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A BILL TO BE ENTITLED
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AN ACT
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relating to limited agricultural cooperatives; providing |
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penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 4, Agriculture Code, is amended by adding |
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Chapter 53 to read as follows: |
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CHAPTER 53. LIMITED AGRICULTURAL COOPERATIVES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 53.001. SHORT TITLE. This Act may be cited as the |
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Limited Agricultural Cooperatives Act. |
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Sec. 53.002. DEFINITIONS. In this chapter: |
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(1) "Address" means mailing address, including a zip |
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code. In the case of a registered address, the term means the |
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mailing address and the actual office location, which may not be a |
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post office box. |
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(2) "Articles of organization" means the articles of |
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organization of a cooperative as originally filed and subsequently |
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amended. |
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(3) "Association" means an organization conducting |
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business on a cooperative plan under the laws of this state or |
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another state that is chartered to conduct business under other |
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laws of this state or another state. |
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(4) "Board" means the board of directors of a |
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cooperative. |
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(5) "Business entity" means: |
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(A) a corporation, limited liability company, |
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limited partnership, limited liability partnership, or other legal |
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entity, whether domestic or foreign; |
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(B) an association; or |
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(C) a body vested with the power or function of a |
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legal entity. |
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(6) "Cooperative" means an association organized |
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under this chapter conducting business on a cooperative plan as |
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provided under this chapter. |
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(7) "Domestic business entity" means a business entity |
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organized under the laws of this state. |
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(8) "Foreign business entity" means a business entity |
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that is not a domestic business entity. |
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(9) "Governing documents" has the meaning assigned by |
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Section 1.002, Business Organizations Code. |
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(10) "Jurisdiction of formation" has the meaning |
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assigned by Section 1.002, Business Organizations Code. |
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(11) "Member" means a person or entity shown on the |
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books of a cooperative as the owner of governance rights of a |
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membership interest of the cooperative and includes patron and |
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nonpatron members. |
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(12) "Membership interest" means a member's interest |
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in a cooperative consisting of a member's financial rights, a |
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member's right to assign financial rights, a member's governance |
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rights, and a member's right to assign governance rights. |
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Membership interest includes a patron membership interest and a |
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nonpatron membership interest. |
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(13) "Members' meeting" means a regular or special |
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members' meeting. |
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(14) "Merger" means: |
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(A) the division of a cooperative into two or |
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more new cooperatives or other business entities or into a |
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surviving cooperative and one or more new domestic or foreign |
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business entities; or |
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(B) the combination of one or more cooperatives |
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with one or more domestic or foreign business entities, resulting |
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in: |
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(i) one or more surviving cooperatives or |
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domestic or foreign business entities; |
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(ii) the creation of one or more new |
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cooperatives or domestic or foreign business entities; or |
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(iii) one or more surviving cooperatives or |
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business entities and the creation of one or more new cooperatives |
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or business entities. |
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(15) "Nonpatron membership interest" means a |
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membership interest that does not require the holder to conduct |
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patronage business for or with the cooperative to receive financial |
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rights or distributions. |
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(16) "Patron" means a person or entity that conducts |
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patronage business with a cooperative. |
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(17) "Patronage" means business, transactions, or |
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services done for or with the cooperative as defined by the |
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cooperative. |
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(18) "Patron member" means a member who holds a patron |
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membership interest. |
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(19) "Patron membership interest" means a membership |
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interest that requires the holder to conduct patronage business for |
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or with the cooperative, as specified by the cooperative, to |
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receive financial rights or distributions. |
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Sec. 53.003. APPLICATION OF OTHER LAW. To the extent the |
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provision is not inconsistent with this chapter, the provisions of |
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Title 1, Business Organizations Code, apply to a cooperative in the |
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same manner as if the cooperative were a domestic limited liability |
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company. |
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Sec. 53.004. FEES. The secretary of state shall impose a |
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fee of: |
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(1) $300 for filing articles of organization under |
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this chapter; |
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(2) $150 for filing articles of amendment under this |
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chapter; |
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(3) $300 for filing restated articles of organization |
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under this chapter; |
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(4) $15 for filing a statement of change of registered |
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agent or change of registered office, or both, under this chapter; |
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(5) $300 for filing a merger or conversion under this |
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chapter, which is in addition to any fee imposed for filing |
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formation documents for a domestic business entity or cooperative |
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created by the merger or conversion; |
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(6) $40 for filing articles of dissolution under this |
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chapter; |
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(7) $75 for filing an application for reinstatement |
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under this chapter; |
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(8) $15 for filing a certificate of correction under |
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this chapter; and |
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(9) $15 for filing any other instrument permitted or |
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authorized by this chapter. |
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[Sections 53.005-53.050 reserved for expansion] |
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SUBCHAPTER B. PURPOSE AND POWERS |
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Sec. 53.051. ORGANIZATIONAL PURPOSE. A cooperative may be |
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formed and organized on a cooperative plan under this chapter to |
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market, process, or otherwise change the form or marketability of |
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crops, livestock, and other agricultural products, including |
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manufacturing and further processing of products, and other |
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purposes that are necessary or convenient to facilitate the |
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production or marketing of agricultural products by patron members |
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or that are related to the business of the cooperative. |
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Sec. 53.052. POWERS. (a) In addition to other powers, a |
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cooperative: |
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(1) may perform each act or thing necessary or proper |
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to the conduct of the cooperative's business or the accomplishment |
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of the purposes of the cooperative; |
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(2) has the rights, powers, and privileges granted to |
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a domestic entity under Chapter 2, Business Organizations Code, |
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except those that are inconsistent with this chapter; and |
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(3) has the powers provided by this section. |
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(b) A cooperative may buy, sell, or deal in its own |
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products, the products of the cooperative's individual members, |
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patrons, or nonmembers, the products of another cooperative |
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association or of its members or patrons, or the products of another |
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person or entity. A cooperative may negotiate the price for which |
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the products the cooperative sells may be sold. |
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(c) A cooperative may enter into or become a party to a |
