Applicability of ch. 408 to cooperative securities. Chapter 408
applies to those securities of a cooperative which fall within the definition of a "security" in s. 408.102
, except that s. 185.21
applies to all stock of a cooperative and s. 185.23 (2)
applies to all securities of a cooperative regardless of any provisions of ch. 408
which are inconsistent therewith or contrary thereto.
Directors; number, election, removal and vacancies. 185.31(1)(1)
All powers of the cooperative shall be exercised by or under authority of, and the business and affairs of a cooperative shall be managed under the direction of, the board, except as otherwise provided in this chapter. Every director shall be a member or a representative of a member who is other than a natural person. The bylaws shall prescribe any other qualifications for directors and may provide that directors be from specified districts.
The number of directors shall not be less than 5, provided that, in a cooperative with less than 50 members, the number of directors shall not be less than 3. Subject to such limitation, the number shall be fixed in the articles, or if the articles so provide, in the bylaws.
The directors constituting the temporary board, named in the articles, shall hold office until the first member meeting. At that meeting and thereafter, directors shall be elected by the members at a member meeting in the manner and for the terms provided in the bylaws. If the bylaws provide that directors be from specified districts, the articles may limit voting for any director to members from within the district from which the director is to be elected. Unless the bylaws provide otherwise, a director's term of office shall be one year. Each director shall hold office for the term for which elected and until a successor takes office. The bylaws may permit selection of alternates to take the place of directors absent at a meeting of the board. Whenever any change is made in the board, the cooperative shall file within 20 days with the department a report showing the names and addresses of all directors.
Unless the bylaws provide otherwise, a director may be removed upon a majority vote of all members.
Unless the bylaws provide otherwise, any vacancy existing in the board, including any vacancy created by an increase in the number of directors, may be filled until the next annual meeting by appointment by a majority vote of the directors then in office.
History: 1985 a. 30
; 1995 a. 27
Directors; meetings, quorum and waiver of notice. 185.32(1)(1)
Meetings of the board shall be held at such place and upon such notice as is prescribed in or pursuant to the bylaws.
Unless a greater number is required in the bylaws, a majority of the directors in office shall constitute a quorum for transaction of business. Unless a greater number is required in the bylaws, an act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board.
A signed waiver of notice of a board meeting is equivalent to personal notice to the person so signing. The waiver may be signed at any time. Attendance at a meeting is a waiver of notice of such meeting, except when a director attends the meeting and objects thereat to the transaction of business because the meeting was not lawfully convened.
Unless the bylaws provide otherwise, the purposes of any meeting of the board need not be specified in the notice or waiver of notice of such meeting.
Unless the articles or bylaws provide otherwise, the board may permit any or all directors to participate in a regular or special meeting or in a committee meeting, including an executive committee meeting, of the board by, or to conduct the meeting through the use of, any means of communication by which any of the following occurs:
All participating directors may simultaneously hear each other during the meeting.
All communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.
If a meeting will be conducted through the use of any means described in par. (a)
, all participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by any means described in par. (a)
is deemed to be present in person at the meeting. If requested by a director, minutes of the meeting shall be prepared and distributed to each director.
History: 1989 a. 308
; 1991 a. 16
Executive committee. 185.33(1)(1)
If the bylaws so provide, the board may elect an executive committee to consist of 3 or more directors. When the board is not in session, such committee shall have all powers of the board except in respect to:
The board may elect other directors as alternates for members of the executive committee.
Action without meeting by directors or members.
Any action which may be taken at a meeting may be taken without a meeting if a writing setting forth and approving the action taken shall be signed by all of the cooperative members, directors or executive committee members entitled to vote on such action. Such consent shall have the same force and effect as a unanimous vote at a meeting.
History: 1985 a. 30
Unless the articles of incorporation provide otherwise, the principal officers of a cooperative are a president, one or more vice presidents as prescribed in the bylaws, a secretary and a treasurer. They shall be elected annually by the board at such time and in such manner as the bylaws provide. Upon original election and whenever any change is made in the officers, the cooperative shall file with the department, within 20 days, a report showing the name and address of all officers. Each principal officer except the secretary and the treasurer must be a director of the cooperative. The offices of secretary and treasurer may be combined in one person.
