AB327,119,1717
membership interests
AB327,119,21
18193.601 Membership interests. (1) Amounts and divisions of membership
19interests. To the extent permitted under this chapter, a cooperative may increase,
20decrease, establish, or alter the authorized amount and divisions of membership
21interests by amending the articles under s. 193.221 or the bylaws under s. 193.241.
AB327,120,10
22(2) Issuance and acquisition of membership interests generally. A
23cooperative may issue authorized membership interests on terms and conditions
24prescribed in the articles or bylaws or, if authorized in the articles or bylaws, on terms
25and conditions determined by the board. The cooperative shall disclose to any person
1to whom a membership interest is issued, before issuance, the organizational and
2capital structure of the cooperative, known business prospects and risks of the
3cooperative, and the nature of the governance and financial rights of the membership
4interest being acquired and of other classes of membership and membership
5interests. The cooperative shall notify all members, before issuance, of any
6membership interest issued by the cooperative. The cooperative may not issue a
7membership interest to any person unless the subscription price of the membership
8interest has been paid for in money or property. If the subscription price is paid for
9in property, the value of the property to be contributed shall be approved by the
10board.
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11(3) Transferring ownership of membership interests. After issuance by the
12cooperative, ownership of a membership interest may be transferred only with the
13approval of the board. The board may adopt resolutions prescribing procedures to
14approve transfers prospectively.
AB327,120,24
15(4) Patron membership interests. Except as otherwise provided in this
16subsection, if nonpatron membership interests are authorized by the patron
17members, all patron membership interests, collectively, shall have not less than 51
18percent of the cooperative's financial rights to profit allocations and distributions.
19The patron members by majority vote may authorize that the patron membership
20interests, collectively, may have less than 51 percent, but not less than 30 percent,
21of the cooperative's financial rights to profit allocations and distributions, and this
22change must be included in the bylaws. Notwithstanding s. 193.221 (1) and (3), an
23amendment of the articles under this subsection may be adopted only if approved by
24the affirmative vote of the patron members.
AB327,121,9
1(5) First privilege to purchase membership interests. The articles or bylaws
2may provide the patron members, individually or collectively, or the cooperative with
3the first privilege of purchasing the membership interests of any class of
4membership interests offered for sale. If the articles or bylaws provide patron
5members with a first privilege to purchase membership interests under this
6subsection, the articles or bylaws shall include a procedure by which patron
7members may proceed to acquire the membership interests. If the cooperative
8acquires a membership interest under this subsection, the cooperative may hold the
9interest to be reissued or may retire and cancel the interest.
AB327,121,19
10(6) Nonpatron membership interests. If nonpatron membership interests are
11authorized by the patron members, each person to whom a nonpatron membership
12interest is issued shall sign a member control agreement or a statement agreeing to
13abide by any applicable conditions imposed under the bylaws. Unless the bylaws
14contain a sufficient description, the cooperative shall provide to a person to whom a
15nonpatron membership interest is issued, before issuance, a description of the rights
16and obligations applicable to holders of that nonpatron membership interest, the
17transferability of that nonpatron membership interest, and the manner in which
18profits and losses are divided and allocated among the membership interests and
19membership classes.
AB327,122,8
20(6m) Allocation of profits, losses, and distributions. If the articles or bylaws
21do not otherwise provide for the allocation of the profits and losses between patron
22membership interests and any authorized nonpatron membership interests, then
23the allocation of profits and losses among nonpatron membership interests
24individually and patron membership interests collectively shall be allocated based
25on the value of contributions to capital made according to the patron membership
1interests collectively and the nonpatron membership interests individually to the
2extent the contributions have been accepted by the cooperative. Distributions of cash
3or other assets of the cooperative shall be allocated among the membership interests
4as provided in the articles and bylaws, subject to the provisions of this chapter. If not
5otherwise provided in the articles or bylaws, distributions shall be made on the basis
6of value of the capital contributions of the patron membership interests collectively
7and the nonpatron membership interests to the extent the contributions have been
8accepted by the cooperative.