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contract or agreement for the cooperative or for the cooperative's |
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individual members or patrons or between the cooperative and its |
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members. |
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(d) A cooperative may purchase and hold, lease, mortgage, |
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encumber, sell, exchange, or convey real property, buildings, and |
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personal property as the business of the cooperative may require, |
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including the sale or other disposition of assets required by the |
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business of the cooperative as determined by the board. |
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(e) A cooperative may erect buildings or other structures or |
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facilities on land owned or leased by the cooperative or on a |
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right-of-way acquired by the cooperative. |
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(f) A cooperative may issue bonds or other evidence of |
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indebtedness and may borrow money to finance the business of the |
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cooperative. |
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(g) A cooperative may make advances to the cooperative's |
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members or patrons on products delivered by the members or patrons |
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to the cooperative. |
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(h) A cooperative may accept deposits of money from other |
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cooperatives, associations, or its members. |
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(i) A cooperative may extend trade credit to or borrow money |
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from individual members, cooperatives, or associations from which |
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it is constituted using security that it considers sufficient in |
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dealing with the members, cooperatives, or associations. |
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(j) If reasonably necessary or incidental to accomplish the |
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purposes stated in its articles of organization, a cooperative may |
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purchase, acquire, hold, or dispose of an ownership interest in |
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another business entity, whether organized under the laws of this |
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state or another state, and assume all rights, interests, |
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privileges, responsibilities, and obligations arising out of the |
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ownership interest. |
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(k) A cooperative may acquire and hold an ownership interest |
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in another business entity organized under the laws of this or |
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another state, including a business entity organized: |
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(1) as a federation of associations; |
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(2) for the purpose of forming a district, state, or |
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national marketing, sales, or service agency; or |
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(3) for the purpose of acquiring marketing facilities |
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at terminal or other markets in this state or other states. |
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(l) A cooperative may purchase, own, and hold ownership |
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interests, memberships, interests in nonstock capital, or |
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evidences of indebtedness of any domestic business entity or |
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foreign business entity if reasonably necessary or incidental to |
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accomplish the purposes stated in the articles of organization. |
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(m) A cooperative may exercise any fiduciary power in |
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relations with the members, cooperatives, associations, or |
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business entities from which it is constituted. |
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(n) A cooperative may take, receive, and hold real and |
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personal property, including the principal of and interest on money |
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or other funds and rights in a contract, in trust for any purpose |
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not inconsistent with the purposes of the cooperative stated in its |
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articles of organization and may exercise fiduciary powers in |
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relation to the taking, receiving, or holding of the property. |
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(o) A cooperative may not act as a credit union, bank, trust |
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company, savings bank, or savings association regulated under the |
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Finance Code. |
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Sec. 53.053. AGRICULTURAL PRODUCT MARKETING CONTRACTS. (a) |
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A cooperative and its patron member or patron may make and execute a |
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marketing contract that requires the patron member or patron to |
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sell a specified portion of the patron member's or patron's |
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agricultural product or specified commodity produced from a certain |
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area exclusively to or through the cooperative or a facility |
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established by the cooperative. |
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(b) If a sale is contracted to the cooperative, the sale |
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transfers title to the product absolutely, subject only to a |
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recorded lien or security interest, to the cooperative on delivery |
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of the product or at another specified time if expressly provided in |
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the contract. The contract may allow the cooperative to sell or |
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resell the product with or without taking title to the product and |
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pay the resale price to the patron member or patron after deducting |
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all necessary selling, overhead, and other costs and expenses, |
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including other proper reserves and interest. |
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(c) The term of a marketing contract may not exceed 10 |
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years, but a marketing contract may be made self-renewing for |
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subsequent periods of five years each, subject to the right of |
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either party to terminate by giving written notice of the |
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termination as specified in the contract. |
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(d) The bylaws or the marketing contract, or both, may set a |
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specific sum as liquidated damages to be paid by the patron member |
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or patron to the cooperative for a breach of any provision of a |
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marketing contract regarding the sale, delivery, or withholding of |
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a product and may provide that the patron member or patron shall pay |
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the costs, premiums for bonds, expenses, and fees if an action is |
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brought on the contract by the cooperative. The remedies for breach |
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of contract are valid and enforceable in the courts of this state. |
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The provisions shall be enforced as liquidated damages and may not |
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be considered or regarded as a penalty. |
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(e) On a breach or threatened breach of a marketing contract |
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by a patron member or patron, the cooperative is entitled to seek an |
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injunction to prevent the breach and to specific performance of the |
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contract. Pending the adjudication of the action, the cooperative |
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may be granted a temporary restraining order and preliminary |
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injunction against the patron member or patron. |
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(f) A person commits an offense if the person knowingly |
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induces or attempts to induce a member or patron of a cooperative to |
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breach a marketing contract with the cooperative or knowingly |
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spreads false reports about the finances or management of a |
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cooperative organized under this chapter. An offense under this |
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subsection is a misdemeanor punishable by a fine of not less than |
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$100 or more than $1,000. It is a defense to prosecution under this |
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subsection that the person is a bona fide creditor of the |
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cooperative or the agent or attorney of a bona fide creditor |
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attempting to collect a debt of the cooperative. |
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(g) A person is liable to the cooperative for civil damages |
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if the person: |
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(1) knowingly induces a member or patron of a |
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cooperative to breach a marketing contract with the cooperative; or |
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(2) knowingly spreads false reports about the finances |
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or management of a cooperative. |
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Sec. 53.054. DISTRIBUTION OF UNCLAIMED PROPERTY. (a) A |
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cooperative may, instead of paying or delivering unclaimed property |
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to this state, distribute the unclaimed property to a corporation |
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or organization that is exempt from federal income taxation. To be |
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valid, a cooperative that elects to distribute unclaimed property |
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must file with the comptroller: |
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(1) a verified, written explanation of the proof of |
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claim of an owner establishing a right to receive the abandoned |
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property; |
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(2) any error in the presumption of abandonment; |
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(3) the name, address, and exemption number of the |
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corporation or organization to which the property was or is to be |
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distributed; and |
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(4) the approximate date of distribution. |
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(b) This section does not alter any procedure provided by |
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law for a cooperative to report unclaimed property to this state or |
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a requirement that the claims of an owner be made to the cooperative |
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for a period following the publication of a list of abandoned |
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property. |
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(c) The entitlement of an owner to unclaimed property held |
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by a cooperative is extinguished when the property is distributed |
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under this section. |
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[Sections 53.055-53.100 reserved for expansion] |
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SUBCHAPTER C. FILINGS |
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Sec. 53.101. WHEN FILINGS TAKE EFFECT. (a) Except as |
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permitted by Subsection (b) or as otherwise provided by this |
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chapter, a filing instrument submitted to the secretary of state |
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takes effect when filed. |
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(b) The date and time at which a filing instrument takes |
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effect may be delayed as provided by Subchapter B, Chapter 4, |
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Business Organizations Code. |
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Sec. 53.102. ABANDONMENT BEFORE EFFECTIVENESS. The parties |
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to a filing instrument may abandon the filed instrument if the |
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instrument has not taken effect by filing a certificate of |
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abandonment in accordance with Section 4.057, Business |
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Organizations Code. |
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Sec. 53.103. CORRECTING AN ERRONEOUS OR DEFECTIVE |
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INSTRUMENT. (a) A cooperative may, by filing a certificate of |
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correction in accordance with Subchapter C, Chapter 4, Business |
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Organizations Code, correct any instrument filed with the secretary |
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of state if the instrument is an inaccurate record of the event or |
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transaction evidenced in the instrument, contains an inaccurate or |
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erroneous statement, or was defectively or erroneously signed, |
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sealed, acknowledged, or verified. |
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(b) The certificate of correction must be signed by a |
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director or authorized officer of the cooperative. |
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(c) Except as provided by Subsection (d), after the |
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certificate of correction is filed by the secretary of state, the |
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filing instrument is considered to have been corrected on the date |
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the filing instrument was originally filed. |
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(d) With respect to a person who is adversely affected by |
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the correction, the filing instrument is considered to have been |
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corrected on the date the certificate of correction is filed. |
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(e) A certificate issued by the secretary of state before a |
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filing instrument is corrected, with respect to the effect of |
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filing the original filing instrument, applies to the corrected |
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filing instrument as of the date the corrected filing instrument is |
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considered to have been filed under this section. |
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Sec. 53.104. SIGNATURE AND GENERAL FILING REQUIREMENTS. |
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(a) Unless otherwise provided by this chapter, a filing instrument |
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submitted by or on behalf of a cooperative must be signed by an |
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authorized officer of the cooperative. |
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(b) If the cooperative is under the control of a receiver, |
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trustee, or other court-appointed fiduciary, a filing instrument |
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may be signed by that fiduciary. |
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(c) A person authorized to sign a filing instrument for a |
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cooperative is not required to show evidence of the person's |
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authority as a requirement for filing. |
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(d) A photographic, photostatic, facsimile, electronic, or |
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similar reproduction of a filing instrument, signature, |
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acknowledgment of filing, certificate, or communication may be |
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filed or issued in place of: |
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(1) an original filing instrument; |
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(2) an original signature on a filing instrument; or |
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(3) an original certificate or acknowledgment of |
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filing or other written communication from the secretary of state |
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relating to a filing instrument. |
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(e) To be accepted and filed by the secretary of state, an |
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instrument that is submitted for filing must satisfy the filing |
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requirements of this chapter, the requirements of any other law |
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that is made applicable to the instrument or cooperative by this |
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chapter, and any administrative rule adopted by the secretary of |
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state relating to the instrument. |
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(f) If the secretary of state finds that a filing instrument |
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conforms to the requirements of Subsection (e) and all required |
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fees have been paid, the secretary of state shall: |
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(1) file the instrument by accepting it into the |
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filing system adopted by the secretary of state and assigning the |
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instrument a date of filing; and |
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(2) deliver a written acknowledgment or certificate |
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evidencing filing to the cooperative or its representative. |
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(g) If a duplicate copy of a filing instrument is delivered |
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to the secretary of state, on accepting the filing instrument the |
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secretary of state shall endorse the duplicate copy with the word |
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"Filed" and the month, day, and year of filing and return the |
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duplicate copy to the cooperative or its representative with the |
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written acknowledgment or certificate evidencing filing. |
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Sec. 53.105. APPEALS FROM SECRETARY OF STATE'S REFUSAL TO |
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FILE INSTRUMENT. A person may appeal the secretary of state's |
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disapproval of the filing of an instrument only as provided by |
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Section 12.004, Business Organizations Code. |
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Sec. 53.106. PENALTY FOR SUBMISSION OF A FALSE OR |
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FRAUDULENT INSTRUMENT. Section 4.008, Business Organizations Code, |
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applies to a filing instrument under this chapter. |
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Sec. 53.107. SECRETARY OF STATE; DUTIES AND AUTHORITY. (a) |
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The duty of the secretary of state to file instruments under this |
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chapter is ministerial. |
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(b) The secretary of state may adopt procedural rules for |
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the filing of instruments authorized to be filed with the secretary |
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of state under this chapter. |
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(c) The secretary of state may adopt forms for a filing |
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instrument authorized or required by this chapter. |
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(d) The secretary of state has the power and authority |
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reasonably necessary to perform the duties imposed under this |
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chapter. |
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[Sections 53.108-53.150 reserved for expansion] |
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SUBCHAPTER D. ORGANIZATION |
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Sec. 53.151. ORGANIZERS. A cooperative may be organized by |
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one or more organizers who must be adult individuals and who may act |
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for themselves or as agents for other entities. An organizer of the |
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cooperative is not required to become a member of the cooperative. |
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Sec. 53.152. COOPERATIVE NAME. (a) The name of a |
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cooperative must comply with Subchapters A and B, Chapter 5, |
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Business Organizations Code, in the manner required of a domestic |
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filing entity. |
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(b) A cooperative may conduct business under a name other |
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than the name stated in the articles of organization if the |
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cooperative files an assumed name certificate in accordance with |
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Chapter 36, Business & Commerce Code. |
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(c) A cooperative's name may not infringe on the rights of |
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another person under: |
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(1) the Trademark Act of 1946, as amended (15 U.S.C. |
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Section 1051 et seq.); |
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(2) Chapter 16 or 36, Business & Commerce Code; or |
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(3) common law. |
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Sec. 53.153. ARTICLES OF ORGANIZATION. (a) The organizers |
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shall prepare the articles of organization, which must include: |
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(1) the name of the cooperative; |
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(2) the purpose of the cooperative; |
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(3) the principal place of business for the |
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cooperative; |
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(4) the period of duration for the cooperative, if the |
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duration is not perpetual; |
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(5) the capital structure of the cooperative, |
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including a statement of the classes and relative rights, |
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preferences, and restrictions granted to or imposed on each type of |
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member interest, the rights to share in profits or distributions of |
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the cooperative, and the authority to issue member interests, which |
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may be designated to be determined by the board; |
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(6) a provision designating the voting and governance |
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rights, including which membership interests have voting power and |
|
any limitation or restriction on the voting power, which must be in |
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accordance with the provisions of this chapter; |
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(7) a statement that a patron membership interest with |
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voting power is restricted to one vote for each member regardless of |
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the amount of the patron membership interest held in the affairs of |
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the cooperative, or a statement describing a different allocation |
|
of voting power as provided for in this chapter; |
|
(8) a statement that a membership interest held by a |
|
member is transferable only with the approval of the board or as |
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provided in the bylaws; |
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(9) the names, mailing addresses, and terms of office |
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of the directors of the initial board; |
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(10) a statement as to how profits and losses are to be |
|
allocated and cash distributed between patron membership interests |
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collectively and nonpatron membership interests collectively; |
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(11) a statement that net income allocated to a patron |
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membership interest as determined by the board in excess of |
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dividends and additions to reserves is to be distributed on the |
|
basis of patronage and that the records of the cooperative are to |
|
include the interests of patron membership interests and nonpatron |
|
membership interests, which may be additionally described in the |
|
bylaws of any class and in the reserves; and |
|
(12) the street address of the cooperative's initial |
|
registered office and the name of the cooperative's registered |
|
agent at the office. |
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(b) The articles of organization must indicate if a |
|
cooperative is being formed under a plan of conversion or a plan of |
|
merger. If the cooperative is being formed under a plan of |
|
conversion, the articles of organization must state the name, |
|
address, date of formation, organizational form, and jurisdiction |
|
of formation of the entity being converted to a cooperative under |
|
the plan. |
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(c) The articles of organization shall contain the |
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provisions described by Subsections (a) and (b), except that the |
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names and mailing addresses of the directors of the initial board |
|
may be omitted after their successors have been elected by the |
|
members or the articles of organization are amended or restated in |
|
their entirety. |
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(d) The articles of organization may contain any other |
|
lawful provision. The articles of organization are not required to |
|
state any of the powers provided to the cooperative under this |
|
chapter. |
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(e) The articles of organization must be signed by the |
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organizers. |
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(f) Except as otherwise provided by this subsection, the |
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original articles of organization must be filed with the secretary |
|
of state. The articles of organization for a cooperative that is |
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formed under a plan of merger or conversion must be filed with the |
|
articles of merger or certificate of conversion and are not |
|
required to be separately filed. If the secretary of state |
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determines that articles of organization submitted with articles of |
|
merger or a certificate of conversion meet the requirements of this |
|
chapter, the secretary of state shall file the articles of |
|
organization and issue a certificate of organization. In the case |
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of a merger or conversion, the certificate of organization of the |
|
cooperative that is the converted entity or that is created under |
|
the plan of merger becomes effective when the merger or conversion |
|
becomes effective. |
|
(g) When the articles of organization are filed with the |
|
secretary of state and the required fee is paid, it is presumed |
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that: |
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(1) all conditions precedent required to be performed |
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by the organizers have been complied with; |
|
(2) the cooperative has been chartered by this state |
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as a separate legal entity; and |
|
(3) the secretary of state will issue a certificate of |
|
organization to the cooperative. |
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Sec. 53.154. AMENDMENT OF ARTICLES OF ORGANIZATION. (a) |
|
The articles of organization of a cooperative may be amended as |
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follows: |
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(1) the board by majority vote must pass a resolution |
|
stating the text of the proposed amendment; |
|
(2) the text of the proposed amendment and an attached |
|
mail ballot if the board has provided for a mail ballot in the |
|
resolution, or a description of an alternative voting method |
|
approved by the board and stated in the resolution, must be mailed |
|
or distributed with a regular or special meeting notice to each |
|
member; |
|
(3) the notice must designate the time and place of the |
|
meeting for the proposed amendment to be considered and voted on; |
|
and |
|
(4) if a quorum of the members is registered as being |
|
present or represented by alternative vote at the meeting, the |
|
proposed amendment is adopted: |
|
(A) when approved by a majority of the votes |
|
cast; or |
|
(B) if the cooperative has articles of |
|
organization or bylaws that require more than majority approval or |
|
other conditions for approval, when approved by a proportion of the |
|
votes cast or a number of total members as required by the articles |
|
of organization or bylaws and when the conditions for approval in |
|
the articles of organization or bylaws have been complied with. |
|
(b) After an amendment has been adopted, the cooperative |
|
shall file with the secretary of state articles of amendment signed |
|
by the chair, vice chair, records officer, or assistant records |
|
officer that: |
|
(1) state the name of the cooperative; |
|
(2) identify by reference or description each |
|
provision being added, altered, or deleted; |
|
(3) provide the amended text of each section that is |
|
added or altered; and |
|
(4) include a statement that the amendment was |
|
approved in the manner required by this section and by the |
|
cooperative's governing documents. |
|
(c) A certificate shall be prepared stating: |
|
(1) the vote and meeting of the board adopting a |
|
resolution of the proposed amendment; |
|
(2) the notice given to members of the meeting at which |
|
the amendment was adopted; |
|
(3) the quorum registered at the meeting; and |
|
(4) the votes cast adopting the amendment. |
|
(d) The certificate shall be signed by the chair, vice |
|
chair, records officer, or financial officer and filed with the |
|
records of the cooperative. |
|
(e) A majority of directors may amend the articles of |
|
organization if the cooperative does not have any members with |
|
voting rights. |
|
Sec. 53.155. RESTATED ARTICLES OF ORGANIZATION. (a) A |
|
cooperative may authorize, execute, and file restated articles of |
|
organization using the procedures for amending the articles of |
|
organization under Section 53.154. The restated articles of |
|
organization must restate the entire text of the cooperative's |
|
articles of organization and incorporate all amendments previously |
|
filed with the secretary of state. The restated articles of |
|
organization may incorporate new amendments not previously filed |
|
with the secretary of state. |
|
(b) Unless otherwise provided by the articles of |
|
organization or bylaws, member approval is not required to file |
|
restated articles of organization if the restated text consists |
|
only of the text of articles of organization and amendments |
|
previously filed with the secretary of state. |
|
(c) Restated articles of organization must be signed by an |
|
authorized officer of the cooperative and filed in accordance with |
|
Section 3.059, Business Organizations Code. |
|
(d) Restated articles of organization may omit the name and |
|
address of each organizer and may insert the names and addresses of |
|
the current directors of the cooperative in place of similar |
|
information concerning the initial directors. |
|
Sec. 53.156. CONVERSION OF AN EXISTING ASSOCIATION TO BE |
|
GOVERNED BY THIS CHAPTER. (a) Notwithstanding any other law of |
|
this state, an existing association incorporated under this code or |
|
organized under another law of this state is authorized to convert |
|
and become subject to the provisions of this chapter by adopting a |
|
plan of conversion. |
|
(b) To effect a conversion, the converting association must |
|
act on and the members of the association must approve a plan of |
|
conversion in the manner provided for the approval of a plan of |
|
merger by an association if the association does not survive the |
|
merger. If a law or the governing documents of the association do |
|
not provide a method to approve a merger if the association does not |
|
survive the merger, the members of the association may approve a |
|
plan of conversion in the manner provided by Chapter 10, Business |
|
Organizations Code, for the adoption and approval of a conversion |
|
by a domestic entity. |
|
(c) The plan of conversion must include: |
|
(1) the name of the association that is the converting |
|
entity; |
|
(2) the name of the cooperative that is the converted |
|
entity; |
|
(3) a statement that the converting entity is |
|
continuing its existence as a cooperative governed by this chapter; |
|
(4) the proposed effect of the conversion on the |
|
members and patron members of the converting entity; |
|
(5) the manner and basis of converting the membership |
|
interests of the converting entity into membership interests of the |
|
cooperative; and |
|
(6) the articles of organization of the cooperative, |
|
which must meet the requirements of Section 53.153 and may be |
|
included as an attachment or exhibit to the plan of conversion. |
|
(d) A plan of conversion may include any other provisions |
|
relating to the conversion allowed by law. |
|
(e) On approval of the plan of conversion, a certificate of |
|
conversion must be filed with the secretary of state for the |
|
conversion to be effective. The certificate of conversion must |
|
include: |
|
(1) the plan of conversion, or a statement certifying: |
|
(A) the name, entity type, and jurisdiction of |
|
organization of the converting entity; |
|
(B) the name of the cooperative that is the |
|
converted entity; |
|
(C) that the converting entity is continuing its |
|
existence as a cooperative governed by this chapter; |
|
(D) that a signed plan of conversion is on file at |
|
the principal place of business of the converting entity and |
|
certifying the address of the principal place of business; |
|
(E) that a signed plan of conversion will be on |
|
file at the principal place of business of the converted entity and |
|
certifying the address of the principal place of business; and |
|
(F) that a copy of the plan of conversion will be |
|
furnished, without cost, on written request to any member of the |
|
converting entity or the converted entity by: |
|
(i) the converting entity before the |
|
conversion; or |
|
(ii) the converted entity after the |
|
conversion; |
|
(2) a statement that the plan of conversion has been |
|
approved as required by this section, by the law governing the |
|
converting entity, and by the governing documents of the converting |
|
entity; and |
|
(3) the articles of organization of the cooperative |
|
that is to be formed under the plan of conversion. |
|
(f) When a conversion takes effect, each member of the |
|
converting association has a membership interest in the cooperative |
|
resulting from the conversion. This subsection does not apply to: |
|
(1) a member who receives payment for the person's |
|
interest under a law providing for dissent and appraisal; or |
|
(2) a person who agrees to an alternative disposition |
|
of the person's interest under the conversion. |
|
(g) An association may not convert under this section if, as |
|
a result of the conversion, a member of the association would become |
|
personally liable for a liability or other obligation of the |
|
cooperative without that person's consent. |
|
(h) When the conversion takes effect: |
|
(1) the converting entity continues to exist, without |
|
interruption, as a cooperative governed by this chapter rather than |
|
in the organizational form of the entity before the conversion; |
|
(2) each right or title to or interest in property |
|
owned by the converting entity continues to be owned, subject to any |
|
existing lien or other encumbrance on the property, by the |
|
cooperative without: |
|
(A) reversion or impairment; |
|
(B) further act or deed; or |
|
(C) any transfer or assignment having occurred; |
|
(3) each liability or obligation of the converting |
|
entity continues to be a liability or obligation of the cooperative |
|
without impairment or diminution because of the conversion; |
|
(4) the rights of creditors or other parties with |
|
respect to or against the previous members of the converting entity |
|
in their capacities as members continue to exist and may be enforced |
|
by the creditors and obligees as if a conversion had not occurred; |
|
(5) a proceeding pending by or against the converting |
|
entity or by or against any of the converting entity's members in |
|
their capacities as members may be continued by or against the |
|
cooperative and by or against the previous members without |
|
substituting a party; |
|
(6) the membership interests of the converting entity |
|
are converted into membership interests of the converted entity as |
|
provided in the plan of conversion and the former members of the |
|
converting entity are entitled only to the rights provided in the |
|
plan of conversion or under a right of dissent and appraisal as |
|
provided by law; and |
|
(7) if a member of the converted entity is liable after |
|
the conversion takes effect for the liabilities or obligations of |
|
the converted entity in the person's capacity as a member, the |
|
person is liable for the liabilities and obligations of the |
|
converting entity that existed before the conversion took effect |
|
only to the extent that the person: |
|
(A) agrees in writing to be liable for the |
|
liabilities or obligations; |
|
(B) was liable, before the conversion took |
|
effect, for the liabilities or obligations; or |
|
(C) becomes liable under other applicable law for |
|
the existing liabilities and obligations of the converted entity as |
|
a result of becoming a member of the converted entity. |
|
Sec. 53.157. CONVERSION OF AN EXISTING BUSINESS ENTITY TO |
|
BE GOVERNED BY THIS CHAPTER. (a) A business entity other than an |
|
association described by Section 53.156 may convert to a |
|
cooperative governed by this chapter by adopting a plan of |
|
conversion and by filing a certificate of conversion as provided by |
|
Section 53.156. |
|
(b) To effect the conversion, the business entity must take |
|
any action that may be required for a conversion under the laws of |
|
the entity's jurisdiction of formation and the entity's governing |
|
documents. |
|
(c) The conversion must be permitted by the laws under which |
|
the business entity is incorporated or organized, or by its |
|
governing documents if the governing documents are not inconsistent |
|
with the laws of the entity's jurisdiction of formation. |
|
Sec. 53.158. EXISTENCE. (a) The existence of a cooperative |
|
begins when the filing of the articles of organization takes effect |
|
as provided by this chapter. |
|
(b) A cooperative has a perpetual duration unless the |
|
articles of organization provide for a limited period of duration. |
|
Sec. 53.159. REGISTERED AGENT; CHANGE OF REGISTERED OFFICE |
|
OR REGISTERED AGENT. (a) Each cooperative must continuously |
|
maintain in this state: |
|
(1) a registered office, which may be the same as its |
|
place of business; and |
|
(2) a registered agent, which may be: |
|
(A) an individual resident of this state whose |
|
business office is the same as the cooperative's registered office; |
|
or |
|
(B) a domestic business entity, or a foreign |
|
business entity authorized to transact business in this state, |
|
whose business office is the same as the cooperative's registered |
|
office. |
|
(b) A cooperative may change its registered office or agent |
|
on filing with the secretary of state a statement that includes: |
|
(1) the name of the cooperative; |
|
(2) the address of the cooperative's current |
|
registered office; |
|
(3) the address of the cooperative's new registered |
|
office if the cooperative is changing its registered office; |
|
(4) the name of the cooperative's current registered |
|
agent; |
|
(5) the name of the cooperative's new registered agent |
|
if the cooperative is changing its registered agent; |
|
(6) a certification that the address of the |
|
cooperative's registered office and the address of the business |
|
office of the cooperative's registered agent are identical; and |
|
(7) a certification that the change in the |
|
cooperative's registered agent or registered office was authorized |
|
by an affirmative vote of a majority of the board of directors of |
|
the cooperative. |
|
(c) The statement under Subsection (b) shall be signed and |
|
delivered to the secretary of state. If the secretary of state finds |
|
that the statement meets the requirements of this section, the |
|
secretary of state shall file the statement. The change of address |
|
of the registered office or the appointment of a new registered |
|
agent is effective when filed by the secretary of state. |
|
(d) A registered agent of a cooperative may resign as agent |
|
in the manner provided by Section 5.204, Business Organizations |
|
Code. |
|
(e) The registered agent of a cooperative may change its |
|
name, its address as the address of the cooperative's registered |
|
office, or both, by filing a statement of the change in accordance |
|
with Section 5.203, Business Organizations Code. |
|
Sec. 53.160. FAILURE TO MAINTAIN REGISTERED AGENT OR |
|
REGISTERED OFFICE; INVOLUNTARY DISSOLUTION AND REINSTATEMENT. (a) |
|
If the secretary of state determines that a cooperative has failed |
|
to maintain a registered agent or registered office in this state as |
|
required by law, the secretary of state may notify the cooperative |
|
of the failure by regular or certified mail addressed to the |
|
cooperative's registered office or principal place of business as |
|
shown on the records of the secretary of state. |
|
(b) The secretary of state may involuntarily dissolve a |
|
cooperative at any time after the 90th day after the date that |
|
notice under Subsection (a) was mailed if the cooperative has |
|
continuously failed to maintain a registered agent or registered |
|
office as required by law. |
|
(c) If the secretary of state involuntarily dissolves a |
|
cooperative under this section, the secretary of state shall: |
|
(1) issue a certificate of involuntary dissolution; |
|
and |
|
(2) deliver the certificate of involuntary |
|
dissolution by regular or certified mail to the cooperative at its |
|
registered office or principal place of business. |
|
(d) The certificate of involuntary dissolution must state: |
|
(1) that the cooperative has been involuntarily |
|
dissolved; and |
|
(2) the date of and the reason for the involuntary |
|
dissolution. |
|
(e) Except as otherwise provided by this section, the |
|
existence of the cooperative is terminated on the issuance of the |
|
certificate of involuntary dissolution by the secretary of state. |
|
(f) The secretary of state shall reinstate a cooperative |
|
that has been involuntarily dissolved under this section if the |
|
cooperative files an application for reinstatement with the |
|
secretary of state as prescribed for a filing entity by Section |
|
11.253, Business Organizations Code, and: |
|
(1) the entity files a statement of change of |
|
registered agent or registered office, or both; or |
|
(2) the secretary of state finds that the |
|
circumstances that led to the involuntary dissolution did not exist |
|
at the time of termination. |
|
(g) The secretary of state may not reinstate a cooperative |
|
if the cooperative name is the same as or deceptively similar or |
|
similar to a name of a cooperative or other domestic or foreign |
|
business entity already on file, reserved, or registered with the |
|
secretary of state. This subsection does not prevent a cooperative |
|
from being reinstated if the cooperative files an amendment to its |
|
articles of organization, accompanied by the required fee, to |
|
change its name to a name that does not violate this subsection. |
|
(h) Section 11.253(d), Business Organizations Code, applies |
|
to a cooperative that is reinstated under Subsection (f) to the same |
|
extent it applies to a filing entity reinstated under Section |
|
11.253, Business Organizations Code. |
|
[Sections 53.161-53.200 reserved for expansion] |
|
SUBCHAPTER E. BYLAWS |
|
Sec. 53.201. BYLAWS. (a) A cooperative shall adopt bylaws |
|
governing the cooperative's business affairs and structure, the |
|
qualifications, classification, rights, and obligations of its |
|
members, and the classifications, allocations, and distributions |
|
of membership interests. |
|
(b) The bylaws of a cooperative may be adopted or amended by |
|
the directors as provided by Subsection (c) or at a regular or |
|
special members' meeting if: |
|
(1) the notice of the meeting contains a statement |
|
that the bylaws or restated bylaws will be voted on and copies are |
|
included with the notice, or copies are available on request from |
|
the cooperative and summary statement of each proposed bylaw or |
|
amendment is included with the notice; |
|
(2) a quorum is registered as being present or |
|
represented by mail or alternative voting method if the mail or |
|
alternative voting method is authorized by the board; and |
|
(3) the bylaw or amendment is approved by a majority of |
|
votes cast, or for a cooperative with articles of organization or |
|
bylaws requiring more than majority approval or other conditions |
|
for approval, the bylaw or amendment is approved when the |
|
conditions for approval in the articles of organization or bylaws |
|
are complied with. |
|
(c) Until the next annual or special members' meeting, the |
|
majority of directors may adopt and amend bylaws for the |
|
cooperative that are consistent with Subsection (d) and that may be |
|
additionally amended or repealed by the members at an annual or |
|
special members' meeting. |
|
(d) Bylaws may contain any provision relating to the |
|
management or regulation of the affairs of the cooperative that is |
|
not inconsistent with the laws of this state or the articles of |
|
organization and must include: |
|
(1) the number of directors and the qualifications, |
|
manner of election, powers, duties, and compensation, if any, of |
|
directors; |
|
(2) the qualifications of members and any limitation |
|
on their number; |
|
(3) the manner of admission, withdrawal, suspension, |
|
and expulsion of members; and |
|
(4) the governance rights, financial rights, |
|
assignability of governance or financial rights, and other rights, |
|
privileges, and obligations of members and their membership |
|
interests, which may be additionally described in a member control |
|
agreement. |
|
[Sections 53.202-53.250 reserved for expansion] |
|
SUBCHAPTER F. MEMBERSHIP INTERESTS |
|
Sec. 53.251. INTERESTS. (a) The authorized amount and |
|
divisions of patron membership interests and nonpatron membership |
|
interests may be increased or decreased or established or altered |
|
in accordance with the restrictions in this chapter by amending the |
|
articles of organization at a regular members' meeting or at a |
|
special members' meeting called for the purpose of acting on the |
|
amendment. |
|
(b) Authorized membership interests may be issued on terms |
|
prescribed in the articles of organization, bylaws, or as |
|
determined by the board. The cooperative shall disclose to any |
|
person or entity who acquires a membership interest issued by the |
|
cooperative the organization, capital structure, and business |
|
prospects and risks of the cooperative and the nature of the |
|
governance and financial rights of the membership interest acquired |
|
and of other classes of membership and membership interests. The |
|
cooperative shall notify all members of the membership interests |
|
being offered by the cooperative. A membership interest may not be |
|
issued until the subscription price of the membership interest has |
|
been paid in cash or a cash equivalent or property with the |
|
agreed-on value. |
|
(c) The patron membership interests collectively may have |
|
at least 15 percent of the cooperative's financial rights to profit |
|
allocations and distributions. |
|
(d) After issuance by the cooperative, a membership |
|
interest in a cooperative may be sold or transferred only with the |
|
approval of the board. |
|
(e) The cooperative may solicit and issue nonpatron |
