AB327: Bill Text

AB327,133,18 (b) The acceptance of the contribution and the contribution's accorded value are both reflected in the required records of the cooperative.

AB327,134,9 193.702 Valuation; presumption and liability. The determinations of the board as to a contribution's accorded value under s. 193.701 (3) (a) and the fairness to the cooperative of a contribution and any terms of payment or performance applicable to the contribution, the terms of any contribution agreement under s. 193.711, and the terms of any contribution rights agreement under s. 193.715 are presumed to be proper if the determinations are made in good faith and on the basis of methods that are reasonable under the circumstances. Directors who are present and entitled to vote, and who, intentionally or without reasonable investigation, fail to vote against approving a consideration that is unfair to the cooperative, or who overvalue property or services received or to be received by the cooperative as a contribution, are jointly and severally liable to the cooperative for the benefit of the members then existing who did not consent to and are damaged by the consideration or overvaluing of property or services, to the extent of the damages to those members. A director against whom a claim is asserted pursuant to this section, except in a case of knowing participation in a deliberate fraud, is entitled to contribution on an equitable basis from other directors who are liable under this section.

AB327,134,13 193.705 Restated value of previous contributions. (1) Definition. In this section, "old contributions" means all contributions reflected in the required records of a cooperative immediately before the time the cooperative accepts a new contribution.

AB327,134,15 (2) Restatement required. If a cooperative accepts a new contribution, the board shall restate the value of all old contributions.

AB327,134,19 (3) Restatement method for same series or class. (a) Unless otherwise provided in the articles or bylaws, the board shall restate the value of old contributions of the same series or class of the new contribution by following all of the following steps in numerical order:

AB327,134,20 1. State the value accorded to the new contribution under s. 193.701 (3) (a).

AB327,134,22 2. Determine what the total value will be, after the restatement under this subsection, of all contributions of same series or class as the new contribution.

AB327,134,25 3. Subtract the value stated under subd. 1. from the value determined under subd. 2., yielding the total value, after the restatement under this subsection, of all the old contributions of the particular series or class.

AB327,135,4 4. Subtract the value, as reflected in the required records before the restatement under this subsection, of the old contributions from the value determined under subd. 3., yielding the value to be allocated among and added to the old contributions of the particular series or class.

AB327,135,7 5. Allocate the value determined under subd. 4. proportionally among the old contributions of the particular series or class, add the allocated values to the values of those old contributions, and change the required records accordingly.

AB327,135,9 (b) The values determined under par. (a) 4. and allocated and added under par. (a) 5. may be positive, negative, or zero.

AB327,135,13 (4) Restatement method for different series or class. Unless otherwise provided in the articles or bylaws, the board shall restate the value of old contributions of a series or class different from that of the new contribution by following all of the following steps in alphanumerical order:

AB327,135,16 (a) Determine the percentage by which any restatement under sub. (3) has changed the total contribution value reflected in the required records for the series or class of the new contribution.

AB327,135,19 (b) As to each old contribution of a different series or class, change the value reflected in the required records by the percentage determined under par. (a). The percentage determined under par. (a) may be positive, negative, or zero.

AB327,135,23 (5) Aggregating new contributions. If a cooperative accepts more than one new contribution of the same series or class at the same time, then for the purpose of the restatement required by this section the board may consider all such new contributions as if they were a single contribution.

AB327,136,3 193.711 Contribution agreements. (1g) Contribution agreements permitted. Pursuant to s. 193.701 (1), a cooperative and a member or potential member may enter into an agreement requiring the member or potential member to contribute goods, services, or money to the cooperative as a condition of membership or receipt of a membership interest.

AB327,136,5 (1r) Signed writing required. A contribution agreement shall be in writing and signed by each person required to make a contribution under the agreement.

AB327,136,10 (2) Agreement irrevocable for definite period; exceptions. A contribution agreement is irrevocable for a period of 6 months, unless otherwise provided in the contribution agreement or unless each person required to make a contribution under the agreement and, if in existence, the cooperative, consents to a different period of irrevocability.