AB327,123,2
9(7) Reacquisition of nonpatron membership interests after dissent. Unless
10the articles or bylaws provide otherwise, a nonpatron member may force the
11cooperative to acquire the member's nonpatron membership interests as provided
12under this subsection if the articles or bylaws are amended in a manner that
13materially and adversely affects the rights and preferences applicable to the
14nonpatron membership interests of the nonpatron member. If approval of the
15amendment is not required of the members, the nonpatron member shall file a notice
16of dissent and intent to demand fair value of the membership interests with the
17cooperative within 30 days after the date on which notice of the amendment is given
18to members. If approval of the amendment is required of the members, the
19nonpatron member shall file a notice of dissent and intent to demand fair value of
20the membership interests with the cooperative before the vote on the proposed
21amendment and shall not vote in favor of the proposed amendment. After receipt of
22a notice under this subsection and, if applicable, after approval of the amendment,
23the cooperative shall rescind the amendment within 60 days after receipt of the
24notice or acquire the membership interests by paying the fair value of the
25membership interests to the dissenting member within 180 days after receipt of the
1notice. Upon acquiring the membership interests, the cooperative may hold the
2interests to be reissued or may retire and cancel the interests.
AB327,123,7
3193.605 Cooperative securities. (1) Applicability of ch. 408 to cooperative
4securities. To the extent that the provisions of this chapter concerning the
5authorization, issuance, control, use, and rights of membership interests or
6concerning the stock of a cooperative are inconsistent with ch. 408, the provisions of
7this chapter apply.
AB327,123,9
8(2) Liability of cooperative for wrongful transfers of its securities. (a) In
9this subsection:
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1. "Proper person" means the registered owner or last prior transferee, whether
11or not described as fiduciary for another, or his or her authorized agent or legal
12representative or the successor to his or her interest by operation of law.
AB327,123,1313
2. "Transfer" includes a redemption or recall of stock.
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3. "Wrongful transfer" means a transfer which is in excess of the authorization
15or capacity of the transferor, or which is made in breach of the transferor's fiduciary
16duty.
AB327,123,2017
(b) A cooperative may not be held liable for acting upon wrongful transfers of
18its securities which are not "securities" as defined in s. 408.102, unless it has notice
19that the certificate was not transferred by a proper person or has notice that the
20transfer was a wrongful transfer.
AB327,123,24
21(3) Missing securities or records. (a) When a security issued by a cooperative,
22which is not a "security" as defined in s. 408.102, is missing, the cooperative shall
23issue a duplicate security if the owner so requests and furnishes an indemnity
24acceptable to the cooperative.
AB327,124,4
1(b) When records showing ownership of securities or apportionment of equity
2or membership interests are missing and the information therein contained is
3necessary to a proposed redemption of the interest, the cooperative may give notice
4and redeem by satisfying all of the following:
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1. The cooperative shall set aside an amount equal to the value of the interests
6to be redeemed.
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2. The cooperative shall give notice of such redemption to all owners of interests
8of which the cooperative has knowledge.
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3. If there are interests, the ownership of which is unknown to the cooperative,
10it shall publish notice of the redemption at least once a month for 4 months in a
11publication circulated among members of cooperatives in the area, and also publish
12a class 3 notice, under ch. 985.
AB327,124,15
13193.611 Assignment of financial rights.
(1) Assignment of financial
14rights permitted. Except as provided in sub. (3), a member's financial rights in a
15cooperative are transferable in whole or in part.
AB327,124,23
16(2) Effect of assignment of financial rights. An assignment of a member's
17financial rights under sub. (1) entitles the assignee to receive, to the extent assigned,
18only the share of profits and losses and the distributions to which the assignor would
19otherwise be entitled. An assignment of a member's financial rights under sub. (1)
20does not dissolve the cooperative and does not entitle or empower the assignee to
21become a member, to exercise any governance rights, to receive any notices from the
22cooperative, or to cause dissolution. The assignment may not allow the assignee to
23control the member's exercise of governance or voting rights.