Any principal officer of a cooperative may be designated by a title other than those designated under sub. (1)
, as provided in the articles of incorporation of the cooperative. The provisions of this chapter applicable to a principal officer as designated under sub. (1)
apply to the principal officer as designated according to the provisions of the articles of incorporation. Any document required or permitted by this chapter to be signed by the president, vice president, secretary or assistant secretary may be signed by such officer as may be stated in such document to correspond to the officer so required or permitted to sign.
Any other officer may be chosen by the board or as provided in the bylaws.
All officers shall have such authority and perform such duties as the bylaws provide, or as the board may determine not inconsistent with the bylaws. Any officer may be removed by the board whenever in its judgment the best interests of the cooperative will be served thereby. Election or appointment shall not of itself create contract rights.
History: 1985 a. 30
; 1995 a. 27
Compensation and benefits to directors, officers and employees. 185.36(1)(1)
Unless the bylaws provide otherwise, only the members may establish compensation or other benefits for a director, not available generally to officers and employees, for services as a director.
Unless the bylaws provide otherwise, for prior or future services of any officer or employee, the board may provide reasonable compensation, pension, bonuses or other benefits to such officer or employee, and pension or other benefits to a member of his or her family or his or her beneficiaries. No officer or employee who is a director may take part in the vote on his or her salary for services rendered the cooperative.
History: 1985 a. 30
; 1993 a. 482
Reliance by directors or officers.
Unless the director or officer has knowledge that makes reliance unwarranted, a director or officer, in discharging his or her duties to the cooperative, may rely on information, opinions, reports or statements, any of which may be written or oral, formal or informal, including financial statements and other financial data, if prepared or presented by any of the following:
An officer or employee of the cooperative whom the director or officer believes in good faith to be reliable and competent in the matters presented.
Legal counsel, certified public accountants licensed or certified under ch. 442
, or other persons as to matters the director or officer believes in good faith are within the person's professional or expert competence.
In the case of reliance by a director, a committee of the board of which the director is not a member if the director believes in good faith that the committee merits confidence.
History: 1987 a. 13
; 2001 a. 16
Consideration of interests in addition to members' and stockholders' interests.
In discharging his or her duties to the cooperative and in determining what he or she believes to be in the best interests of the cooperative, a director or officer may, in addition to considering the effects of any action on members and stockholders, consider the following:
The effects of the action on employees, suppliers and customers of the cooperative.
The effects of the action on communities in which the cooperative operates.
Any other factors the director or officer considers pertinent.
History: 1987 a. 13
Limited liability of directors and officers. 185.367(1)(1)
Except as provided in subs. (2)
, a director or officer is not liable to the cooperative, its members, stockholders or creditors, or any person asserting rights on behalf of the cooperative, its members, stockholders or creditors, or any other person, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director or officer, unless the person asserting liability proves that the breach or failure to perform constitutes any of the following:
A willful failure to deal fairly with the cooperative, its members or stockholders in connection with a matter in which the director or officer has a material conflict of interest.
A violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful.
A transaction from which the director or officer derived an improper personal profit.
Except as provided in sub. (3)
, this section does not apply to any of the following:
A civil or criminal proceeding brought by or on behalf of any governmental unit, authority or agency.
A proceeding brought by any person for a violation of state or federal law where the proceeding is brought pursuant to an express private right of action created by state or federal statute.
(3) Subsection (2) (a)
does not apply to a proceeding brought by a governmental unit, authority or agency in its capacity as a private party or contractor.
History: 1987 a. 13
Cooperative indemnification. La Rowe and Weine. WBB Sept. 1988.
Liability of directors and members. 185.37(1)
Directors who negligently or in bad faith vote for any distribution of assets contrary to this chapter or the articles are jointly and severally liable to the cooperative for the value of assets distributed in excess of the amount which could have been distributed without violating this chapter or the articles. Section 185.367
does not apply to the liability of directors under this subsection.
Members, stockholders and patrons of a cooperative are neither obligated to pay, nor liable upon, any cooperative obligation, except that stockholders are liable to an amount equal to the par value of their shares for debts due an employee for not more than 6 months' service to the cooperative.