AB327,136,16 (3) Time of performance under agreement. Unless the contribution agreement provides otherwise, all payments or other actions required under the agreement shall be made or taken at the time or times determined by the board, except that a call made by the board for a person to make a payment or perform an action required under the agreement shall be uniform for all membership interests of the same class or series.

AB327,136,25 (4) Failure to perform; remedies. (a) Unless the contribution agreement provides otherwise, if a person fails to make a payment required under the contribution agreement, the cooperative may bring an action for breach of contract, sell any membership interests that are subject to the contribution agreement pursuant to par. (b) and bring an action to collect any deficiency, or cancel the contribution agreement pursuant to par. (c). If a person fails to make a required contribution of property or services, the person shall pay to the cooperative an amount equal to that portion of the value of the contribution that has not been made, as stated in the cooperative's required records.

AB327,137,10 (b) To the extent provided in par. (a), the cooperative may cancel the membership interests of any person who defaults on a contribution agreement and sell any membership interests that are subject to a contribution agreement if the amount due under the contribution agreement relating to those membership interests remains unpaid for a period of 20 days after the cooperative gives written notice of demand for payment to the person required to make the payment. The total offering price of the membership interests in such a sale shall be at least the amount of the balance owed by the person, plus the expenses incidental to the sale. If membership interests are sold pursuant to this paragraph, the cooperative shall pay to the person, or that person's legal representative, the lesser of the following:

AB327,137,14 1. The amount by which the proceeds of the sale, less the expenses incident to the sale and any additional amounts the person is required to pay under the terms of the contribution agreement as a result of the default, exceeds the amount of the payment the person failed to make.

AB327,137,15 2. The total amount paid by the person under the contribution agreement.

AB327,137,22 (c) To the extent provided in par. (a), the cooperative may cancel a contribution agreement if the amount due under the contribution agreement remains unpaid for a period of 20 days after the cooperative gives written notice of demand for payment to the person required to make the payment. Unless the contribution agreement provides otherwise, if the cooperative cancels a contribution agreement pursuant to this paragraph, the cooperative may retain any payments made as provided in the contribution agreement.

AB327,138,2 (5) Restrictions on assignment. Unless the articles or bylaws provide otherwise, a person may not assign, in whole or in part, that person's rights under a contribution agreement to a person who is not a member at the time of the assignment, unless all the members consent to the assignment in writing.

AB327,138,6 193.715 Contribution rights agreements. (1) Contribution rights agreements permitted. Pursuant to s. 193.701 (1) and subject to any restrictions in the articles or bylaws, a cooperative may enter into an agreement that provides a person rights to contribute goods, services, or money to the cooperative.

AB327,138,8 (2) Writing required; terms included by reference. A contribution rights agreement shall be in writing. Terms of the agreement may be included by reference.

AB327,138,12 (3) Restrictions on assignment. Unless the articles or bylaws provide otherwise, a person may not assign, in whole or in part, that person's rights under a contribution rights agreement to a person who is not a member at the time of the assignment, unless all the members consent to the assignment in writing.

AB327,138,23 193.721 Allocations of profits and distributions of cash and other assets. (1) Allocation of profits and losses. Except as otherwise provided in this subsection and the articles or bylaws, profits and losses shall be allocated between patron membership interests collectively and nonpatron membership interests collectively on the basis of the value of contributions received from patron membership interests collectively and nonpatron membership interests collectively. The allocation of profits to patron membership interests collectively in a fiscal year may not be less than 51 percent of the total profits for that fiscal year, except that the allocation of profits to patron membership interests collectively in a fiscal year may not be less than 30 percent of the total profits for that fiscal year if any of the following apply:

AB327,139,3 (a) The articles were amended to provide for the reduced percentage and, notwithstanding s. 193.221 (1) and (3), the amendment was approved by the affirmative vote of the patron members.

