AB327,89,2019 1. One or more officers or employees of the cooperative whom the director
20reasonably believes to be reliable and competent in the matters presented.
AB327,89,2221 2. Counsel, public accountants, or other persons as to matters that the director
22reasonably believes are within the person's professional or expert competence.
AB327,89,2523 3. A committee established under s. 193.445 or 193.451 (1) on which the
24director does not serve, as to matters within its designated authority, if the director
25reasonably believes the committee to merit confidence.
AB327,90,2
1(b) Paragraph (a) does not apply to a director who has knowledge concerning
2the matter in question that makes the director's reliance under par. (a) unwarranted.
AB327,90,6 3(3) Presumption of assent. A director who is present at a meeting of the board
4when an action is approved by the board is presumed to have assented to the action
5approved, unless the director is prohibited by a conflict of interest from voting on the
6action or does any of the following:
AB327,90,97 (a) Objects at the beginning of the meeting to the transaction of business
8because the meeting is not lawfully called or convened and fails to participate in the
9meeting after the objection.
AB327,90,1010 (b) Votes against the action at the meeting.
AB327,90,17 11193.461 Director conflicts of interest. (1) Conflict voiding certain
12contracts and transactions.
A contract or transaction between a cooperative and
13a director, as determined under sub. (2) (b) 1., or between a cooperative and a
14business entity of which at least one of the cooperative's directors is a governor,
15director, manager, officer, or legal representative, as determined under sub. (2) (b)
162., or in which at least one of the cooperative's directors has a material financial
17interest, as determined under sub. (2) (a), is void unless any of the following apply:
AB327,91,518 (a) The contract or transaction was fair and reasonable as to the cooperative
19at the time it was authorized or ratified by the cooperative; the material facts as to
20the contract or transaction and as to the director's interest are disclosed or known
21to the members before the contract or transaction is authorized or ratified by the
22cooperative; and the material facts as to the contract or transaction and as to the
23director's interest are fully disclosed or known to the board or a committee
24established under s. 193.445 or 193.451 (1), and the board or committee in good faith
25authorizes or ratifies the contract or transaction. The interested director may not

1be counted in determining the presence of a quorum at a meeting where the contract
2or transaction may be authorized or ratified and may not vote on the authorization
3or ratification. The person asserting the validity of the contract or transaction has
4the burden of establishing that the contract or transaction was fair and reasonable
5as to the cooperative at the time it was authorized or ratified by the cooperative.
AB327,91,86 (b) The contract or transaction is a distribution, or is a contract or transaction
7that is made available to all members or patron members as part of the cooperative's
8business.
AB327,91,109 (c) The contract or transaction results from a resolution fixing the
10compensation of a director or of another officer, employee, or agent of the cooperative.
AB327,91,15 11(2) Material financial interest; transactions involving third parties. (a) For
12purposes of sub. (1), a director has a material financial interest in each organization
13in which that director, that director's spouse, parent, child, or sibling, the spouse of
14that director's child or sibling, or the sibling of that director's spouse has a material
15financial interest.
AB327,91,1916 (b) 1. For purposes of sub. (1), a contract or transaction between a cooperative
17and a director or that director's spouse, parent, child, or sibling, the spouse of that
18director's child or sibling, or the sibling of that director's spouse, is considered to be
19a transaction between the cooperative and the director.
AB327,91,2520 2. For purposes of sub. (1), a contract or transaction between a cooperative and
21a business entity of which a director or that director's spouse, parent, child, or
22sibling, the spouse of that director's child or sibling, or the sibling of that director's
23spouse, is a governor, director, manager, officer, or legal representative is considered
24to be a transaction between the cooperative and a business entity of which the
25director is a governor, director, manager, officer, or legal representative.
AB327,92,5
1193.465 Limitation of director's liability in articles or bylaws. The
2articles or bylaws may eliminate or limit a director's personal liability to the
3cooperative or its members for monetary damages for violating s. 193.455 (1) (a),
4except that neither the articles nor the bylaws may eliminate or limit the liability of
5a director for any of the following:
AB327,92,6 6(1) A breach of the director's duty of loyalty to the cooperative or its members.
AB327,92,8 7(2) An act or omission not in good faith or that involves intentional misconduct
8or a knowing violation of law.
AB327,92,9 9(3) A transaction from which the director derived an improper personal benefit.
AB327,92,11 10(4) An act or omission occurring before the date on which the provision in the
11articles or bylaws eliminating or limiting liability becomes effective.
AB327,92,13 12(5) A knowing violation of ch. 408, subject to s. 193.605, or illegal distributions
13of cooperative assets.
AB327,92,14 14193.471 Indemnification. (1) Definitions. In this section:
AB327,92,1515 (a) "Official capacity" means any of the following:
AB327,92,1716 1. A person's capacity as an officer, employee, or agent of a cooperative or
17predecessor cooperative.
AB327,92,1918 2. A person's capacity as a member of a committee of a cooperative under s.
19193.445 or 193.451 (1) or of a committee of a predecessor cooperative.
AB327,92,2520 3. With respect to a director, chief executive officer, member, or employee of a
21cooperative who, at the request of the cooperative, serves as a governor, director,
22manager, officer, member, partner, trustee, employee, or agent of another
23organization or employee benefit plan, that person's capacity as a governor, director,
24manager, officer, member, partner, trustee, employee, or agent, as applicable, of the
25other organization or employee benefit plan.
AB327,93,6
14. With respect to a person who was a director, chief executive officer, member,
2or employee of a predecessor cooperative and who, at the request of the predecessor
3cooperative, served as a governor, director, manager, officer, member, partner,
4trustee, employee, or agent of another organization or employee benefit plan, that
5person's capacity as a governor, director, manager, officer, member, partner, trustee,
6employee, or agent, as applicable, of the other organization or employee benefit plan.
AB327,93,87 (b) "Potential litigant" means a person made or threatened to be made a party
8to a proceeding by reason of the person's former or present official capacity.
AB327,93,119 (c) "Predecessor cooperative" means a domestic or foreign cooperative that was
10the predecessor of a cooperative in a merger or other transaction in which the
11predecessor's existence ceased upon consummation of the transaction.
AB327,93,1412 (d) "Proceeding" means a threatened, pending, or completed civil, criminal,
13administrative, arbitration, or investigative proceeding, including a proceeding by
14or in the right of the cooperative.
AB327,93,1615 (e) "Special legal counsel" means counsel who has not represented any of the
16following:
AB327,93,1717 1. The cooperative or an affiliate.
AB327,93,1918 2. The director, manager, member of a committee under s. 193.445 or 193.451
19(1), or employee whose indemnification is in issue.
AB327,94,2 20(2) Indemnification. (a) Subject to sub. (4), a cooperative shall indemnify a
21potential litigant against judgments, penalties, and fines applicable to a proceeding,
22against excise taxes assessed against the person with respect to an employee benefit
23plan, and against settlements and reasonable expenses, including attorney fees and
24disbursements, incurred by the potential litigant in connection with the proceeding,

1if, with respect to the acts or omissions of the potential litigant complained of in the
2proceeding, all of the following apply:
AB327,94,43 1. The potential litigant has not been indemnified against the same amounts
4by another person.
AB327,94,55 2. The potential litigant acted in good faith.
AB327,94,76 3. The potential litigant did not receive an improper personal benefit or commit
7an act for which liability cannot be eliminated or limited under s. 193.465 (2).
AB327,94,98 4. In the case of a criminal proceeding, the potential litigant had no reasonable
9cause to believe the acts or omissions were unlawful.
AB327,94,2010 5. In the case of acts or omissions committed in an official capacity, as defined
11in sub. (1) (a) 1. or 2., the potential litigant reasonably believed that the acts or
12omissions were in the best interests of the cooperative or predecessor cooperative, as
13applicable, and, in the case of acts or omissions committed in an official capacity, as
14defined in sub. (1) (c) 3. or 4., the potential litigant reasonably believed that the
15conduct was not opposed to the best interests of the cooperative or predecessor
16cooperative, as applicable. If the acts or omissions relate to conduct as a director,
17officer, trustee, employee, or agent of an employee benefit plan, the conduct is not
18considered to be opposed to the best interests of the cooperative or predecessor
19cooperative if the potential litigant reasonably believed that the conduct was in the
20best interests of the participants or beneficiaries of the employee benefit plan.
