AB327: Bill Text

AB327,123,7 193.605 Cooperative securities. (1) Applicability of ch. 408 to cooperative securities. To the extent that the provisions of this chapter concerning the authorization, issuance, control, use, and rights of membership interests or concerning the stock of a cooperative are inconsistent with ch. 408, the provisions of this chapter apply.

AB327,123,9 (2) Liability of cooperative for wrongful transfers of its securities. (a) In this subsection:

AB327,123,12 1. "Proper person" means the registered owner or last prior transferee, whether or not described as fiduciary for another, or his or her authorized agent or legal representative or the successor to his or her interest by operation of law.

AB327,123,13 2. "Transfer" includes a redemption or recall of stock.

AB327,123,16 3. "Wrongful transfer" means a transfer which is in excess of the authorization or capacity of the transferor, or which is made in breach of the transferor's fiduciary duty.

AB327,123,20 (b) A cooperative may not be held liable for acting upon wrongful transfers of its securities which are not "securities" as defined in s. 408.102, unless it has notice that the certificate was not transferred by a proper person or has notice that the transfer was a wrongful transfer.

AB327,123,24 (3) Missing securities or records. (a) When a security issued by a cooperative, which is not a "security" as defined in s. 408.102, is missing, the cooperative shall issue a duplicate security if the owner so requests and furnishes an indemnity acceptable to the cooperative.

AB327,124,4 (b) When records showing ownership of securities or apportionment of equity or membership interests are missing and the information therein contained is necessary to a proposed redemption of the interest, the cooperative may give notice and redeem by satisfying all of the following:

AB327,124,6 1. The cooperative shall set aside an amount equal to the value of the interests to be redeemed.

AB327,124,8 2. The cooperative shall give notice of such redemption to all owners of interests of which the cooperative has knowledge.

AB327,124,12 3. If there are interests, the ownership of which is unknown to the cooperative, it shall publish notice of the redemption at least once a month for 4 months in a publication circulated among members of cooperatives in the area, and also publish a class 3 notice, under ch. 985.

AB327,124,15 193.611 Assignment of financial rights. (1) Assignment of financial rights permitted. Except as provided in sub. (3), a member's financial rights in a cooperative are transferable in whole or in part.

AB327,124,23 (2) Effect of assignment of financial rights. An assignment of a member's financial rights under sub. (1) entitles the assignee to receive, to the extent assigned, only the share of profits and losses and the distributions to which the assignor would otherwise be entitled. An assignment of a member's financial rights under sub. (1) does not dissolve the cooperative and does not entitle or empower the assignee to become a member, to exercise any governance rights, to receive any notices from the cooperative, or to cause dissolution. The assignment may not allow the assignee to control the member's exercise of governance or voting rights.

AB327,125,6 (3) Restrictions on assignment of financial rights. (a) A restriction on the assignment of financial rights in a cooperative may be imposed in the articles, in the bylaws, in a member control agreement, by a resolution adopted by the members at a members' meeting, or by an agreement among members and the cooperative. A restriction is not binding with respect to financial rights reflected in the required records of the cooperative before the adoption of the restriction, unless the owners of those financial rights are parties to the agreement or voted in favor of the restriction.

AB327,125,11 (b) Subject to par. (c), a restriction under par. (a) is enforceable only if the restriction is not manifestly unreasonable under the circumstances and is noted conspicuously in the required records of the cooperative. Such a restriction may be enforced against the owner of the restricted financial rights or a successor or transferee of the owner, including a pledgee or a legal representative.

AB327,125,16 (c) A restriction on an assignment of financial rights under par. (a) which is otherwise valid and in effect at the time of the issuance of a statement of membership interest issued by the cooperative under s. 193.615 but which is not reflected in that statement is ineffective against an assignee who takes an assignment in reliance on the statement.

AB327,125,20 (d) A security interest in a member's financial rights may be foreclosed and otherwise enforced, and a secured party may assign a member's financial rights in accordance with ch. 408, without the consent or approval of the member whose financial rights are subject to the security interest.

AB327,125,25 193.615 Nature and terms of a membership interest and statement of interest owned. (1) Generally. A membership interest is personal property. A membership interest does not give the owner of the interest any interest in specific cooperative property. All property of the cooperative is property of the cooperative itself.

AB327,126,7 (2) Statement of membership interest. At the request of any member, the cooperative shall state in writing the particular membership interest owned by that member as of the date the cooperative makes the statement. The statement shall describe the member's rights to vote, if any, and to share in profits, losses, and distributions, restrictions on assignments of the member's financial rights under s. 193.611 (3) or voting rights under s. 193.555, and any assignment of the member's rights then in effect other than a security interest.

AB327,126,9 (3) Terms of membership interests generally. (a) All the membership interests of a cooperative shall satisfy all of the following:

AB327,126,11 1. Unless the articles or bylaws provide otherwise, the membership interests shall be of one class, without series.