AB327,139,5 (b) The bylaws provide for the reduced percentage and were approved by an affirmative vote of the patron members.

AB327,139,7 (c) The bylaws were amended to provide for the reduced percentage and the amendment was approved by the affirmative vote of the patron members.

AB327,139,19 (2) Distribution of cash or other assets. If not stated in the articles, the bylaws shall prescribe the distribution of cash or other assets of the cooperative among the membership interests of the cooperative. Unless the articles or bylaws provide otherwise, the cooperative shall distribute cash or other assets to patron membership interests collectively and nonpatron membership interests collectively on the basis of the value of contributions received by the cooperative from patron membership interests collectively and nonpatron membership interests collectively. The distributions to patron membership interests collectively in any fiscal year may not be less than 51 percent of the total distributions for that fiscal year, except that distributions to patron membership interests collectively in a fiscal year may not be less than 30 percent of the total distributions for that fiscal year if any of the following apply:

AB327,139,21 (a) The articles provide for the reduced percentage and that provision was not included in the articles via amendment under s. 193.221 (3).

AB327,139,23 (b) The bylaws provide for the reduced percentage and were adopted by an affirmative vote of the members.

AB327,139,25 (c) The bylaws were amended to provide for the reduced percentage and the amendment was adopted by the affirmative vote of the members.

AB327,140,4 193.725 Allocations and distributions of profits to patron members. (1) Capital reserves. A cooperative may set aside any portion of profits allocated to the patron membership interests that the board determines is advisable for the purpose of creating or maintaining a capital reserve.

AB327,140,6 (2) Other reserves. The board may do any of the following with regard to profits allocated to the patron membership interests:

AB327,140,8 (a) Set aside an amount not to exceed 5 percent of the annual profits of the cooperative for promoting and encouraging cooperative organization.

AB327,140,10 (b) Establish and accumulate reserves for new buildings, machinery and equipment, depreciation, losses, and other proper purposes.

AB327,140,18 (3) Patronage distributions. Profits allocated to patron members in excess of dividends on equity and additions to reserves shall be allocated and distributed to patron members on the basis of patronage and, if the bylaws provide, to nonmember patrons as so provided. A cooperative may establish allocation units and pooling arrangements and may account for and distribute profits to patrons on the basis of allocation units and pooling arrangements. A cooperative may offset the losses of an allocation unit or pooling arrangement against the profits of other allocation units or pooling arrangements.

AB327,140,20 (4) Frequency of distribution. A cooperative shall make distributions under sub. (3) at least annually.

AB327,140,23 (5) Form of distribution. A cooperative may make distributions under sub. (3) in the form of cash, capital credits, allocated patronage equities, revolving fund certificates, or its own or other securities.

AB327,141,4 (7) Patronage credits for ineligible members. If a nonmember patron with patronage credits is not qualified or eligible for membership, the cooperative may credit to the nonmember patron's account a refund due to the nonmember patron. The board may issue a certificate of interest to reflect any such credit and, after the board issues such a certificate, the patron may receive distributions of profits in the same manner as a patron member.

AB327,141,14 193.731 Member control agreements. (1) Authorization and execution. Except as otherwise provided in this subsection, any person who has entered into a contribution agreement under s. 193.711 or an agreement to purchase cooperative securities, or any member, may enter into a written agreement with the cooperative that relates to the control of or the liquidation, dissolution, or termination of the cooperative, or any phase of the business and affairs of the cooperative. Such an agreement may not take effect unless signed by all persons who are then members and all persons who have entered into contribution agreements. An agreement under this subsection may not relate to patron member voting control under s. 193.545 or patron member allocation and distribution provisions under s. 193.721.

AB327,141,18 (2) Same effect as articles and bylaws. Wherever this chapter provides that a particular result may or shall be obtained through a provision in the articles or bylaws, the same result may be accomplished through a provision in an agreement under sub. (1) or a procedure established in such an agreement.

AB327,141,22 (3) Other agreements not affected. This section does not limit the authority of persons to enter into agreements otherwise valid, nor is the procedure set forth in this section the exclusive method of agreement among members or between the members and the cooperative with respect to any of the matters described.

AB327,142,3 193.735 Distribution of unclaimed property. (1) Alternate procedure to distribute property. Notwithstanding s. 177.17 (4) (a) 2. and (b), a cooperative may distribute any property required to be reported under s. 177.17 (1) to an entity that is exempt from taxation under section 501 (a) of the Internal Revenue Code. A cooperative making a distribution under this subsection shall file all of the following with the state treasurer before making the distribution:

AB327,142,4 (a) A verified written description and explanation of the distribution.

AB327,142,6 (c) The name, address, and exemption number of the entity to which the property is to be distributed.

AB327,142,7 (d) The approximate date of the distribution.

AB327,142,9 (2) Reporting procedure not affected. Subsection (1) does not affect the requirement that a cooperative report property under s. 177.17 (1).

AB327,142,12 (3) Owner's right extinguished on disbursement. The articles or bylaws may provide that a distribution under sub. (1) extinguishes all rights of the owner in and to the distributed property.

AB327,142,13 subchapter Viii

AB327,142,14 merger and consolidation

AB327,142,22 193.801 Merger and consolidation. (1) Authorization. Unless otherwise prohibited and except as otherwise provided in this subsection, a cooperative may merge or consolidate with a business entity by complying with this section and the applicable law of the jurisdiction under whose laws the surviving business entity will be organized. A cooperative may not merge or consolidate with a business entity organized under the laws of this state, other than an association, unless the law governing the business entity specifically authorizes merger or consolidation with a cooperative.

AB327,142,24 (2) Plan. To initiate a merger or consolidation, the board shall prepare a written plan stating all of the following:

AB327,143,2 (a) The name of the cooperative and each business entity that is party to the merger or consolidation.

AB327,143,4 (b) The name of the business entity that will survive the merger or consolidation.

AB327,143,8 (c) The manner and basis of converting membership or ownership interests in the cooperative and each business entity that is party to the merger or consolidation into membership or ownership interests in the surviving business entity, money, or other property.

AB327,143,9 (d) The terms of the merger or consolidation.

AB327,143,11 (e) The proposed effect of the merger or consolidation on the members of each association that is party to the merger or consolidation.

AB327,143,14 (f) For a consolidation, the contents of the articles or other organizational documents of the surviving business entity which will be filed with the jurisdiction in which the surviving business entity is organized.

AB327,143,16 (3) Notice. (a) The board shall give notice of the merger or consolidation to each member. The notice shall contain all of the following:

AB327,143,17 1. The full text of the plan under sub. (2).

AB327,143,18 2. The time and place of the meeting at which the plan will be considered.

AB327,143,20 (b) A cooperative with more than 200 members may provide the notice in the same manner as notice of a regular members' meeting.

AB327,143,24 (4) Adoption of plan; articles of merger or consolidation. (a) If a quorum of the members eligible to vote is registered as being present or represented by alternative vote at the meeting specified in the notice under sub. (3), the plan of merger or consolidation may be adopted by the following means, as applicable:

AB327,143,25 1. By a majority of the votes cast.

AB327,144,3 2. For a cooperative with articles or bylaws requiring more than majority approval or other conditions for approval, by a sufficient vote as required under the articles or bylaws or by satisfying the other conditions for approval.

AB327,144,10 (b) If a plan is adopted under par. (a), the chairperson, vice-chairperson, records officer, or documents officer of each association that is party to the merger or consolidation shall execute articles of merger or consolidation which state the plan and the fact that the plan was adopted. The business entity surviving the merger or consolidation shall file the articles of merger with the department. If the business entity surviving the merger or consolidation is organized under the laws of this state, the department shall issue a certificate of organization to the business entity.

AB327,145,4 193.805 Merger of subsidiary or parent. (1) When authorized; plan of merger. (a) Except as otherwise provided in this paragraph, a parent cooperative that owns at least 90 percent of the outstanding ownership interests of each class and series of a subsidiary business entity, other than ownership interests that, absent this section, would not be entitled to vote on a merger, may merge the subsidiary into the parent or the parent into the subsidiary without a vote of the members of the parent or the members of the subsidiary by complying with this section and the applicable law of the jurisdiction under whose laws the business entity surviving the merger will be organized. Except as otherwise provided in this paragraph, a parent cooperative that owns at least 90 percent of the outstanding ownership interests of each class and series of 2 or more subsidiary business entities, other than ownership interests that, absent this section, would not be entitled to vote on a merger, may merge the subsidiaries into one another without a vote of the members of the parent or the members of the subsidiaries by complying with this section and the applicable law of the jurisdiction under whose laws the business entity surviving the merger will be organized. This paragraph does not permit a cooperative to merge with a business entity organized under the laws of this state, other than an association, unless the law governing the business entity specifically authorizes merger with a cooperative.

AB327,145,6 (b) To initiate a merger under par. (a), the board shall prepare a written plan stating all of the following:

AB327,145,8 1. The name of each subsidiary that is party to the merger, the name of the parent, and the name of the business entity surviving the merger.

AB327,145,12 2. Except as provided in subd. 3., the manner and basis of converting membership or ownership interests in the parent and each subsidiary that is party to the merger, as applicable, into membership or ownership interests in the surviving business entity, money, or other property.

AB327,145,17 3. If the parent is party to the merger but is not the surviving business entity and if the surviving business entity is a cooperative, a provision for the pro rata issuance of membership interests of the surviving business entity to the holders of membership interests in the parent on surrender of any certificates for shares of the parent.

AB327,145,20 4. If the surviving business entity is a subsidiary cooperative, a statement of any amendments to the articles of the surviving business entity that will be part of the merger.

AB327,145,24 (c) If the parent is party to the merger but is not the surviving business entity, the plan under par. (b) shall be approved by the affirmative vote of the holders of a majority of the voting power of all membership interests of the parent entitled to vote at a regular or special meeting.

AB327,146,3 (2) Notice. No later than 10 days after the effective date of the merger, the board of the parent shall give notice of the merger, including a copy of the plan of merger, to each member of each subsidiary that is party to the merger.

AB327,146,6 (3) Articles of merger. The board of the parent shall file with the department articles of merger, signed by the chairperson or his or her designee, containing all of the following:

AB327,146,7 (a) The plan of merger.

AB327,146,11 (b) The number of outstanding membership interests of each class and series of each subsidiary that is party to the merger, other than the classes or series that, absent this section, would not be entitled to vote on a merger, and the number of such membership interests owned by the parent.

AB327,146,13 (c) A statement that the plan of merger has been approved by the parent under this section.

AB327,146,16 (5) Certificate. If the business entity surviving the merger is organized under the laws of this state, the department shall issue a certificate of organization to the business entity upon receipt of the articles of merger.

AB327,146,20 (6) Rights of dissenting owners. If, immediately prior to a merger under this section, a business entity that is party to the merger is owned, at least in part, by persons other than the parent or an affiliate of the parent, those persons have dissenters' rights under the law governing that business entity's organization.

AB327,146,22 (7) Nonexclusivity. Mergers authorized under sub. (1) (a) may instead be accomplished under s. 193.801, in which case this section does not apply.

AB327,147,2 193.807 Effective date; effect of merger or consolidation. (1) Effective date. Unless a later date is provided in the plan of merger or consolidation or is required under other applicable law, a merger or consolidation is effective when the articles of merger or consolidation are filed with the department.

AB327,147,4 (2) Effect of merger or consolidation. All of the following occur when a merger or consolidation takes effect:

AB327,147,9 (a) All business entities that are party to the merger or consolidation become the business entity surviving the merger or consolidation, as designated in the plan, and the separate existence of every business entity that is party to the merger or consolidation, except the business entity surviving the merger or consolidation, ceases.