the member or delegate arrives at the members' meeting,
15 unless the articles or bylaws specify an earlier and
16 specific time for closing the right to vote.

18 (c) A member's vote at a members' meeting shall be in
19 person or by mail if a mail vote is authorized by the board
20 or by alternative method if authorized by the board, and
21 not by proxy except as provided in subsection (d) of this
22 section.

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1 (d) The following shall apply to members represented
2 by delegates:

4 (i) A cooperative may provide in the articles or
5 bylaws that units or districts of members are entitled to
6 be represented at members' meetings by delegates chosen by
7 the members of the unit or district. The delegates may vote
8 on matters at the members' meeting in the same manner as a
9 member. The delegates may only exercise the voting rights
10 on a basis and with the number of votes as prescribed in
11 the articles or bylaws;

13 (ii) If the approval of a certain portion of the
14 members is required for adoption of amendments, a
15 dissolution, a merger, a consolidation, or a sale of
16 assets, the votes of delegates shall be counted as votes by
17 the members represented by the delegate;

19 (iii) Patron members may be represented by the
20 proxy of other patron members;

22 (iv) Nonpatron members may be represented by
23 proxy if authorized in the bylaws.

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2 (e) The following shall apply to absentee ballots:

4 (i) A member who is or will be absent from a
5 members' meeting may vote by mail or by an approved
6 alternative method on the ballot prescribed in this
7 subsection on any motion, resolution or amendment that the
8 board submits for vote by mail or alternative method to the
9 members;

11 (ii) The ballot shall be in the form prescribed
12 by the board and contain:

14 (A) The exact text of the proposed motion,
15 resolution or amendment to be acted on at the meeting; and

17 (B) The text of the motion, resolution or
18 amendment for which the member may indicate an affirmative
19 or negative vote.

21 (iii) The member shall express a choice by
22 marking an appropriate choice on the ballot and mail,
23 deliver or otherwise submit the ballot to the cooperative

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1 in a plain, sealed envelope inside another envelope bearing
2 the member's name or by an alternative method approved by
3 the board;

5 (iv) A properly executed ballot shall be
6 accepted by the board and counted as the vote of the absent
7 member at the meeting.

9 17-10-231. Patron member voting in cooperatives
10 constituted entirely or partially of other cooperatives or
11 associations.

13 (a) A cooperative that is constituted entirely or
14 partially of other cooperatives or associations may
15 authorize by the articles or the bylaws for affiliated
16 cooperative patron members to have an additional vote for:

18 (i) A stipulated amount of business transacted
19 between the patron member cooperative and the central
20 cooperative organization;

22 (ii) A stipulated number of patron members in
23 the member cooperative;

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2 (iii) A certain stipulated amount of equity
3 allocated to or held by the patron member cooperative in
4 the cooperative central organization; or

6 (iv) A combination of methods in paragraphs (i)
7 through (iii) of this subsection.

9 (b) A cooperative that is organized into units or
10 districts of patron members, may, by the articles or the
11 bylaws, authorize the delegates elected by its patron
12 members or, have an additional vote for:

14 (i) A stipulated amount of business transacted
15 between the patron members in the units or districts and
16 the cooperative;

18 (ii) A certain stipulated amount of equity
19 allocated to or held by the patron members of the units or
20 districts of the cooperative; or

22 (iii) A combination of methods in paragraphs (i)
23 and (ii) of this subsection.

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2 17-10-232. Vote of ownership interests held by
3 cooperative.

5 A cooperative that holds ownership interests of another
6 business entity may, by direction of the cooperative's
7 board, elect or appoint a person to represent the
8 cooperative at a meeting of the business entity. The
9 representative has authority to represent the cooperative
10 and may cast the cooperative's vote at the business
11 entity's meeting.

13 17-10-233. Allocations and distributions to members.