AB327,125,6
24(3) Restrictions on assignment of financial rights. (a) A restriction on the
25assignment of financial rights in a cooperative may be imposed in the articles, in the
1bylaws, in a member control agreement, by a resolution adopted by the members at
2a members' meeting, or by an agreement among members and the cooperative. A
3restriction is not binding with respect to financial rights reflected in the required
4records of the cooperative before the adoption of the restriction, unless the owners
5of those financial rights are parties to the agreement or voted in favor of the
6restriction.
AB327,125,117
(b) Subject to par. (c), a restriction under par. (a) is enforceable only if the
8restriction is not manifestly unreasonable under the circumstances and is noted
9conspicuously in the required records of the cooperative. Such a restriction may be
10enforced against the owner of the restricted financial rights or a successor or
11transferee of the owner, including a pledgee or a legal representative.
AB327,125,1612
(c) A restriction on an assignment of financial rights under par. (a) which is
13otherwise valid and in effect at the time of the issuance of a statement of membership
14interest issued by the cooperative under s. 193.615 but which is not reflected in that
15statement is ineffective against an assignee who takes an assignment in reliance on
16the statement.
AB327,125,2017
(d) A security interest in a member's financial rights may be foreclosed and
18otherwise enforced, and a secured party may assign a member's financial rights in
19accordance with ch. 408, without the consent or approval of the member whose
20financial rights are subject to the security interest.
AB327,125,25
21193.615 Nature and terms of a membership interest and statement of
22interest owned. (1) Generally. A membership interest is personal property. A
23membership interest does not give the owner of the interest any interest in specific
24cooperative property. All property of the cooperative is property of the cooperative
25itself.
AB327,126,7
1(2) Statement of membership interest. At the request of any member, the
2cooperative shall state in writing the particular membership interest owned by that
3member as of the date the cooperative makes the statement. The statement shall
4describe the member's rights to vote, if any, and to share in profits, losses, and
5distributions, restrictions on assignments of the member's financial rights under s.
6193.611 (3) or voting rights under s. 193.555, and any assignment of the member's
7rights then in effect other than a security interest.
AB327,126,9
8(3) Terms of membership interests generally. (a) All the membership
9interests of a cooperative shall satisfy all of the following:
AB327,126,1110
1. Unless the articles or bylaws provide otherwise, the membership interests
11shall be of one class, without series.
AB327,126,1612
2. The membership interests shall be patron membership interests and, if
13authorized, nonpatron membership interests subject to this chapter entitled to vote
14as provided in s. 193.555, and have equal rights and preferences in all matters not
15otherwise provided for by the board unless and to the extent that the articles or
16bylaws have fixed the relative rights and preferences of different classes and series.
AB327,126,1817
(b) All of the following apply to the rights and preferences of a class or series
18of membership interests:
AB327,126,2319
1. The rights and preferences may be made dependent upon facts ascertainable
20outside the articles or bylaws, or outside the resolution or resolutions under sub. (5)
21establishing the class or series, if the manner in which the facts operate upon the
22rights and preferences is clearly and expressly set forth in the articles or bylaws or
23in the resolution or resolutions establishing the class or series.
AB327,127,324
2. The rights and preferences may include by reference some or all of the terms
25of any agreements, contracts, or other arrangements entered into by the cooperative
1in connection with the establishment of the class or series if the cooperative retains
2at its principal office a copy of the agreements, contracts, or other arrangements or
3the portions thereof included by reference.
AB327,127,64
(c) If specified in the articles or bylaws, or the resolution under sub. (5)
5establishing the class or series, all of the following apply to membership interests of
6a class or series:
AB327,127,97
1. The membership interests are subject to the right of the cooperative to
8redeem any of those membership interests at a price fixed in the articles or bylaws
9or by the board.
AB327,127,1110
2. Owners of the membership interests may receive cumulative, partially
11cumulative, or noncumulative distributions.
AB327,127,1312
3. The membership interests may have preference over any other class or series
13of membership interests for the payment of distributions.
AB327,127,1514
4. The membership interests may be convertible into membership interests of
15any other class or series.