AB327,94,2321 (b) The termination of a proceeding by judgment, order, settlement, or
22conviction or upon a plea of no contest or its equivalent does not, of itself, establish
23that the potential litigant did not meet the applicable criteria under par. (a).
AB327,95,10 24(3) Advances. Subject to sub. (4), a potential litigant is entitled, upon written
25request to the cooperative, to payment or reimbursement by the cooperative of

1reasonable expenses, including attorney fees and disbursements, incurred by the
2potential litigant in advance of the final disposition of the proceeding if the potential
3litigant delivers to the cooperative a written statement that the potential litigant
4believes in good faith that the applicable criteria for indemnification under sub. (2)
5(a) have been satisfied and a written undertaking by the potential litigant to repay
6all amounts so paid or reimbursed by the cooperative if a court determines under sub.
7(6) (c) that the potential litigant is ineligible for indemnification. The written
8undertaking is an unlimited general obligation of the potential litigant but need not
9be secured, and the cooperative shall accept the written undertaking without
10reference to the potential litigant's financial ability to make the repayment.
AB327,95,22 11(4) Prohibition, conditions, and limitations on indemnification or advances.
12The articles or bylaws may prohibit indemnification or advances of expenses
13otherwise required by subs. (2) and (3). The articles or bylaws may impose
14limitations on indemnification or advances of expenses or conditions on
15indemnification or advances of expenses in addition to the conditions contained in
16subs. (2) and (3), if the limitations or conditions apply equally to all persons or to all
17persons within a given class. A prohibition, limitation, or condition contained in the
18articles or bylaws under this subsection does not apply to any person seeking
19indemnification or advancement of expenses under sub. (2) or (3) with respect to any
20acts or omissions of the person committed before the effective date of the provision
21in the articles or the date of adoption of the provision in the bylaws, as applicable,
22establishing the prohibition, limitation, or condition.
AB327,96,2 23(5) Reimbursement to witnesses. This section does not require, or limit the
24ability of, a cooperative to reimburse expenses, including attorney fees and

1disbursements, incurred by a person in connection with an appearance as a witness
2in a proceeding at a time when the person is not a potential litigant.
AB327,96,6 3(6) Determination of eligibility. (a) Except as otherwise provided in this
4subsection, all determinations whether indemnification of a person is required under
5sub. (2) and whether payment or reimbursement of expenses is required under sub.
6(3) shall be made as follows:
AB327,96,107 1. By the board, except as otherwise provided in this paragraph. The directors
8who are, at the time, parties to the proceeding may not vote on the question of a
9determination under this subdivision and may not be counted in determining the
10presence of a quorum at a meeting at which such a question is voted upon.
AB327,96,1511 2. If a quorum under subd. 1. cannot be obtained because of the number of
12directors that are parties to the proceeding and except as otherwise provided in this
13paragraph, by a majority of a committee under s. 193.451 (1) that consists of 2 or more
14directors not at the time parties to the proceeding and that is duly designated to act
15in the matter by a majority of all directors, including those who are parties.
AB327,96,2116 3. If a determination is not made under subd. 1. or 2. and except as otherwise
17provided in this paragraph, by special legal counsel, selected either by the board or
18a committee under s. 193.451 (1). If selected by the board, the vote and determination
19of the presence of a quorum shall be made as described in subd. 1. If selected by a
20committee, the committee shall be designated to act and shall vote in the manner
21described in subd. 2.
AB327,97,222 4. Except as otherwise provided under this paragraph, if a determination is not
23made under subd. 1. or 2. and if a quorum of the board cannot be obtained and a
24committee cannot be established as required under subd. 3., by special legal counsel,

1selected by a majority of all directors, including directors who are parties to the
2proceeding.