|
membership interests on terms determined by the board and disclosed |
|
in the articles of organization, bylaws, or by separate disclosure |
|
to the members. Each member acquiring a nonpatron membership |
|
interest must sign a member control agreement that describes the |
|
rights and obligations of the member as they relate to the nonpatron |
|
membership interest, the financial and governance rights, the |
|
transferability of the nonpatron membership interest, the division |
|
and allocations of profits and losses among the membership |
|
interests and membership classes, and financial rights on |
|
liquidation. If the bylaws do not otherwise provide for the |
|
allocation of the profits and losses between patron membership |
|
interests and nonpatron membership interests, the allocation of |
|
profits and losses among nonpatron membership interests |
|
individually and patron membership interests collectively shall be |
|
allocated on the basis of the value of contributions to capital made |
|
according to the patron membership interests collectively and the |
|
nonpatron membership interests individually to the extent the |
|
contributions have been accepted by the cooperative. Distributions |
|
of cash or other assets of the cooperative shall be allocated among |
|
the membership interests as provided in the articles of |
|
organization and bylaws, subject to the provisions of this chapter. |
|
If not otherwise provided, distributions shall be made on the basis |
|
of value of the capital contributions of the patron membership |
|
interests collectively and the nonpatron membership interests to |
|
the extent the contributions have been accepted by the cooperative. |
|
(f) The bylaws may provide that the cooperative or the |
|
patron members, individually or collectively, have the first |
|
privilege to purchase the membership interest of any class of |
|
patron member's membership interest offered for sale. The first |
|
privilege to purchase a patron membership interest may be complied |
|
with by notice to other patron members that the patron membership |
|
interest is for sale and a procedure by which patron members may |
|
proceed to attempt to purchase and acquire the patron membership |
|
interest. A patron membership interest acquired by the cooperative |
|
may be held to be reissued or may be retired and canceled. |
|
(g) Subject to the bylaws, a member may dissent from and |
|
obtain payment for the fair value of the member's nonpatron |
|
membership interest in the cooperative if the articles of |
|
organization or bylaws are amended in a manner that materially and |
|
adversely affects the rights and preferences of the nonpatron |
|
membership interest of the dissenting member. The dissenting |
|
member must file a notice of intent to demand fair value of the |
|
membership interest with the records officer of the cooperative |
|
before the 30th day after the amendment of the bylaws and notice of |
|
the amendment to members, or the right of the dissenting member to |
|
demand payment of fair value for the membership interest is waived. |
|
If a proposed amendment of the articles of organization or bylaws is |
|
approved by the members, a member who is entitled to dissent and who |
|
elects to exercise dissenter's rights must file a notice to demand |
|
fair value of the membership interest with the records officer of |
|
the cooperative before the vote on the proposed action and may not |
|
vote in favor of the proposed action, or the right to demand fair |
|
value for the membership interest by the dissenting member is |
|
waived. After receipt of the dissenting member's demand notice and |
|
approval of the amendment, the cooperative shall not later than the |
|
60th day after the date of the approval of the amendment rescind the |
|
amendment or remit the fair value for the one member's interest to |
|
the dissenting member before the 180th day after the date the |
|
cooperative received the notice. On receipt of the fair value for |
|
the membership interest, the member has no further member rights in |
|
the cooperative. |
|
Sec. 53.252. ALLOCATIONS AND DISTRIBUTIONS TO MEMBERS. (a) |
|
The bylaws shall prescribe the allocation of profits and losses |
|
between patron membership interests collectively and other |
|
membership interests. If the bylaws do not otherwise provide, the |
|
profits and losses between patron membership interests |
|
collectively and other membership interests shall be allocated on |
|
the basis of the value of contributions to capital made by the |
|
patron membership interests collectively and other membership |
|
interests and accepted by the cooperative. The allocation of |
|
profits to the patron membership interests collectively may not be |
|
less than 15 percent of the total profits in any fiscal year of the |
|
cooperative. |
|
(b) The bylaws shall prescribe the distribution of cash or |
|
other assets of the cooperative among the membership interests of |
|
the cooperative. If not otherwise provided in the bylaws, |
|
distribution shall be made to the patron membership interests |
|
collectively and other members on the basis of the value of |
|
contributions to capital made and accepted by the cooperative by |
|
the patron membership interests collectively and other membership |
|
interests. The distributions to patron membership interests |
|
collectively may not be less than 15 percent of the total |
|
distributions in any fiscal year of the cooperative. |
|
Sec. 53.253. ALLOCATIONS AND DISTRIBUTIONS TO PATRON |
|
MEMBERS. (a) The board of a cooperative may set aside a portion of |
|
net income allocated to the patron membership interests to create |
|
or maintain a capital reserve. |
|
(b) In addition to a capital reserve, the board may, for |
|
patron membership interests: |
|
(1) set aside an amount not to exceed five percent of |
|
the annual net income of the cooperative for promoting and |
|
encouraging the cooperative; and |
|
(2) establish and accumulate reserves for new |
|
buildings, machinery and equipment, depreciation, losses, and |
|
other proper purposes. |
|
(c) Net income allocated to patron members that exceeds |
|
dividends on equity and additions to reserves shall be distributed |
|
to patron members on the basis of patronage. A cooperative may |
|
establish allocation units, whether functional, divisional, |
|
departmental, geographic, or otherwise, establish pooling |
|
arrangements, and account for and distribute net income to patrons |
|
on the basis of allocation units and pooling arrangements. A |
|
cooperative may offset the net loss of an allocation unit or pooling |
|
arrangement against the net income of other allocation units or |
|
pooling arrangements. |
|
(d) Distribution of net income shall be made at least |
|
annually. The board shall present to the members at the annual |
|
meeting a report covering the operations of the cooperative during |
|
the preceding fiscal year of the organization. |
|
(e) A cooperative may distribute net income to patron |
|
members in cash, capital credits, allocated patronage equities, |
|
revolving fund certificates, or its own or other securities. |
|
(f) A cooperative may provide in its bylaws that nonmember |
|
patrons are allowed to participate in the distribution of net |
|
income payable to patron members on equal terms with patron |
|
members. |
|
(g) If a nonmember patron with patronage credits is not |
|
qualified or eligible for membership, a refund owed may be credited |
|
to the patron's individual account. The board may issue a |
|
certificate of interest to reflect the credited amount. After the |
|
patron is issued a certificate of interest, the patron may |
|
participate in the distribution of income on the same basis as a |
|
patron member. |
|
[Sections 53.254-53.300 reserved for expansion] |
|
SUBCHAPTER G. MEMBERS |
|
Sec. 53.301. GROUPING OF MEMBERS. (a) A cooperative may |
|
group members and patron members in districts, units, or another |
|
basis if and as authorized by its articles of organization and |
|
bylaws, which may include authorization for the board to determine |
|
the groupings. |
|
(b) The board may do anything necessary to implement the use |
|
of districts or units, including setting the time and place and |
|
prescribing the rules of conduct for holding a meeting by a district |
|
or unit to elect delegates to members' meetings. |
|
Sec. 53.302. MEMBER VIOLATIONS; LIABILITY FOR COOPERATIVE |
|
DEBTS. (a) A member who knowingly, intentionally, or repeatedly |
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violates a provision of the articles of organization, bylaws, |
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member control agreement, or marketing contract with the |
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cooperative may be required by the board to surrender the financial |
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right of membership interest of any class owned by the member. |
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(b) The cooperative shall refund to the member for the |
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surrendered financial right of membership interest the lesser of |
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the book value or market value of the financial right of the |
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membership interest payable in not more than seven years from the |
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date of surrender or transfer all of any patron member's financial |
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rights to a class of financial rights held by members who are not |
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patron members, or to a certificate of interest that carries |
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liquidation rights on par with a membership interest and is |
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redeemable within seven years after the transfer as provided in the |
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certificate. |
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(c) A membership interest required to be surrendered may be |
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reissued or retired and canceled by the board. |
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(d) A member who knowingly, intentionally, or repeatedly |
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violates a provision of the articles of organization, bylaws, |
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member control agreement, or marketing contract may be required by |
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the board to surrender the member's entitlement to vote in the |
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cooperative. |
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(e) A member is not, merely because of the member's status, |
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personally liable for the acts, debts, liabilities, or obligations |
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of a cooperative. A member is liable for any unpaid subscription |
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for the membership interest, unpaid membership fees, or debt for |
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which the member has separately contracted with the cooperative. |
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Sec. 53.303. REGULAR MEMBERS' MEETINGS. (a) Regular |
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members' meetings shall be held annually at a time determined by the |
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board, unless otherwise provided for in the bylaws. |
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(b) The regular members' meeting shall be held at the |
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principal place of business of the cooperative or at another |
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conveniently located place as determined by the bylaws or the |
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board. |
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(c) The officers shall submit reports to the members at the |
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regular members' meeting covering the business of the cooperative |
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for the previous fiscal year that show the condition of the |
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cooperative at the end of the fiscal year of the organization. |
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(d) Directors shall be elected at the regular members' |
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meeting for the terms of office prescribed in the bylaws, other than |
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directors elected at a district or unit meeting. |
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(e) The cooperative shall give notice of regular members' |
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meetings by mailing a notice to each member at the member's last |
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known mailing address or by other notification approved by the |
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board and agreed to by the members. Notice of a regular members' |
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meeting shall be published or otherwise given by an approved method |