AB327,126,16 2. The membership interests shall be patron membership interests and, if authorized, nonpatron membership interests subject to this chapter entitled to vote as provided in s. 193.555, and have equal rights and preferences in all matters not otherwise provided for by the board unless and to the extent that the articles or bylaws have fixed the relative rights and preferences of different classes and series.

AB327,126,18 (b) All of the following apply to the rights and preferences of a class or series of membership interests:

AB327,126,23 1. The rights and preferences may be made dependent upon facts ascertainable outside the articles or bylaws, or outside the resolution or resolutions under sub. (5) establishing the class or series, if the manner in which the facts operate upon the rights and preferences is clearly and expressly set forth in the articles or bylaws or in the resolution or resolutions establishing the class or series.

AB327,127,3 2. The rights and preferences may include by reference some or all of the terms of any agreements, contracts, or other arrangements entered into by the cooperative in connection with the establishment of the class or series if the cooperative retains at its principal office a copy of the agreements, contracts, or other arrangements or the portions thereof included by reference.

AB327,127,6 (c) If specified in the articles or bylaws, or the resolution under sub. (5) establishing the class or series, all of the following apply to membership interests of a class or series:

AB327,127,9 1. The membership interests are subject to the right of the cooperative to redeem any of those membership interests at a price fixed in the articles or bylaws or by the board.

AB327,127,11 2. Owners of the membership interests may receive cumulative, partially cumulative, or noncumulative distributions.

AB327,127,13 3. The membership interests may have preference over any other class or series of membership interests for the payment of distributions.

AB327,127,15 4. The membership interests may be convertible into membership interests of any other class or series.

AB327,127,17 5. The membership interests may have full, partial, or no voting rights, except as provided in s. 193.555.

AB327,127,25 (4) Rights of judgment creditor. On application to the circuit court by any judgment creditor of a member, the court may order the payment of the unsatisfied amount of the judgment from a member's or an assignee's financial rights. Such a judgment creditor has only the rights of an assignee of a member's financial rights under s. 193.611. This subsection is the sole and exclusive remedy of a judgment creditor with respect to the judgment debtor's membership interest. This subsection does not deprive any member or assignee of financial rights of the benefit of any exemption under s. 815.18 applicable to the membership interest.

AB327,128,6 (5) Board authority to fix terms. (a) If permitted under the bylaws, the board may adopt a resolution establishing a class or series of membership interests, setting forth the designation of the class or series, and fixing the relative rights and preferences of the class or series, consistent with this chapter. A resolution under this paragraph takes effect on the 3rd day after the date on which the statement required under par. (b) is given to the members, as determined by the board.

AB327,128,10 (b) The cooperative may not accept contributions for any membership interests established by resolution under par. (a) until the board gives the members a statement setting forth the name of the cooperative, the text of the resolution, and the date on which the resolution was adopted.

AB327,128,13 (7) Security interest in cooperative securities. For the purpose of any law relating to security interests, a membership interest, governance or voting rights, and financial rights are each to be characterized as provided in s. 408.103 (3).

AB327,128,24 (8) Powers of estate of a deceased or incompetent member and other fiduciaries. (a) Except as provided in par. (b), if a member who is an individual dies or a court adjudges the member to be incompetent to manage his or her person or property, or an order for relief under a judgment of bankruptcy is entered with respect to the member, the member's executor, administrator, guardian, conservator, trustee, or other legal representative may exercise all of the rights applicable to the member's membership interest for the purpose of settling the estate or administering the member's property. Except as provided in par. (b), if a member is not an individual and is dissolved, terminated, or placed by a court in receivership or bankruptcy, the member's legal representative or successor may exercise all of the rights applicable to the member's membership interest.

AB327,129,6 (b) Subject to the articles and bylaws, if an event described in par. (a) causes the termination of a member's membership interest and the termination does not result in dissolution of the cooperative, the terminated member's interest is considered to be that of an assignee of financial rights under s. 193.611 and the rights to be exercised by the executor, administrator, guardian, conservator, trustee, legal representative, or successor are limited accordingly.

AB327,129,11 (9) Liability of subscribers and members with respect to membership interests. A subscriber for membership interests or a member of a cooperative is under no obligation to the cooperative or its creditors with respect to the membership interests subscribed for or owned, except to pay to the cooperative the full consideration for which the membership interests are issued or to be issued.

AB327,129,15 193.621 Certificated membership interests. (1) Certificated interests authorized. A membership interest of a cooperative may be certificated. The cooperative shall provide each holder of a certificated membership interest with a certificate of membership interest under sub. (2).

AB327,129,22 (2) Requirements of certificate; generally. (a) A certificate of membership interest shall be signed by an agent or officer authorized in the articles or bylaws to sign the certificate or, in the absence of such an authorization, by the chairperson of the board or the records officer of the cooperative. If the person who signs the certificate subsequently ceases to have the capacity to sign the certificate before the certificate is issued, the cooperative may issue the certificate with the same effect as if the person had that capacity on the date of its issue.

AB327,129,24 (b) A certificate of membership interest shall contain all of the following information on the certificate's face:

AB327,129,25 1. The name of the cooperative.