History: 1985 a. 30
; 1987 a. 13
Disposition of assets; right to secure debts. 185.38(1)(1)
Except as authorized by the members, the board may not dispose of all or substantially all of a cooperative's fixed assets. At any meeting the members may authorize the disposition of all or substantially all of a cooperative's fixed assets if:
Notice that such disposition will be considered at such meeting has been given to all persons entitled to vote thereon; and
Such disposition has been approved by two-thirds of those entitled to vote thereon voting at the meeting.
Unless the bylaws provide otherwise, the board may secure payment of a cooperative's debts by mortgaging the cooperative's rights, privileges, authority and franchises, revenues and other property.
History: 1985 a. 30
Cooperative contracts. 185.41(1)
If otherwise lawful, contracts for any of the following purposes, whether written or contained in the bylaws, are valid when made between an association and any member in which such member agrees to:
Sell, market or deliver all or any specified part of products produced or to be produced either by the member or under the member's control to or through the association or any facilities furnished by it.
Authorize the association or any facilities furnished by it to act for the member in any manner with respect to all or any specified part of such products and any services to be furnished by the member.
Buy or procure all or a specified part of goods or services from or through the association or any facilities furnished by it.
Authorize the association or any facilities furnished by it to act for the member in any manner in the procurement of goods or services.
The term of such contracts may not exceed 5 years, but they may be made self-renewing for periods not exceeding 5 years each, subject to the right of either party to terminate at the end of the original and each renewal term upon giving written notice of such termination during a period specified in such contract. Such period shall be of at least 30 days' duration during the last year of each term. The association shall furnish to each member-maker a completed original or copy of the member-maker's contract, and on the member-maker's request at any time shall promptly furnish the member-maker information as to the member-maker's rights of termination. The 5-year limitation herein contained shall not apply to contracts for the furnishing of electric energy or service involving an investment by the vendor in fixed assets to be amortized over a longer term.
Such contract may require liquidated damages to be paid by the member in the event of a breach of the contract. Liquidated damages may be either a percentage of the value of the products, goods, or services, or a specific sum, but neither may be more than 30 percent of the value of the products, goods, or services, subject to the breach. Where a specific sum is provided as liquidated damages, but such sum exceeds 30 percent of the value of the products, goods, or services which are the subject of the breach, then the contract shall be construed as providing an amount equal to 30 percent.
If any contract authorized by sub. (1) (a)
contains an assignment to the association of any part or all of funds due or to become due the member during the life of the contract for any product produced or to be produced by the member or for any services performed or to be performed in producing any product, any person who accepts or receives such product from the member is bound by such assignment after receiving written notice from the association or the member of the amount and duration of such assignment. However, as to any seasonal crop, if no funds are paid or become payable by any person under such an assignment for a period of 2 consecutive years during the life of the contract, thereafter the assignment shall not be binding upon any person who receives or accepts such product from the member until the assignment is reaffirmed by the member in writing and written notice thereof is given by the association or the member. Any such reaffirmation shall continue to be effective during the life of the contract until another such lapse of 2 consecutive years shall occur.
Recording of cooperative contracts; effect thereof. 185.42(1)(1)
The association may record in the office of the register of deeds of the county in which the member-maker of the contract resides:
If a uniform contract is used, a sworn list of the names of all member-makers of that contract residing in the county.
The register of deeds, upon payment of the fee specified under s. 59.43 (2) (ag)
, shall number each contract consecutively and shall record it. The register of deeds shall enter the name of every member-maker of such a contract in the real estate records index under s. 59.43 (9)
The recording constitutes notice to all persons of the association's rights under the contract. The recording also constitutes such notice that an interest in the title to all products agreed to be sold by the member-maker of such contract to the association during the term of such contract is vested in the association. In case of a purchase of any such product thereafter by any party other than the association from any party other than the association, no interest of any nature shall pass to such other purchaser; the association may recover the possession of such products from any person in whose possession they may be found, may obtain an injunction to prevent any attempted purchase, receipt or transfer not permitted by the contract or may enforce its rights in any manner permitted by law.
The recording constitutes notice to all persons that the contract is and remains a valid contract until: