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Model Bylaws Non Stock or Stock Cooperative
[name of cooperative]
NONCAPITAL STOCK COOPERATIVE
1.01. Qualifications. Any person, firm, partnership,
corporation, or association (including both landlords and tenants in
share tenancies) who: (a) produces agricultural goods; (b) pays a
membership fee; and (c) meets any other uniform requirements set by the
Board of Directors (Board), may be a member of this Cooperative. A
nontransferable certificate of membership will be issued to each member
of the Cooperative. This certificate may be in any form that the Board
1.02. Suspension or Termination.
a. Basis for Suspension or Termination. A member's rights
may be suspended, or his membership terminated, after a hearing by the
Board. In order for this to result, the Board must determine that the
member (i) has ceased to be an eligible member; (ii) has not marketed,
through the Cooperative, products covered by a marketing contract with
the Cooperative for a period of [number] years; or (iii) has not
otherwise patronized the Cooperative.
b. Rights and Interests. The rights and interests of the
member in the Cooperative cease upon the termination of membership. The
member is entitled only to payment or credit for an equitably appraised
value of the member's property rights and interests in the Cooperative.
This value will be determined, conclusively, by the Board.
The obligations or liabilities of either party under any contract
with the Cooperative are not affected by the termination of membership
of any party, but can only be terminated in accordance with the terms of
[Alternative Article if Cooperative is formed with capital stock]
1.01. Membership. Each member of the Cooperative will hold
one fully paid share of its common stock. The Articles of Incorporation
of the Cooperative contain the necessary requirements for ownership of
1.02. Representation. A corporate member of the Cooperative
may authorize, in writing, an individual to represent him. This written
authorization must be filed with the Cooperative.
MEETINGS OF MEMBERS
2.01. Annual Meetings. The Cooperative will hold its annual
meeting in [town or city, state], at [time] AM [PM] [time zone],
on the [number] day of [month] of each year, or on a date that the
Board chooses at least [number] days in advance.
2.02. Special Meetings. The Cooperative may call a special
meeting at any time, by order of the Board. Such a meeting must be
called if requested in writing by at least ........ percent (........%)
of the members. Not less than [number] signatures are required in
such a request. This request must state the time, place, and object of
2.03. Notice of Meeting. The members must be notified of
every regular and special meeting. This notice will be mailed to the
last known post office address of each member not less than [number]
days before the meeting. The notice must state the time, place, and
object of the meeting. Business not specified in the notice of a
special meeting will not be permitted at that meeting.
2.04. Voting. At each meeting, a member has one vote on each
matter submitted to a vote. All matters will be decided by a vote of
the majority of the members voting on that matter. Voting by proxy or
cumulative voting is not permitted.
2.05. Absentee Ballots. Members may vote on specific matters,
other than the removal of Directors, by ballot mailed to the Secretary,
if all members have been notified, in writing, by the Board of the exact
motion or resolution to be voted on and a copy of it is attached to the
vote mailed to the Secretary.
2.06. Quorum Requirements. A quorum exists if [number]
members or ........ percent (........%) of the total number of members,
whichever is greater, is present. If, however, the total number of
members is greater than [number], [number] members or ........
percent (........%) of the total number of members, whichever is
greater, constitutes a quorum. If a quorum is not present, a majority
of those present may adjourn the meeting, without further notice.
2.07. Order of Business, at the Annual Meeting. The order of
business at the annual meeting will be:
a. Determination of quorum;
b. Proof of timely notice of meeting;
c. Reading and disposition of minutes;
d. Annual reports of officers and committees;
e. Unfinished business;
f. New business;
g. Election of Directors; and
DIRECTORS AND OFFICERS
3.01. Number and Qualification of Directors. The Board of
Directors will consist of [number] members. To be a member of the
Board, an individual must be a member of the Cooperative. A member may
not be on the Board if he is in competition with, or affiliated with,
any business that is in competition with the Cooperative. A Director
will lose his position if it is found, after a hearing, by a majority of
the Board that the Director is or has been in competition with the
Cooperative, or is so affiliated.
3.02. Election of Directors. Directors will be elected to
succeed the incorporating Directors at the first annual meeting of the
Board. The schedule of elections will be as follows:
a. [number] Directors will be elected for one year.
b. [number] Directors will be elected for two years.
c. [number] Directors will be elected for three years.
After these terms have expired, each Director will be elected for a
three-year term. There must be at least two candidates for each
Director's position. Directors will be elected by secret ballot. The
nominee receiving the greatest number of votes will be elected.
3.02. Election of Directors by District.
a. Establishing Districts. Incorporating Directors will
serve as Directors until the first annual meeting of the members or
until their successors have been elected and qualified. The territory
served by the Cooperative will be divided into districts by the
incorporating Directors based on geographic areas with approximately
equal numbers of either members or volume of business.
b. Redistricting. A redistricting committee will be
established by the Board every year. This committee will consist of one
member from each district. No Director may be on the committee. The
committee must meet at least [number] days before the annual meeting
and, if it thinks advisable, redistrict the territory. Maps and
descriptions of the current districts will be kept in the Cooperative's
c. District Meetings. The time and place in each district
for meetings to nominate Directors will be set by the Board. These
district meetings will be held between [number] to [number] days
before the annual meeting. Notice of district meetings must be mailed
to each member in the district at least [number] days before the
d. District Elections. Members present at the district
meetings will constitute a quorum. A chairman will be elected by these
members. Not more than two candidates may be nominated at such meetings
for the Directors' positions. Within [number] days of the selection
of these candidates by the members, the Chairman will certify this
selection to the Secretary.
e. Schedule of Elections. Beginning with [year], the
schedule of elections will be as follows:
i. [number] Directors will be elected for one year.
ii. [number] Directors will be elected for two years.
iii. [number] Directors will be elected for three years.
After these terms have expired, each Director will be elected for a
three-year term. These Directors will be elected by secret ballot at
the annual meetings of members. The candidates will be selected from
nominations made at the district meetings, as well as nominations of
members made from the floor of the annual meeting.
a. Nominating Committee. The Board will appoint a
nominating committee of [number] members, to be chosen from different
sections of the country to guarantee equitable representation. This
committee will be appointed not less than [number] or more than
[number] days before the date of the meeting of the members at which
Directors are to be elected. A Director may not serve on this
committee. At least [number] days before the meeting at which the
election takes place, the committee will post, at the Cooperative's
principal office, a list of nominations for the Board. This list must
have at least two candidates for each position that will be filled by
the election. At least [number] days before the meeting, the
Secretary will mail to members a statement containing the number of
Board members to be elected and the names and addresses of the
b. Nomination by Members. [Number] or more members,
together, may make nominations in addition to those made by the
nominating committee. The Secretary must post these nominations in the
same place as the committee's nominations.
Nominations made by petition must be received at least
[number] days before the meeting for election of Directors, to be
included on the official ballot. If nominations are made later than
this, they are considered nominations from the floor.
3.03. Election of Officers. The Board will elect a president,
vice-president, secretary, and treasurer. The Board will do this within
[number] days after the Board's first election and every annual
election of Directors that follows. The President and Vice-President
must be members of the Board.
All officers will hold their positions until (a) the election and
qualification of their successor; (b) their early removal due to death
or resignation; or (c) their removal for cause.
3.04. Vacancies. If a vacancy, other than by expiration of a
term, occurs on the Board, it will be filled by appointment by the
remaining Board members, until the next regular Board meeting.
3.05. Board Meetings. The Board will hold regular meetings.
These are to be held [time, place, and period, e.g., monthly], or at
other times and places as the Board may determine.
3.06. Special Meetings.
a. Who May Call Meeting. The President or a majority of the
Directors may call a special meeting of the Board.
b. Procedure to Call Meeting. The call must be in writing,
state the time and place of the meeting, and be signed by the person who
called the meeting. This call must be addressed and delivered to the
Secretary of the Board.
c. Business on Agenda. Any business may be discussed at a
3.07. Notice of Board Meetings. The Secretary must give each
Director oral or written notice of all Board meetings, at least
[number] hours before the meeting. This notice may be waived in
writing by all the Directors. A Director's presence at a meeting is
equivalent to waiver of notice of that meeting.
3.08. Compensation. Whether the members of the Board or
executive committee are to be compensated will be determined by the
members of the Cooperative, at either a special or at the annual
meeting. A Board member will not be allowed to hold any position in the
Cooperative on a regular salaried basis.
3.09. Quorum. A majority of the Board is a quorum for any
4.01. General Powers. The Board of Directors will be in
charge of all the business and exercise all the powers of the
Cooperative. The only exceptions to this exclusive grant of power are
the powers that are reserved to the members of the Cooperative by law,
or by the Articles of Incorporation or Bylaws of the Cooperative.
The rules and regulations that the Board establishes are not to be
inconsistent with the law, the Articles of Incorporation, or Bylaws of
4.02. Manager. The Board may employ, compensate, and define
the duties of a manager.
4.03. Bonds and Insurance.
a. Bonds. The manager, as well as any other officers,
agents, or employees who deal with any funds or property of the
Cooperative, will be required to give adequate bonds. The cost of these
bonds will be paid by the Cooperative. They must be with a responsible
bonding company and approved by the Board. If cash security is posted,
the bonds will be unnecessary.
b. Insurance. Adequate insurance for and against (i) the
property of the Cooperative; (ii) the property in possession of or
stored by the Cooperative; and (iii) liability for accidents to the
public and to employees must be provided by the Board.
4.04. Finances of the Cooperative. The Board is responsible
for establishing and maintaining an accounting and record-keeping
system. The books of the Cooperative shall be audited at least once a
year. This must be done by an independent certified public accountant
hired by the Board. The auditor will make a written report of the audit
that will be given to the members of the Cooperative at the annual
meeting. The report must contain, at a minimum, a balance sheet and
operating statement for the fiscal period involved in the audit.
OFFICER'S AND MANAGER'S RESPONSIBILITIES
5.01. President's Duties. The President is to (a) preside
over all meetings of the Cooperative and Board; (b) sign all membership
certificates and other papers of the Cooperative as authorized by the
Board, but the Board may authorize others to sign checks, contracts, or
other instruments in writing on behalf of the Cooperative; and (c)
perform any other duties that are usually performed by a president, or
that are prescribed by the Board.
5.02. Vice-President's Duties. The Vice-President will take
over the President's duties if the President is absent or becomes
5.03. Secretary's Duties. The Secretary will (a) keep a
complete record of all meetings of the Cooperative and the Board; (b) be
in charge of the supervision of the books and records of the
Cooperative; (c) sign all membership certificates, along with the
President, as well as other papers of the Cooperative, as authorized by
the Board; (d) serve all notices on Cooperative members, required by law
and by the Bylaws of the Cooperative; (e) make a full report to the
members of the Cooperative, at the annual meeting, of all the matters
related to his position; (f) keep complete membership records; (g) keep
the corporate seal; (h) make all reports required by law; and (i)
perform any other duties, as required by the Cooperative or the Board.
5.04. Treasurer's Duties. The Treasurer will perform all
duties with respect to the Cooperative's finances that the Board
5.05. Manager's Duties. The Manager will be in charge of the
day-to-day operations of the Cooperative. This includes the purchasing,
marketing, and handling of all products and supplies of the Cooperative.
The Manager will also be in charge of the employment, supervision, and
dismissal of all employees of the Cooperative. In addition, he will
make annual and other statements, as directed by the Board, and exercise
any other authority vested in him by the Board.
EXECUTIVE AND OTHER COMMITTEES
6.01. Executive Committee. An executive committee, consisting
of [number] members may be appointed by the Board from its own
membership. The Board will determine the tenure of office, power, and
duties of the executive committee. The Board may give to this executive
committee, subject to the Board's supervision, any of the Board's powers
Copies of the minutes of any meeting of the executive committee
will be mailed to all Directors within [number] days of the meeting.
6.02. Other Committees. The Board may appoint other
committees, if it thinks that it is necessary to do so.
7.01. Membership Certificates. The Board will cause
appropriate certificates of membership to be issued.
[Alternative Article if Cooperative has capital stock]
7.01. Common Stock. The face of each share of Common Stock
must state the class of the stock and the privileges, voting rights,
restrictions, and qualifications of shares of that class, if any, as
specified in the Articles of Incorporation.
7.02. Preferred Stock. The face of each share of Preferred
Stock must state the preferences, privileges, voting rights,
restrictions, and qualifications of these shares, as specified in the
Articles of Incorporation.
PATRON'S CAPITAL AND OPERATIONS AT COST
8.01. Profits, Interest, and Dividends. The Cooperative will
operate as and provide a cooperative service, on a cost basis, for the
mutual benefit of its patrons (members and nonmembers). The Cooperative
will not pay any interest or dividends to its patrons for capital that
they have furnished to the Cooperative.
8.02. Patron's Capital. All patrons will furnish capital to
the Cooperative by their patronage of the facilities and services of the
Cooperative. Any funds received by the Cooperative, in excess of
operating costs and expenses of the Cooperative (including interest from
nonpatronage sources), will be considered capital contributions by
patrons. The Cooperative must account to all patrons, on a patronage
basis, for all amounts received by it after payment of operating costs
and expenses chargeable against services furnished.
8.03. Refunds. The Cooperative must refund all funds in
excess of operating costs and expenses, in cash or by credits to a
capital account, to or for each patron. At the end of each fiscal year,
the records of the Cooperative must clearly note the amount of capital
furnished by each patron. Within [number] months of the end of its
fiscal year, the Cooperative must give written notice of allocation
(defined in 26 USC § 1388) of the amount of capital credited to each
8.04. Operating Losses. Any operating loss will be borne by
the patrons on as equitable a basis as possible. This will be achieved
by apportioning the loss among the patrons during the year of the loss.