AB327,97,73 5. If a determination is not made under subds. 1. to 4., by the affirmative vote
4of the members. The membership interests held by parties to the proceeding may
5not be counted in determining the presence of a quorum at a meeting at which the
6question of a determination under this subdivision is voted upon and parties holding
7such membership interests may not vote on the determination.
AB327,97,168 (b) Except as provided in par. (c), with respect to a person who is not, and was
9not at the time of the acts or omissions complained of in the proceedings, a director,
10chief executive officer, or person possessing, directly or indirectly, the power to direct
11or cause the direction of the management or policies of the cooperative, the
12determination whether indemnification of the person is required under sub. (2) and
13whether the payment or reimbursement of expenses is required under sub. (3) shall
14be made by an annually appointed committee under s. 193.451 (1), having at least
15one member who is a director. Any such committee shall report at least annually to
16the board concerning its actions.
AB327,98,817 (c) Within 60 days after the termination of the applicable proceeding or the
18receipt of a written request for indemnification by the cooperative, whichever occurs
19earlier, a person seeking indemnification under sub. (2) or payment or
20reimbursement of expenses under sub. (3) may petition the circuit court for a
21determination of the person's eligibility for indemnification, payment, or
22reimbursement, if a determination is made under par. (a) or (b) that the person is
23ineligible, or if no determination is made under par. (a) or (b). The court shall order
24the cooperative to indemnify the person if indemnification is required under sub. (2)
25and, if applicable, shall order the cooperative to pay or reimburse the person's

1expenses if the payment or reimbursement is required under sub. (3). In addition,
2if the person is a director or officer of the cooperative, the court shall order the
3cooperative to indemnify the person if, in view of all the relevant circumstances, the
4person is fairly and reasonably entitled to indemnification, regardless of whether
5indemnification is required under sub. (2). In a proceeding under this paragraph, the
6person seeking indemnification, payment, or reimbursement has the burden of
7establishing that indemnification is required or that the person is entitled to
8payment or reimbursement of expenses.
AB327,98,13 9(7m) Expenses of obtaining court-ordered indemnification. If the court, in
10a proceeding under sub. (6) (c), determines that the cooperative unreasonably
11refused a director's or officer's request for indemnification under sub. (2), the court
12shall order the cooperative to pay the officer's or director's reasonable expenses
13incurred to obtain the court-ordered indemnification.
AB327,98,18 14(9) Insurance. A cooperative may purchase and maintain insurance on behalf
15of a person in that person's official capacity against any liability asserted against and
16incurred by the person in or arising from that capacity, whether or not the
17cooperative would be required to indemnify the person against the liability under
18sub. (2).
AB327,98,22 19(10) Disclosure. A cooperative that indemnifies or advances expenses to a
20person under sub. (2) or (3) shall report to the members in writing the amount of the
21indemnification or advance and to whom and on whose behalf it was paid not later
22than the date of the first members' meeting occurring after the payment.
AB327,98,24 23(11) Indemnification of other persons. This section does not limit the power
24of a cooperative to indemnify persons who do not act in an official capacity.
AB327,99,2
1193.475 Officers. (1) Required officers. (a) The board shall elect a
2chairperson and one or more vice-chairpersons.
AB327,99,43 (b) Except as provided in sub. (3), the board shall elect or appoint a records
4officer and a financial officer.
AB327,99,7 5(2) Chief executive and additional officers. The board may employ a chief
6executive officer to manage the day-to-day affairs and business of the cooperative.
7The board may elect additional officers as the articles or bylaws authorize or require.
AB327,99,9 8(3) Records officer and financial officer may be combined. The offices of
9records officer and financial officer may be combined.
AB327,99,12 10(4) Officers that shall be directors and members. The chairperson and first
11vice-chairperson shall each be a director and member. The financial officer, records
12officer, and additional officers need not be directors or members.
AB327,99,1513 193.478 Director Education. A director shall annually attend a course in at
14least 2 of the following topics offered by a recognized provider of cooperative director
15education:
AB327,99,16 16(1) Duties and responsibilities of a cooperative director.
AB327,99,17 17(2) Board and management relations.