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at least two weeks before the date of the meeting or mailed at least |
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15 days before the date of the meeting. |
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Sec. 53.304. SPECIAL MEMBERS' MEETINGS. (a) A special |
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members' meeting may be called by: |
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(1) a majority vote of the board; or |
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(2) a written petition submitted to the chair of at |
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least 20 percent of the patron members, 20 percent of the nonpatron |
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members, or 20 percent of all members collectively. |
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(b) The cooperative shall give notice of a special members' |
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meeting by mailing a notice to each member personally at the |
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person's last known mailing address or an alternative method |
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approved by the board and the member individually or the members |
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generally. For a member that is an entity, notice mailed or |
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delivered by an alternative method must be to an officer of the |
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entity. The notice shall state the time, place, and purpose of the |
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special members' meeting. The notice shall be issued not later than |
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the 10th day after the date the members' petition is submitted and |
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the meeting held within 30 days after the date the members' petition |
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is submitted. |
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Sec. 53.305. CERTIFICATION OF MEETING NOTICE. (a) After |
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mailing or delivering of the special or regular members' meeting |
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notices, the chair or records officer shall execute a certificate |
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containing the date of mailing or delivery of the notices and a |
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statement that the notices were mailed or delivered as prescribed |
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by law. |
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(b) The certificate shall be made a part of the record of the |
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meeting. |
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Sec. 53.306. FAILURE TO RECEIVE MEETING NOTICE. Failure of |
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a member to receive notice of a special or regular members' meeting |
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does not invalidate an action taken by the members at the meeting. |
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Sec. 53.307. QUORUM. (a) The quorum for a members' meeting |
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is: |
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(1) 10 percent of the total number of members for a |
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cooperative with 500 or fewer members; or |
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(2) 50 members for a cooperative with more than 500 |
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members. |
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(b) In determining a quorum at a meeting, on a question |
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submitted to a vote by mail or an alternative method, members |
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present in person or represented by mail vote or the alternative |
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voting method shall be counted. The attendance of a sufficient |
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number of members to establish a quorum shall be determined by a |
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registration of the members of the cooperative present at the |
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meeting. Registration shall be verified by the chair or the records |
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officer and reported in the minutes of the meeting. |
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(c) An action by a cooperative is invalid in the absence of a |
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quorum at the meeting at which the action was taken. |
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Sec. 53.308. MEMBER VOTING RIGHTS. (a) A patron member is |
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only entitled to one vote on an issue to be voted on by members who |
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hold a patron membership interest, except that a patron member of a |
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cooperative described by Section 53.309 may be entitled to more |
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than one vote as provided by that section. On any matter of the |
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cooperative, the entire patron members' voting power shall be voted |
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collectively based on the vote of the majority of patron members |
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voting on the issue. A nonpatron member has voting rights according |
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to the member's nonpatron membership interest granted in the |
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bylaws, subject to the provisions of this chapter. |
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(b) A member or delegate may exercise the member's voting |
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rights on any matter that is before the members as provided by the |
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articles of organization or bylaws at a members' meeting from the |
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time the member or delegate arrives at the members' meeting, unless |
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the articles of organization or bylaws specify an earlier and |
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specific time for the expiration of the member's right to vote. |
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(c) A member's vote at a members' meeting must be in person |
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or by mail if a mail vote is authorized by the board or by an |
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alternative method authorized by the board and not by proxy except |
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as provided by Subsection (d). |
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(d) A cooperative may provide in the articles of |
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organization or bylaws that a unit or district of members is |
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entitled to be represented at a members' meeting by delegates |
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chosen by the members of the unit or district. The delegates may |
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vote on matters at the members' meeting in the same manner as a |
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member. The delegates may only exercise the voting rights on a |
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basis of and with the number of votes as provided by the articles of |
|
organization or bylaws. If the approval by a certain number of the |
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members is required for the adoption of amendments, a dissolution, |
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a merger, a conversion, or a sale of assets, the votes of delegates |
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shall be counted as votes by the members represented by the |
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delegate. Patron members may be represented by a delegate who is a |
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patron member. Nonpatron members may be represented by a delegate |
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if authorized in the bylaws. |
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(e) A member who is or will be absent from a members' meeting |
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may vote by mail or by an approved alternative method on any motion, |
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resolution, or amendment that the board submits for vote by mail or |
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alternative method to the members. A properly executed ballot |
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shall be accepted by the board and counted as the vote of the absent |
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member at the meeting. |
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(f) The ballot used for a vote under Subsection (e) must: |
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(1) be in the form prescribed by the board; |
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(2) contain the exact text of the proposed motion, |
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resolution, or amendment to be acted on at the meeting; |
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(3) contain the text of the motion, resolution, or |
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amendment for which the member may indicate an affirmative or |
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negative vote; and |
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(4) allow the member to express a choice by marking an |
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appropriate choice on the ballot and mailing, delivering, or |
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otherwise submitting the ballot to the cooperative in a plain, |
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sealed envelope inside another envelope bearing the member's name |
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or by an alternative method approved by the board. |
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Sec. 53.309. PATRON MEMBER VOTING IN COOPERATIVES |
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CONSTITUTED ENTIRELY OR PARTIALLY OF OTHER COOPERATIVES OR |
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ASSOCIATIONS. (a) The articles of organization or the bylaws of a |
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cooperative that is constituted wholly or partly of other |
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cooperatives or associations may authorize the patron members of a |
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subsidiary cooperative to have an additional vote for: |
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(1) a stipulated amount of business transacted between |
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the parent cooperative and the subsidiary cooperative to which the |
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patron member is a member; |
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(2) a stipulated number of patron members in the |
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subsidiary cooperative; |
|
(3) a stipulated amount of equity allocated to or held |
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by the subsidiary cooperative in the parent cooperative; or |
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(4) a combination of the reasons in Subdivisions |
|
(1)-(3). |
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(b) The articles of organization or the bylaws of a |
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cooperative that is organized into units or districts of patron |
|
members may authorize the delegates elected by its patron members |
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to have an additional vote for: |
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(1) a stipulated amount of business transacted between |
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the patron members in the unit or district and the cooperative; |
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(2) a stipulated amount of equity allocated to or held |
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by the patron members of the units or districts of the cooperative; |
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or |
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(3) a combination of the reasons in Subdivisions (1) |
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and (2). |
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[Sections 53.310-53.350 reserved for expansion] |
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SUBCHAPTER H. ADMINISTRATION |
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Sec. 53.351. GOVERNANCE. A cooperative is governed by its |
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board. |