AB327,130,2 2. A statement that the cooperative is organized under the laws of this state and this chapter.

AB327,130,3 3. The name of the person to whom the certificate is issued.

AB327,130,5 4. The number and class of membership interests, and the designation of the series, if any, that the certificate represents.

AB327,130,7 5. A statement that membership interests are subject to the articles and bylaws.

AB327,130,12 6. Any restrictions on transfer of the membership interests that the certificate represents, including any requirement for the approval of the board and first rights to purchase by the cooperative. Notwithstanding any other provision of this subsection, the information required under this subdivision may be stated by reference to the back of the certificate or to another document.

AB327,130,21 (3) Requirements of certificate; multiple series or classes. A certificate of membership interest representing a membership interest issued by a cooperative that is authorized to issue membership interests of more than one class or series shall set forth upon the face or back of the certificate, or shall state that the cooperative will furnish to any member upon request and without charge, a full statement of the designations, preferences, limitations, and relative rights of the membership interests of each class or series authorized to be issued, so far as they have been determined, and the authority of the board to determine the relative rights and preferences of subsequent classes or series.

AB327,130,24 (4) Prima facie evidence. A certificate of membership interest issued under this section is prima facie evidence of the ownership of the membership interest that the certificate represents.

AB327,131,11 (5) Uncertificated membership interests authorized. Unless uncertificated membership interests are prohibited by the articles or bylaws, the board may adopt a resolution permitting uncertificated membership interests. Such a resolution does not apply to a membership interest represented by a certificate until the certificate is surrendered to the cooperative. Within a reasonable time after the issuance or transfer of an uncertificated membership interest, the cooperative shall send to the new member a statement containing the information required under sub. (2) (b) and (3) to be stated on certificates, unless the cooperative is publicly held and has adopted a system of issuance, recordation, and transfer of its membership interests by electronic or other means not involving an issuance of certificates, in compliance with section 17A of the Securities Exchange Act of 1934.

AB327,131,15 (6) Comparable rights. Except as otherwise provided under this chapter, the rights and obligations of holders of certificated membership interests are identical to the rights and obligations of holders of uncertificated membership interests of the same class and series.

AB327,131,20 193.625 Replacement certificates. (1) Issuance. A cooperative may issue a replacement certificate of membership interest under s. 193.621 using the procedure specified in s. 408.405 (1), if the owner of the membership interest represented in a certificate claims that the certificate has been lost, destroyed or wrongfully taken.

AB327,131,22 (2) Not an overissue. The issuance of a replacement certificate under sub. (1) is not an overissue of the membership interest it represents.

AB327,132,8 193.631 Restriction on transfer or registration of membership interests. (1) How imposed. A restriction on the transfer, including registration, of a membership interest may be imposed in the articles, in the bylaws, in a member control agreement, by a resolution adopted by the members, or by an agreement among or other written action by members or among them and the cooperative. A restriction imposed by a member control agreement or other written action of members is effective only against the parties to the agreement or written action or the members who assent pursuant to a member resolution. A restriction is not binding with respect to membership interests issued prior to the adoption of the restriction, unless the holders of those membership interests are parties to the agreement or voted in favor of the restriction.

AB327,132,11 (2) Restrictions permitted. (a) A restriction under sub. (1) is enforceable only if the restriction is not manifestly unreasonable under the circumstances and any of the following apply:

AB327,132,15 1. The restriction is noted conspicuously on a certificate of membership interest representing the membership interest or the existence of the restriction is noted on the certificate and reference is made to a separate document creating or describing the restriction.

AB327,132,17 2. The restriction is imposed under this chapter or is included in the articles or bylaws.

AB327,132,19 3. The restriction relates to an uncertificated membership interest and is included in information sent to the holders of such a membership interest.

AB327,132,22 (b) A restriction that is enforceable under par. (a) may be enforced against the holder of the restricted membership interest or a successor or transferee of the holder, including a pledgee or a legal representative.

AB327,132,23 subchapter vii

AB327,132,25 contributions, allocations, and distributions

AB327,133,4 193.701 Authorization, form, and acceptance. (1) Board may authorize. If authorized by the board, a cooperative may accept contributions, make contribution agreements under s. 193.711, and make contribution rights agreements under s. 193.715.

AB327,133,6 (2) Permissible forms. A person may make a contribution to a cooperative by any of the following means:

AB327,133,8 (a) By paying money or transferring the ownership of an interest in property to the cooperative, or performing services to or for the benefit of the cooperative.

AB327,133,11 (b) Through a written obligation that is signed by the person and requires the person to pay money or transfer ownership of an interest in property to the cooperative or to perform services to or for the benefit of the cooperative.

AB327,133,13 (3) Acceptance of contributions. No purported contribution is to be treated as or considered to be a contribution, unless all of the following apply:

AB327,133,16 (a) The board accepts the contribution on behalf of the cooperative and in that acceptance describes the contribution, including terms of future performance, if any, and states the value being accorded to the contribution.

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.