AB327,99,18 18(3) The board's role in defining and developing cooperative policies.
AB327,99,19 19(4) Understanding cooperative governance and structure.
AB327,99,20 20(5) Understanding financial statements, key financial ratios, and control tools.
AB327,99,21 21(6) Cooperative finance and equity redemption.
AB327,99,22 22(7) Cooperative strategic planning.
AB327,99,23 23(8) Cooperative membership communication and education.
AB327,99,24 24(9) Selecting and evaluating principal cooperative management.
AB327,99,25 25(10) Board evaluation.
AB327,100,2
1(11) Analyzing and understanding the current cooperative business
2environment.
AB327,100,33 Subchapter v
AB327,100,44 members
AB327,100,8 5193.501 Members. (1) Requirement. A cooperative shall have at least one
6patron member. A cooperative may have nonpatron members if the patron members
7by majority vote approve an article, bylaw provision, or amendment provision
8authorizing nonpatron members.
AB327,100,11 9(2) Grouping of members. (a) A cooperative may group members in districts
10or units, or on another basis, to the extent authorized in the articles or bylaws. The
11articles or bylaws may authorize the board to determine the grouping of members.
AB327,100,1512 (b) The board may take all steps necessary to implement the use of groupings
13established under par. (a), including setting the time and place and prescribing the
14rules of conduct for holding meetings by group to elect delegates to members'
15meetings.
AB327,100,20 16(3) Member violations. (a) A member who knowingly, intentionally, or
17repeatedly violates a provision of the articles or bylaws, or a member control
18agreement or marketing contract with the cooperative, may be required by the board
19to surrender the member's membership interest in the cooperative or any of the
20following portions of the member's membership interest:
AB327,100,2121 1. Governance rights and right to assign governance rights.
AB327,100,2222 2. Financial rights and right to assign financial rights.
AB327,101,223 (b) 1. Except as provided in subd. 2., if the board requires a member to
24surrender the member's membership interest or the rights described in par. (a) 2.,
25the cooperative shall refund to the member the lesser of the book value or market

1value of the membership interest or rights, as applicable, payable in not more than
27 years from the date of surrender.
AB327,101,73 2. If the board requires a patron member to surrender the patron member's
4rights described in par. (a) 2., the board may transfer all of those rights to a class of
5financial rights held by members who are not patron members, or to a certificate of
6interest that carries liquidation rights on par with membership interests and that
7must be redeemed within 7 years after the transfer as provided in the certificate.
AB327,101,98 (c) The board may reissue or retire and cancel any membership interests
9required to be surrendered under par. (a).
AB327,101,21 10(4) Inspection of cooperative records by member. (a) Except as otherwise
11provided in this paragraph and pars. (d) and (e), a member may inspect and copy any
12of the records described in s. 193.245 if the member meets the requirements of par.
13(b). A member's agent or attorney has the same inspection and copying rights under
14this paragraph as the member. No member may inspect or copy any records of the
15cooperative relating to the amount of equity capital in the cooperative held by any
16person or any accounts receivable or other amounts due the cooperative from any
17person, or any personnel records or employment records relating to any employee of
18the cooperative, unless the member is a director or officer acting pursuant to
19authority of the board. Except as provided under par. (e), records shall be inspected
20and copied under this paragraph during regular business hours at a reasonable
21location specified by the cooperative.
AB327,101,2322 (b) A member may inspect and copy records under par. (a) if all of the following
23apply:
AB327,102,3
11. The member has been a member for at least one year immediately preceding
2the demand to inspect or copy or holds at least 5 percent of all of the outstanding
3equity interests in the cooperative as of the date the demand is made.
AB327,102,64 2. The member gives the cooperative a written demand to inspect or copy at
5least 5 business days before the date on which the member wishes to inspect or copy
6the records.
AB327,102,87 3. The written demand describes with reasonable particularity the purpose for
8which the demand is made and the records the member desires to inspect or copy.
AB327,102,109 4. The demand is made in good faith and for a proper cooperative business
10purpose.
AB327,102,1111 5. The records are directly connected with the described purpose.
Loading...
Loading...