AB327,127,1716
5. The membership interests may have full, partial, or no voting rights, except
17as provided in s. 193.555.
AB327,127,25
18(4) Rights of judgment creditor. On application to the circuit court by any
19judgment creditor of a member, the court may order the payment of the unsatisfied
20amount of the judgment from a member's or an assignee's financial rights. Such a
21judgment creditor has only the rights of an assignee of a member's financial rights
22under s. 193.611. This subsection is the sole and exclusive remedy of a judgment
23creditor with respect to the judgment debtor's membership interest. This subsection
24does not deprive any member or assignee of financial rights of the benefit of any
25exemption under s. 815.18 applicable to the membership interest.
AB327,128,6
1(5) Board authority to fix terms. (a) If permitted under the bylaws, the board
2may adopt a resolution establishing a class or series of membership interests, setting
3forth the designation of the class or series, and fixing the relative rights and
4preferences of the class or series, consistent with this chapter. A resolution under
5this paragraph takes effect on the 3rd day after the date on which the statement
6required under par. (b) is given to the members, as determined by the board.
AB327,128,107
(b) The cooperative may not accept contributions for any membership interests
8established by resolution under par. (a) until the board gives the members a
9statement setting forth the name of the cooperative, the text of the resolution, and
10the date on which the resolution was adopted.
AB327,128,13
11(7) Security interest in cooperative securities. For the purpose of any law
12relating to security interests, a membership interest, governance or voting rights,
13and financial rights are each to be characterized as provided in s. 408.103 (3).
AB327,128,24
14(8) Powers of estate of a deceased or incompetent member and other
15fiduciaries. (a) Except as provided in par. (b), if a member who is an individual dies
16or a court adjudges the member to be incompetent to manage his or her person or
17property, or an order for relief under a judgment of bankruptcy is entered with
18respect to the member, the member's executor, administrator, guardian, conservator,
19trustee, or other legal representative may exercise all of the rights applicable to the
20member's membership interest for the purpose of settling the estate or
21administering the member's property. Except as provided in par. (b), if a member is
22not an individual and is dissolved, terminated, or placed by a court in receivership
23or bankruptcy, the member's legal representative or successor may exercise all of the
24rights applicable to the member's membership interest.
AB327,129,6
1(b) Subject to the articles and bylaws, if an event described in par. (a) causes
2the termination of a member's membership interest and the termination does not
3result in dissolution of the cooperative, the terminated member's interest is
4considered to be that of an assignee of financial rights under s. 193.611 and the rights
5to be exercised by the executor, administrator, guardian, conservator, trustee, legal
6representative, or successor are limited accordingly.
AB327,129,11
7(9) Liability of subscribers and members with respect to membership
8interests. A subscriber for membership interests or a member of a cooperative is
9under no obligation to the cooperative or its creditors with respect to the membership
10interests subscribed for or owned, except to pay to the cooperative the full
11consideration for which the membership interests are issued or to be issued.
AB327,129,15
12193.621 Certificated membership interests. (1) Certificated interests
13authorized. A membership interest of a cooperative may be certificated. The
14cooperative shall provide each holder of a certificated membership interest with a
15certificate of membership interest under sub. (2).
AB327,129,22
16(2) Requirements of certificate; generally. (a) A certificate of membership
17interest shall be signed by an agent or officer authorized in the articles or bylaws to
18sign the certificate or, in the absence of such an authorization, by the chairperson of
19the board or the records officer of the cooperative. If the person who signs the
20certificate subsequently ceases to have the capacity to sign the certificate before the
21certificate is issued, the cooperative may issue the certificate with the same effect as
22if the person had that capacity on the date of its issue.
AB327,129,2423
(b) A certificate of membership interest shall contain all of the following
24information on the certificate's face:
AB327,129,2525
1. The name of the cooperative.
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12. A statement that the cooperative is organized under the laws of this state
2and this chapter.
AB327,130,33
3. The name of the person to whom the certificate is issued.
AB327,130,54
4. The number and class of membership interests, and the designation of the
5series, if any, that the certificate represents.