15 (a) The bylaws shall prescribe the allocation of
16 profits and losses between patron membership interests
17 collectively and other membership interests. If the bylaws
18 do not otherwise provide, the profits and losses between
19 patron membership interests collectively and other
20 membership interests shall be allocated on the basis of the
21 value of contributions to capital made by the patron
22 membership interests collectively and other membership
23 interests and accepted by the cooperative. The allocation

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1 of profits to the patron membership interests collectively
2 shall not be less than fifteen percent (15%) of the total
3 profits in any fiscal year.

5 (b) The bylaws shall prescribe the distribution of
6 cash or other assets of the cooperative among the
7 membership interests of the cooperative. If not otherwise
8 provided in the bylaws, distribution shall be made to the
9 patron membership interests collectively and other members
10 on the basis of the value of contributions to capital made
11 and accepted by the cooperative by the patron membership
12 interests collectively and other membership interests. The
13 distributions to patron membership interests collectively
14 shall not be less than fifteen percent (15%) of the total
15 distributions in any fiscal year.

17 17-10-234. Allocations and distributions to patron
18 members.

20 (a) A cooperative may set aside a portion of net
21 income allocated to the patron membership interests as the
22 board determines advisable to create or maintain a capital
23 reserve.

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2 (b) In addition to a capital reserve, the board may,
3 for patron membership interests:

5 (i) Set aside an amount not to exceed five
6 percent (5%) of the annual net income of the cooperative
7 for promoting and encouraging cooperative organization; and

9 (ii) Establish and accumulate reserves for new
10 buildings, machinery and equipment, depreciation, losses,
11 and other proper purposes.

13 (c) Net income allocated to patron members in excess
14 of dividends on equity and additions to reserves shall be
15 distributed to patron members on the basis of patronage. A
16 cooperative may establish allocation units, whether the
17 units are functional, divisional, departmental, geographic,
18 or otherwise and pooling arrangements and may account for
19 and distribute net income to patrons on the basis of
20 allocation units and pooling arrangements. A cooperative
21 may offset the net loss of an allocation unit or pooling
22 arrangement against the net income of other allocation
23 units or pooling arrangements.

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2 (d) Distribution of net income shall be made at least
3 annually. The board shall present to the members at their
4 annual meeting a report covering the operations of the
5 cooperative during the preceding fiscal year.

7 (e) A cooperative may distribute net income to patron
8 members in cash, capital credits, allocated patronage
9 equities, revolving fund certificates, or its own or other
10 securities.

12 (f) The cooperative may provide in the bylaws that
13 nonmember patrons are allowed to participate in the
14 distribution of net income payable to patron members on
15 equal terms with patron members.

17 (g) If a nonmember patron with patronage credits is
18 not qualified or eligible for membership, a refund due may
19 be credited to the patron's individual account. The board
20 may issue a certificate of interest to reflect the credited
21 amount. After the patron is issued a certificate of
22 interest, the patron may participate in the distribution of
23 income on the same basis as a patron member.

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2 17-10-235. Distribution of unclaimed property.

4 (a) A cooperative may, in lieu of paying or
5 delivering to the state the unclaimed property specified in
6 its report of unclaimed property, distribute the unclaimed
7 property to a corporation or organization that is exempt
8 from taxation. A cooperative making the election to
9 distribute unclaimed property shall file with the secretary
10 of state:

12 (i) A verified written explanation of the proof
13 of claim of an owner establishing a right to receive the
14 abandoned property;

16 (ii) Any error in the presumption of
17 abandonment;

19 (iii) The name, address, and exemption number of
20 the corporation or organization to which the property was
21 or is to be distributed; and

23 (iv) The approximate date of distribution.

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2 (b) This subsection does not alter the procedure
3 provided by law for cooperatives to report unclaimed
4 property to the state and the requirement that claims of
5 owners are made to the cooperatives for a period following
6 the publication of lists of abandoned property.

8 (c) The right of an owner to unclaimed property held
9 by a cooperative is extinguished when the property is
10 disbursed by the cooperative to a tax exempt organization
11 in accordance with this section.

13 17-10-236. Merger and consolidation.