The Board will determine the basis on which capital furnished by patrons
could be reduced if the Cooperative incurs a loss other than an
operating loss, so that the loss may be equitably apportioned among the
8.05. Retired Capital. The capital credited to patrons'
accounts may be fully or partially retired if the Board determines that
the financial condition of the Cooperative will not be impaired. The
capital will be retired in order of priority according to the year when
it was credited; that is, the capital first received by the Cooperative
will be the first retired.
The Board will have the power to retire any capital credited to
patrons' accounts on such terms and conditions as may be agreed upon by
the parties, provided the interests of the Cooperative and its patrons
will be served and funds are available for these purposes.
8.06. Transfer. The Board must consent to the assignment or
transfer of any amount credited to the capital account of a patron. The
assignment or transfer will not be binding on the Cooperative (a)
without this consent and (b) until it is entered in the books of the
8.07. Consent. Anyone who (a) applies for and is accepted to
membership in this Cooperative and (b) is already a member of the
Cooperative on the date this Bylaw becomes effective and continues as a
member after that, consents, by such acts, that the amount of
distribution of the member's patronage after [date] will be taken into
account at their stated dollar amounts. These funds will be taken into
account in the manner provided in 26 USC § 1385(a) for the taxable year
that a written notice of allocation of capital is received by the
patron. These allocations to capital are to be made by written notice
of allocations (defined in 26 USC § 1388) to the patron by the
8.08. Notification of Adoption of This Article. Written
notification of the adoption, a statement of significance, and a copy of
the provision of this Article 8 will be given separately to each member
and prospective member before he becomes a member of the Cooperative.
DIVISION OF PROPERTY AT DISSOLUTION
9.01. Dissolution. If the Cooperative is dissolved: (a) Its
debts and liabilities will be paid; (b) all capital furnished through
patronage will be retired on a pro rata basis, without priority; and (c)
the remaining property and assets of the Cooperative will be distributed
among members and former members in the proportion that each member's
patronage bears to patronage of all members, unless the law provides
[Alternative Article if Cooperative has capital stock]
DIVISION OF PROPERTY AT DISSOLUTION
COOPERATIVE WITH CAPITAL STOCK
9.01. Dissolution. If the Cooperative is dissolved: (a) The
debts and liabilities will be paid; (b) the par value of the
stockholders' shares will be returned; and (c) thereafter, capital
furnished through patronage will be retired on a pro rata basis, without
priority. The remaining property and assets of the Cooperative will be
distributed among members and former members in the proportion that each
member's patronage bears to patronage of all members, unless the law
10.01. Claims Controlled by Article X. A claim against the
Cooperative for money is subject to this Article when the Cooperative
(a) is ready, willing, and able to pay a claim; and (b) has generally
paid or is paying claims arising under similar circumstances; but (c)
cannot pay this claim because it does not know the whereabouts or
address of the person entitled to the payment.
10.02. Removal of the Claim From the Cooperative's Books. The
Cooperative will remove the claim from its books if it is not paid
within [number] years after it became payable. The Cooperative must
have sent, by registered U.S. mail, return receipt requested, written
notice of the removal of the claim from its books, at least [number]
days before it is removed from the Cooperative's books. This notice
must be sent to the person entitled to the payment according to the
Cooperative's records, at that person's last address according to the
Cooperative's records. The Cooperative will continue to maintain a
memorandum record of the claim and pay the principal, without interest,
of this claim to anyone who can establish his right to receive payment
to the satisfaction of the Cooperative. These payments will be paid out
of the special account noted below.
Any amounts the Cooperative recovered under this Article, after
taxes due are deducted, will be put in a special account.
11.01. Fiscal Year. The Cooperative's fiscal year will begin
on the first day of [month] of each year, and end on the last day of
[month] of the following year.
12.01. Waiver of Notice. If the Bylaws require that notice of
a meeting be given to any Cooperative or Board member, he may waive that
notice in writing. If a Cooperative or Board member attends a meeting,
that attendance serves as a waiver of notice. If the member is
attending that meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been
lawfully called, then attendance is not deemed to be waiver of notice.
12.02. Printing of Bylaws. The Bylaws and Articles of
Incorporation will be printed in a pamphlet, after adoption. A copy
will be delivered to each member and individuals who later become
members of the Cooperative, as shown on the record books.
12.03. Seal. The name of the Cooperative and year of its
incorporation will be inscribed on the corporate seal.
13.01. Amendments. A bylaw may be amended at any regular or
special meeting by an affirmative vote of the majority of members
voting, if the notice of this meeting included a notice of the nature of
the proposed amendment.