AB327,130,76
5. A statement that membership interests are subject to the articles and
7bylaws.
AB327,130,128
6. Any restrictions on transfer of the membership interests that the certificate
9represents, including any requirement for the approval of the board and first rights
10to purchase by the cooperative. Notwithstanding any other provision of this
11subsection, the information required under this subdivision may be stated by
12reference to the back of the certificate or to another document.
AB327,130,21
13(3) Requirements of certificate; multiple series or classes. A certificate of
14membership interest representing a membership interest issued by a cooperative
15that is authorized to issue membership interests of more than one class or series shall
16set forth upon the face or back of the certificate, or shall state that the cooperative
17will furnish to any member upon request and without charge, a full statement of the
18designations, preferences, limitations, and relative rights of the membership
19interests of each class or series authorized to be issued, so far as they have been
20determined, and the authority of the board to determine the relative rights and
21preferences of subsequent classes or series.
AB327,130,24
22(4) Prima facie evidence. A certificate of membership interest issued under
23this section is prima facie evidence of the ownership of the membership interest that
24the certificate represents.
AB327,131,11
1(5) Uncertificated membership interests authorized. Unless uncertificated
2membership interests are prohibited by the articles or bylaws, the board may adopt
3a resolution permitting uncertificated membership interests. Such a resolution does
4not apply to a membership interest represented by a certificate until the certificate
5is surrendered to the cooperative. Within a reasonable time after the issuance or
6transfer of an uncertificated membership interest, the cooperative shall send to the
7new member a statement containing the information required under sub. (2) (b) and
8(3) to be stated on certificates, unless the cooperative is publicly held and has adopted
9a system of issuance, recordation, and transfer of its membership interests by
10electronic or other means not involving an issuance of certificates, in compliance
11with section 17A of the Securities Exchange Act of 1934.
AB327,131,15
12(6) Comparable rights. Except as otherwise provided under this chapter, the
13rights and obligations of holders of certificated membership interests are identical
14to the rights and obligations of holders of uncertificated membership interests of the
15same class and series.
AB327,131,20
16193.625 Replacement certificates. (1) Issuance. A cooperative may issue
17a replacement certificate of membership interest under s. 193.621 using the
18procedure specified in s. 408.405 (1), if the owner of the membership interest
19represented in a certificate claims that the certificate has been lost, destroyed or
20wrongfully taken.
AB327,131,22
21(2) Not an overissue. The issuance of a replacement certificate under sub. (1)
22is not an overissue of the membership interest it represents.
AB327,132,8
23193.631 Restriction on transfer or registration of membership
24interests. (1) How imposed. A restriction on the transfer, including registration,
25of a membership interest may be imposed in the articles, in the bylaws, in a member
1control agreement, by a resolution adopted by the members, or by an agreement
2among or other written action by members or among them and the cooperative. A
3restriction imposed by a member control agreement or other written action of
4members is effective only against the parties to the agreement or written action or
5the members who assent pursuant to a member resolution. A restriction is not
6binding with respect to membership interests issued prior to the adoption of the
7restriction, unless the holders of those membership interests are parties to the
8agreement or voted in favor of the restriction.
AB327,132,11
9(2) Restrictions permitted. (a) A restriction under sub. (1) is enforceable only
10if the restriction is not manifestly unreasonable under the circumstances and any of
11the following apply:
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1. The restriction is noted conspicuously on a certificate of membership interest
13representing the membership interest or the existence of the restriction is noted on
14the certificate and reference is made to a separate document creating or describing
15the restriction.
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2. The restriction is imposed under this chapter or is included in the articles
17or bylaws.
AB327,132,1918
3. The restriction relates to an uncertificated membership interest and is
19included in information sent to the holders of such a membership interest.
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(b) A restriction that is enforceable under par. (a) may be enforced against the
21holder of the restricted membership interest or a successor or transferee of the
22holder, including a pledgee or a legal representative.