15 (a) Unless otherwise prohibited, cooperatives
16 organized under the laws of this state may merge or
17 consolidate with each other or other business entities
18 organized under the laws of this state or another state by
19 complying with the provisions of this section or the law of
20 the state where the surviving or new business entity will
21 exist.

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1 (b) To initiate a merger or consolidation of a
2 cooperative, a written plan of merger or consolidation
3 shall be prepared by the board or by a committee selected
4 by the board to prepare a plan. The plan shall state:

6 (i) The names of the constituent cooperatives
7 and other business entities;

9 (ii) The name of the surviving or new
10 cooperative or other business entity;

12 (iii) The manner and basis of converting
13 membership or ownership interests of the constituent
14 cooperatives or business entities into membership or
15 ownership interests in the surviving or new cooperative or
16 business entity;

18 (iv) The terms of the merger or consolidation;

20 (v) The proposed effect of the consolidation or
21 merger on the members and patron members of the
22 cooperative; and

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1 (vi) For a consolidation, the plan shall contain
2 the articles of the entity or organizational documents to
3 be filed with the state in which the entity is organized.

5 (c) The following shall apply to notice:

7 (i) The board shall mail a merger or
8 consolidation or otherwise transmit or deliver notice to
9 each member. The notice shall contain:

11 (A) The full text of the plan; and

13 (B) The time and place of the meeting at
14 which the plan will be considered.

16 (ii) A cooperative with more than two hundred
17 (200) members may provide the merger or consolidation
18 notice in the same manner as a regular members' meeting
19 notice.

21 (d) The following shall apply to the adoption of a
22 plan or merger or consolidation:

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1 (i) A plan of merger or consolidation is adopted
2 if:

4 (A) A quorum of the members is registered
5 as being present or represented by mail vote at the
6 meeting; and

8 (B) The plan is approved by two-thirds
9 (2/3) of the votes cast, or for a cooperative with articles
10 or bylaws requiring more than two-thirds (2/3) of the votes
11 cast or other conditions for approval, the plan is approved
12 by a proportion of the votes cast or a number of total
13 members as required by the articles or bylaws and the
14 conditions for approval in the articles or bylaws have been
15 satisfied.

17 (ii) After the plan has been adopted, articles
18 of merger or consolidation stating the plan and that the
19 plan was adopted according to this article shall be signed
20 by the chair, vice-chair, records officer or documents
21 officer of each cooperative merging or consolidating;

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1 (iii) The articles of merger or consolidation
2 shall be filed in the office of the secretary of state;

4 (iv) For a merger, the articles of the surviving
5 cooperative subject to this article are deemed amended to
6 the extent provided in the articles of merger;

8 (v) Unless a later date is provided in the plan,
9 the merger or consolidation is effective when the articles
10 of merger or consolidation are filed in the office of the
11 secretary of state;

13 (vi) The secretary of state shall issue a
14 certificate of organization of the merged or consolidated
15 cooperative.

17 (e) The following shall apply to the effect of a
18 merger:

20 (i) After the effective date, the cooperatives
21 or other business entities that are parties to the plan
22 become a single entity. For a merger, the surviving
23 business entity is the business entity designated in the

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1 plan. For a consolidation, the new cooperative or other
2 business entity is the business entity provided for in the
3 plan. Except for the surviving or new business entity, the
4 separate existence of all business entities that are
5 parties to the plan cease on the effective date of the
6 merger or consolidation;

8 (ii) The surviving or new business entity
9 possesses all of the rights and property of each of the
10 merged or consolidated business entities and is responsible
11 for all their obligations. The title to property of the
12 merged or consolidated business entity is vested in the
13 surviving or new business entity without reversion or
14 impairment of the title caused by the merger or
15 consolidation;

17 (iii) The right of a creditor may not be
18 impaired by the merger or consolidation without the
19 creditor's consent.

21 (f) The fee to be paid to the secretary of state for
22 filing articles of merger or consolidation shall conform
23 with the provisions of W.S. 17-16-122.

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2 17-10-237. Liquidation.

4 (a) A cooperative shall be liquidated as provided in
5 the articles in a manner consistent with other business
6 entities organized in this state or if not provided, may be
7 liquidated in the same manner as a limited liability
8 company organized in this state or the members may
9 authorize a liquidation by adopting a resolution at a
10 members' meeting. The notice of the members' meeting shall
11 include a statement that the disposition of all of the
12 assets of the cooperative will be considered at the
13 meeting. If a quorum is present in person, by mail ballot,
14 or alternative method approved by the board at the members'
15 meeting, the resolution approving of the liquidation is
16 adopted if:

18 (i) Approved by two-thirds (2/3) of the votes
19 cast; or

21 (ii) For a cooperative with articles or bylaws
22 requiring more than two-thirds (2/3) for approval or other
23 conditions for approval, the resolution is approved by the

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1 proportion of the votes cast or a number of total members
2 as required by the articles or bylaws and the conditions
3 for approval in the articles or bylaws have been satisfied.

5 (b) The board of directors by resolution may
6 liquidate a cooperative if the board obtains an opinion of
7 an accountant that the cooperative is unlikely to continue
8 as a business based on its current finances.

10 17-10-238. Methods of dissolution.

12 A cooperative may be dissolved by the members or by order
13 of the court.

15 17-10-239. Winding up.

17 (a) After the notice of intent to dissolve has been
18 filed with the secretary of state, the board, or the
19 officers acting under the direction of the board, shall
20 proceed as soon as possible:

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1 (i) To collect or make provision for the
2 collection of all debts due or owing to the cooperative,
3 including unpaid subscriptions for shares; and

5 (ii) To pay or make provision for the payment of
6 all debts, obligations and liabilities of the cooperative
7 according to their priorities.

9 (b) After the notice of intent to dissolve has been
10 filed with the secretary of state, the board may sell,
11 lease, transfer or otherwise dispose of all or
12 substantially all of the property and assets of the
13 dissolving cooperative without a vote of the members.

15 (c) Tangible and intangible property, including
16 money, remaining after the discharge of the debts,
17 obligations and liabilities of the cooperative may be
18 distributed to the members and former members as provided
19 in the bylaws. If previously authorized by the members, the
20 tangible and intangible property of the cooperative may be
21 liquidated and disposed of at the discretion of the board.

23 17-10-240. Revocation of dissolution proceedings.

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2 (a) Dissolution proceedings may be revoked before the
3 articles of dissolution are filed with the secretary of
4 state.

6 (b) The chair may call a members' meeting to consider
7 the advisability of revoking the dissolution proceedings.
8 The question of the proposed revocation shall be submitted
9 to the members at the members' meeting called to consider
10 the revocation. The dissolution proceedings are revoked if
11 the proposed revocation is approved at the members' meeting
12 by a majority of the members of the cooperative or for a
13 cooperative with articles or bylaws requiring a greater
14 number of members, the number of members required by the
15 articles or bylaws.

17 (c) Revocation of dissolution proceedings is
18 effective when a notice of revocation is filed with the
19 secretary of state. After the notice is filed, the
20 cooperative may resume business.

22 17-10-241. Statute of limitations.

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1 The claim of a creditor or claimant against a dissolving
2 cooperative is barred if the claim has not been enforced by
3 initiating legal, administrative or arbitration proceedings
4 concerning the claim by two (2) years after the date the
5 notice of intent to dissolve is filed with the secretary of
6 state.

8 17-10-242. Articles of dissolution.

10 (a) Articles of dissolution of a cooperative shall be
11 filed with the secretary of state after payment of the
12 claims of all known creditors and claimants has been made
13 or provided for and the remaining property has been
14 distributed by the board. The articles of dissolution shall
15 state:

17 (i) That all debts, obligations, and liabilities
18 of the cooperative have been paid or discharged or adequate
19 provisions have been made for them or time periods allowing
20 claims have run and other claims are not outstanding;

22 (ii) That the remaining property, assets, and
23 claims of the cooperative have been distributed among the

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1 members or pursuant to a liquidation authorized by the
2 members; and

4 (iii) That legal, administrative, or arbitration
5 proceedings by or against the cooperative are not pending
6 or adequate provision has been made for the satisfaction of
7 a judgment, order or decree that may be entered against the
8 cooperative in a pending proceeding.

10 (b) The cooperative is dissolved when the articles of
11 dissolution have been filed with the secretary of state.

13 (c) The secretary of state shall issue to the
14 dissolved cooperative or its legal representative a
15 certificate of dissolution that contains:

17 (i) The name of the dissolved cooperative;

19 (ii) The date the articles of dissolution were
20 filed with the secretary of state; and

22 (iii) A statement that the cooperative is
23 dissolved.

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2 17-10-243. Application for court-supervised voluntary
3 dissolution.

5 After a notice of intent to dissolve has been filed with
6 the secretary of state and before a certificate of
7 dissolution has been issued, the cooperative or, for good
8 cause shown, a member or creditor may apply to a court
9 within the county where the registered address is located
10 to have the dissolution conducted or continued under the
11 supervision of the court as provided in W.S. 17-10-250.

13 17-10-244. Court-ordered remedies or dissolution.

15 (a) A court may grant equitable relief that it deems
16 just and reasonable in the circumstances or may dissolve a
17 cooperative and liquidate its assets and business:

19 (i) In a supervised voluntary dissolution that
20 is applied for by the cooperative;

22 (ii) In an action by a member when it is
23 established that:

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2 (A) The directors or the persons having the
3 authority otherwise vested in the board are deadlocked in
4 the management of the cooperative's affairs and the
5 shareholders or members are unable to break the deadlock;

7 (B) The directors or those in control of
8 the cooperative have acted fraudulently, illegally or in a
9 manner unfairly prejudicial toward one (1) or more members
10 in their capacities as members, directors or officers;

12 (C) The members of the cooperative are so
13 divided in voting power that, for a period that includes
14 the time when two (2) consecutive regular members' meetings
15 were held, they have failed to elect successors to
16 directors whose terms have expired or would have expired
17 upon the election and qualification of their successors;

19 (D) The cooperative assets are being
20 misapplied or wasted; or

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1 (E) The period of duration as provided in
2 the articles has expired and has not been extended as
3 provided in this article.

5 (iii) In an action by a creditor when:

7 (A) The claim of the creditor against the
8 cooperative has been reduced to judgment and an execution
9 on the judgment has been returned unsatisfied; or

11 (B) The cooperative has admitted in writing
12 that the claim of the creditor against the cooperative is
13 due and owing and it is established that the cooperative is
14 unable to pay its debts in the ordinary course of business;
15 or

17 (iv) In an action by the attorney general to
18 dissolve the cooperative in accordance with this article
19 when it is established that a decree of dissolution is
20 appropriate.

22 (b) In determining whether to order equitable relief
23 or dissolution, the court shall take into consideration the

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1 financial condition of the cooperative but may not refuse
2 to order equitable relief or dissolution solely on the
3 ground that the cooperative has accumulated operating net
4 income or current operating net income.

6 (c) In deciding whether to order dissolution of the
7 cooperative, the court shall consider whether lesser relief
8 suggested by one (1) or more parties, such as a form of
9 equitable relief or a partial liquidation, would be
10 adequate to permanently relieve the circumstances
11 established under subparagraph (a)(ii)(B) or (C) of this
12 section. Lesser relief may be ordered if it would be
13 appropriate under the facts and circumstances of the case.

15 (d) If the court finds that a party to a proceeding
16 brought under this section has acted arbitrarily,
17 vexatiously, or otherwise not in good faith, the court may
18 in its discretion award reasonable expenses, including
19 attorneys' fees and disbursements, to any of the other
20 parties.

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1 (e) Proceedings under this section shall be brought
2 in a court within the county where the registered address
3 of the cooperative is located.

5 (f) It is not necessary to make members parties to
6 the action or proceeding unless relief is sought against
7 them personally.

9 17-10-245. Procedure in involuntary or
10 court-supervised voluntary dissolution.

12 (a) In dissolution proceedings before a hearing can
13 be completed the court may:

15 (i) Issue injunctions;

17 (ii) Appoint receivers with all powers and
18 duties that the court directs;

20 (iii) Take actions required to preserve the
21 cooperative's assets wherever located; and

23 (iv) Carry on the business of the cooperative.

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2 (b) After a hearing is completed, on notice the court
3 directs to be given to parties to the proceedings and to
4 other parties in interest designated by the court, the
5 court may appoint a receiver to collect the cooperative's
6 assets, including amounts owing to the cooperative by
7 subscribers on account of an unpaid portion of the
8 consideration for the issuance of shares. A receiver has
9 authority, subject to the order of the court, to continue
10 the business of the cooperative and to sell, lease,
11 transfer, or otherwise dispose of the property and assets
12 of the cooperative either at public or private sale.

14 (c) The assets of the cooperative or the proceeds
15 resulting from a sale, lease, transfer, or other
16 disposition shall be applied in the following order of
17 priority or:

19 (i) The costs and expenses of the proceedings,
20 including attorneys' fees and disbursements;

22 (ii) Debts, taxes and assessments due the United
23 States, this state and other states in that order;

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2 (iii) Claims duly proved and allowed to
3 employees under the provisions of the workers' compensation
4 act except that claims under this clause may not be allowed
5 if the cooperative has carried workers' compensation
6 insurance, as provided by law, at the time the injury was
7 sustained;

9 (iv) Claims, including the value of all
10 compensation paid in a medium other than money, proved and
11 allowed to employees for services performed within three
12 (3) months preceding the appointment of the receiver, if
13 any; and

15 (v) Other claims proved and allowed.

17 (d) After payment of the expenses of receivership and
18 claims of creditors are proved, the remaining assets, if
19 any, may be distributed to the members or distributed
20 pursuant to an approved liquidation plan.

22 17-10-246. Receiver qualifications and powers.

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1 (a) A receiver shall be a natural person or a
2 domestic corporation or a foreign corporation authorized to
3 transact business in this state. A receiver shall give a
4 bond as directed by the court with the sureties required by
5 the court.

7 (b) A receiver may sue and defend in all courts as
8 receiver of the cooperative. The court appointing the
9 receiver has exclusive jurisdiction of the cooperative and
10 its property.

12 17-10-247. Dissolution action by attorney general.

14 (a) A cooperative may be dissolved involuntarily by a
15 decree of a court in this state in an action filed by the
16 attorney general if it is established that:

18 (i) The articles and certificate of organization
19 were procured through fraud;

21 (ii) The cooperative was organized for a purpose
22 not permitted by this article or prohibited by state law;

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1 (iii) The cooperative has flagrantly violated a
2 provision of this article, has violated a provision of this
3 article more than once or has violated more than one (1)
4 provision of this article; or

6 (iv) The cooperative has acted, or failed to
7 act, in a manner that constitutes surrender or abandonment
8 of the cooperative's franchise, privileges, or enterprise.

10 (b) An action may not be commenced under this section
11 until thirty (30) days after notice to the cooperative by
12 the attorney general of the reason for the filing of the
13 action. If the reason for filing the action is an act that
14 the cooperative has done, or omitted to do, and the act or
15 omission may be corrected by an amendment of the articles
16 or bylaws or by performance of or abstention from the act,
17 the attorney general shall give the cooperative thirty (30)
18 additional days to make the correction before filing the
19 action.

21 17-10-248. Filing claims in court-supervised
22 dissolution proceedings.

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1 (a) In proceedings to dissolve a cooperative, the
2 court may require all creditors and claimants of the
3 cooperative to file their claims under oath with the court
4 administrator or with the receiver in a form prescribed by
5 the court.