AB327,132,2323
subchapter vii
AB327,132,2524
contributions, allocations,
25
and distributions
AB327,133,4
1193.701 Authorization, form, and acceptance. (1) Board may authorize. 2If authorized by the board, a cooperative may accept contributions, make
3contribution agreements under s. 193.711, and make contribution rights agreements
4under s. 193.715.
AB327,133,6
5(2) Permissible forms. A person may make a contribution to a cooperative by
6any of the following means:
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(a) By paying money or transferring the ownership of an interest in property
8to the cooperative, or performing services to or for the benefit of the cooperative.
AB327,133,119
(b) Through a written obligation that is signed by the person and requires the
10person to pay money or transfer ownership of an interest in property to the
11cooperative or to perform services to or for the benefit of the cooperative.
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12(3) Acceptance of contributions. No purported contribution is to be treated
13as or considered to be a contribution, unless all of the following apply:
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(a) The board accepts the contribution on behalf of the cooperative and in that
15acceptance describes the contribution, including terms of future performance, if any,
16and states the value being accorded to the contribution.
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(b) The acceptance of the contribution and the contribution's accorded value are
18both reflected in the required records of the cooperative.
AB327,134,9
19193.702 Valuation; presumption and liability. The determinations of the
20board as to a contribution's accorded value under s. 193.701 (3) (a) and the fairness
21to the cooperative of a contribution and any terms of payment or performance
22applicable to the contribution, the terms of any contribution agreement under s.
23193.711, and the terms of any contribution rights agreement under s. 193.715 are
24presumed to be proper if the determinations are made in good faith and on the basis
25of methods that are reasonable under the circumstances. Directors who are present
1and entitled to vote, and who, intentionally or without reasonable investigation, fail
2to vote against approving a consideration that is unfair to the cooperative, or who
3overvalue property or services received or to be received by the cooperative as a
4contribution, are jointly and severally liable to the cooperative for the benefit of the
5members then existing who did not consent to and are damaged by the consideration
6or overvaluing of property or services, to the extent of the damages to those members.
7A director against whom a claim is asserted pursuant to this section, except in a case
8of knowing participation in a deliberate fraud, is entitled to contribution on an
9equitable basis from other directors who are liable under this section.
AB327,134,13
10193.705 Restated value of previous contributions. (1) Definition. In this
11section, "old contributions" means all contributions reflected in the required records
12of a cooperative immediately before the time the cooperative accepts a new
13contribution.
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14(2) Restatement required. If a cooperative accepts a new contribution, the
15board shall restate the value of all old contributions.
AB327,134,19
16(3) Restatement method for same series or class. (a) Unless otherwise
17provided in the articles or bylaws, the board shall restate the value of old
18contributions of the same series or class of the new contribution by following all of
19the following steps in numerical order:
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1. State the value accorded to the new contribution under s. 193.701 (3) (a).
AB327,134,2221
2. Determine what the total value will be, after the restatement under this
22subsection, of all contributions of same series or class as the new contribution.
AB327,134,2523
3. Subtract the value stated under subd. 1. from the value determined under
24subd. 2., yielding the total value, after the restatement under this subsection, of all
25the old contributions of the particular series or class.
AB327,135,4
14. Subtract the value, as reflected in the required records before the
2restatement under this subsection, of the old contributions from the value
3determined under subd. 3., yielding the value to be allocated among and added to the
4old contributions of the particular series or class.
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5. Allocate the value determined under subd. 4. proportionally among the old
6contributions of the particular series or class, add the allocated values to the values
7of those old contributions, and change the required records accordingly.
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(b) The values determined under par. (a) 4. and allocated and added under par.
9(a) 5. may be positive, negative, or zero.
AB327,135,13
10(4) Restatement method for different series or class. Unless otherwise
11provided in the articles or bylaws, the board shall restate the value of old
12contributions of a series or class different from that of the new contribution by
13following all of the following steps in alphanumerical order:
AB327,135,1614
(a) Determine the percentage by which any restatement under sub. (3) has
15changed the total contribution value reflected in the required records for the series
16or class of the new contribution.