7 (b) If the court requires the filing of claims, the
8 court shall:

10 (i) Set a date, by order, at least one hundred
11 twenty (120) days after the date the order is filed, as the
12 last day for the filing of claims; and

14 (ii) Prescribe the notice of the fixed date that
15 shall be given to creditors and claimants.

17 (c) Before the fixed date, the court may extend the
18 time for filing claims. Creditors and claimants failing to
19 file claims on or before the fixed date may be barred, by
20 order of court, from claiming an interest in or receiving
21 payment out of the property or assets of the cooperative.

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1 17-10-249. Discontinuance of court-supervised
2 dissolution proceedings.

4 The involuntary or supervised voluntary dissolution of a
5 cooperative may be discontinued at any time during the
6 dissolution proceedings if it is established that cause for
7 dissolution does not exist. The court shall dismiss the
8 proceedings and direct the receiver, if any, to redeliver
9 to the cooperative its remaining property and assets.

11 17-10-250. Court-supervised dissolution order.

13 (a) In an involuntary or supervised voluntary
14 dissolution after the costs and expenses of the proceedings
15 and all debts, obligations and liabilities of the
16 cooperative have been paid or discharged and the remaining
17 property and assets have been distributed to its members
18 or, if its property and assets are not sufficient to
19 satisfy and discharge the costs, expenses, debts,
20 obligations and liabilities, when all the property and
21 assets have been applied so far as they will go to their
22 payment according to their priorities, the court shall
23 enter an order dissolving the cooperative.

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2 (b) When the order dissolving the cooperative or
3 association has been entered, the cooperative or
4 association is dissolved.

6 17-10-251. Filing court's dissolution order.

8 After the court enters an order dissolving a cooperative,
9 the court administrator shall cause a certified copy of the
10 dissolution order to be filed with the secretary of state.
11 The secretary of state may not charge a fee for filing the
12 dissolution order.

14 17-10-252. Barring of claims.

16 (a) A person who is or becomes a creditor or claimant
17 before, during, or following the conclusion of dissolution
18 proceedings, who does not file a claim or pursue a remedy
19 in a legal, administrative or arbitration proceeding during
20 the pendency of the dissolution proceeding or has not
21 initiated a legal, administrative, or arbitration
22 proceeding before the commencement of the dissolution
23 proceedings and all those claiming through or under the

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1 creditor or claimant, are forever barred from suing on that
2 claim or otherwise realizing upon or enforcing it, except
3 as provided in this section.

5 (b) By one (1) year after articles of dissolution
6 have been filed with the secretary of state pursuant to
7 this article or a dissolution order has been entered, a
8 creditor or claimant who shows good cause for not having
9 previously filed the claim may apply to a court in this
10 state to allow a claim:

12 (i) Against the cooperative to the extent of
13 undistributed assets; or

15 (ii) If the undistributed assets are not
16 sufficient to satisfy the claim, the claim may be allowed
17 against a member to the extent of the distributions to
18 members in dissolution received by the member.

20 (c) Debts, obligations, and liabilities incurred
21 during dissolution proceedings shall be paid or provided
22 for by the cooperative before the distribution of assets to
23 a member. A person to whom this kind of debt, obligation,

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1 or liability is owed but is not paid may pursue any remedy
2 against the officers, directors or members of the
3 cooperative before the expiration of the applicable statute
4 of limitations. This subsection does not apply to
5 dissolution under the supervision or order of a court.

7 17-10-253. Right to sue or defend after dissolution.

9 After a cooperative has been dissolved, any of its former
10 officers, directors or members may assert or defend, in the
11 name of the cooperative, a claim by or against the
12 cooperative.

14 Section 2. W.S.17-10-109(a)(intro) is amended to
15 read:

17 17-10-109. Powers.

19 (a) Each corporation formed under the provisions of
20 this ~~chapter~~ article shall have power:

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1 Section 3. This act is effective July 1, 2001.

3 (END)

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