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Sec. 53.352. NUMBER OF DIRECTORS. The board must have at |
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least three directors. |
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Sec. 53.353. ELECTION OF DIRECTORS. (a) Directors are |
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elected for the term, at the time, and in the manner provided by |
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this section and the bylaws. A majority of the directors must be |
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members, and at least one director must be elected exclusively by |
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the members holding patron membership interests. The voting |
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entitlement of the directors may be allocated according to |
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allocation units or equity classifications of the cooperative |
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provided that at least one-half of the voting power on general |
|
matters of the cooperative must be allocated to one or more |
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directors elected by members holding a patron membership interest. |
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(b) Directors are elected for the terms of office prescribed |
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in the bylaws. Other than directors elected at a district meeting, |
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all directors are elected at the regular members' meeting. |
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(c) For a cooperative with districts or other units, members |
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may elect directors on a district or unit basis if provided for by |
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the bylaws. The directors may be nominated or elected at a district |
|
meeting if authorized by the bylaws. Directors who are nominated at |
|
district meetings are elected at the annual regular members' |
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meeting by vote of the entire membership unless the bylaws provide |
|
that a director who is nominated at a district meeting is to be |
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elected by vote of the members of the district at the annual regular |
|
members' meeting. |
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(d) A member must vote in person at a meeting for a director |
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unless an alternative method of voting is authorized for the |
|
election of directors by the articles of organization or bylaws. |
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(e) If alternative voting for directors is authorized: |
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(1) the ballot must be in a form prescribed by the |
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board; |
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(2) a member shall mark the ballot for the candidate |
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chosen and mail the ballot to the cooperative in a sealed plain |
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envelope inside another envelope bearing the member's name, or |
|
shall vote in the alternative manner prescribed by the board; and |
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(3) the ballot shall be accepted and counted as the |
|
vote of the absent member if the ballot of the member is received by |
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the cooperative on or before the date of the regular members' |
|
meeting. |
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(f) If a member is not a natural person and the bylaws do not |
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provide otherwise, the member may nominate one or more natural |
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persons for election to the board. |
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Sec. 53.354. FILLING VACANCIES. If a director who was |
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elected by patron members vacates the director's position, the |
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board shall appoint a patron member of the cooperative to fill the |
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vacancy until the next regular or special members' meeting. If the |
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vacating director was not a patron member, the board shall appoint a |
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patron member to fill the vacancy. At the next regular or special |
|
members' meeting, the members or patron members shall elect a |
|
director for the unexpired term of the vacant position. |
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Sec. 53.355. REMOVAL OF DIRECTORS. At a members' meeting |
|
the class of members who elected a director may remove the director |
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for cause related to the duties of the position and fill the vacancy |
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caused by the removal. |
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Sec. 53.356. LIMITATION OF DIRECTOR'S LIABILITY. (a) |
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Except as provided by Subsection (b), a director's personal |
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liability to the cooperative or its members for monetary damages |
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for a breach of fiduciary duty as a director may be eliminated or |
|
limited in the articles of organization. |
|
(b) The articles of organization may not eliminate or limit |
|
the liability of a director for: |
|
(1) a breach of the director's duty of loyalty to the |
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cooperative or its members; |
|
(2) an act or omission that is not in good faith, that |
|
involves intentional misconduct, or that is a knowing violation of |
|
law; |
|
(3) a transaction from which the director derived an |
|
improper personal benefit; or |
|
(4) an act or omission occurring before the date when |
|
the provision in the articles of organization eliminating or |
|
limiting liability becomes effective. |
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Sec. 53.357. OFFICERS. (a) The board shall: |
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(1) elect a chair and one or more vice chairs; and |
|
(2) elect or appoint a records officer and a financial |
|
officer. |
|
(b) The board may elect additional officers as the articles |
|
of organization or bylaws authorize or require. |
|
(c) The offices of records officer and financial officer may |
|
be combined. |
|
(d) The chair and first vice chair must be directors and |
|
members. The financial officer, records officer, and other |
|
officers are not required to be directors or members. |
|
(e) The board may employ a chief executive officer to manage |
|
the day-to-day affairs and business of the cooperative. |
|
(f) At a members' meeting, members may remove an officer, |
|
other than the chief executive officer, for cause related to the |
|
duties of the position of the officer and fill the vacancy caused by |
|
the removal. |
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Sec. 53.358. VOTE OF OWNERSHIP INTERESTS HELD BY |
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COOPERATIVE. A cooperative that holds an ownership interest in |
|
another business entity may, by direction of the cooperative's |
|
board, elect or appoint a person to represent the cooperative at a |
|
meeting of that business entity. The representative may represent |
|
the cooperative and cast the cooperative's vote at the business |
|
entity's meeting. |
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[Sections 53.359-53.400 reserved for expansion] |
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SUBCHAPTER I. MERGER AND CONVERSION |
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Sec. 53.401. MERGER. (a) A cooperative may merge with one |
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or more cooperatives or other business entities as provided by this |
|
subchapter. |
|
(b) To initiate a merger, a written plan of merger must be |
|
prepared by the board or by a committee selected by the board to |
|
prepare a plan. The plan must contain: |
|
(1) the name, organizational form, and jurisdiction of |
|
formation of each of the constituent cooperatives and other |
|
business entities; |
|
(2) the name of each surviving or new cooperative or |
|
other business entity that is created by the plan; |
|
(3) the manner and basis of converting the membership |
|
or ownership interests of the constituent cooperatives or business |
|
entities into membership or ownership interests in the surviving or |
|
new cooperative or business entity; |
|
(4) the terms of the merger; |
|
(5) the proposed effect of the merger on the members |
|
and patron members of the cooperative; |
|
(6) for a merger that creates a new cooperative or |
|
business entity, the articles of organization or applicable |
|
organizational documents of each entity to be filed with the state |
|
in which the entity is organized; and |
|
(7) any amendments made under the plan to the articles |
|
of organization or organizational documents of a surviving |
|
cooperative or business entity. |
|
(c) If more than one business entity survives or is created |
|
under the plan of merger, the plan must include, in addition to each |
|
other requirement of this section: |
|
(1) the manner and basis of allocating and vesting the |
|
property of each entity that is a party to the merger among the |
|
entities that survive or are created by the merger; |
|
(2) the name of each surviving or new business entity |
|
that is primarily obligated to pay the fair value of an interest of |
|
an owner or member of a domestic business entity subject to |
|
dissenters' rights that is a party to the merger, if the owner or |
|
member complies with the requirements for dissent and appraisal |
|
applicable to the entity; and |
|
(3) the manner and basis of allocating each liability |
|
and obligation of each business entity that is a party to the merger |
|
to one or more of the surviving or new entities, or an alternative |
|
arrangement that provides for the payment and discharge of each |
|
liability and obligation. |
|
Sec. 53.402. NOTICE. (a) The board shall mail a merger |
|
plan or otherwise transmit or deliver notice to each member. The |
|
notice must contain: |
|
(1) the full text of the plan; and |
|
(2) the time and place of the meeting at which the plan |
|
will be considered. |
|
(b) A cooperative with more than 200 members may provide the |
|
merger notice in the same manner as the notice of a regular members' |
|
meeting. |
|
Sec. 53.403. ADOPTION OF MERGER PLAN. (a) A plan of merger |
|
is adopted if: |
|
(1) a quorum of the members is registered as being |
|
present or represented by mail vote at the meeting; and |
|
(2) the plan is approved by two-thirds of the votes |
|
cast, or for a cooperative with articles of organization or bylaws |
|
that require more than two-thirds of the votes cast or other |
|
conditions for approval, as required by the articles of |
|
organization or bylaws. |
|
(b) After the plan has been adopted, articles of merger must |
|
be filed with the secretary of state for the merger to take effect. |
|
(c) The articles of merger must be signed by an officer or |
|
other authorized representative on behalf of each cooperative and |
|
each business entity that is a party to the merger and must include: |
|
(1) the plan of merger or a certified statement |
|
permitted by Section 10.151, Business Organizations Code; |
|
(2) a statement that the plan of merger has been |
|
approved as required by this chapter and the laws of the |
|
jurisdiction of formation of each business entity; and |
|
(3) a statement that the approval of the owners or |
|
members of a business entity that is a party to the plan of merger is |
|
not required under the laws of the entity's jurisdiction of |
|
formation, if applicable. |
|
(d) The articles of organization of each surviving |
|
cooperative subject to this chapter are considered amended as |
|
provided in the plan of merger. |
|
(e) Except as otherwise provided by Section 53.101, the |
|
merger is effective when the articles of merger are filed in the |
|
office of the secretary of state. |
|
(f) If the plan of merger creates a new cooperative, the |
|
articles of organization must also be filed with the secretary of |
|
state. |
|
(g) If the plan of merger creates a new domestic business |
|
entity to be formed or organized under the laws of this state and |
|
the entity is required to file a certificate of formation, the |
|
certificate of formation must also be filed with the secretary of |
|
state. |
|
Sec. 53.404. MERGER AUTHORIZED. (a) Notwithstanding any |
|
other law of this state, an existing association incorporated under |
|
this code may merge with a cooperative governed by this chapter by |
|
adopting and approving a plan of merger in the same manner as a |
|
cooperative governed by this chapter. |
|
(b) Notwithstanding any other law of this state, an existing |
|
association organized under a law of this state, other than an |
|
association organized under this code, may merge with a cooperative |
|
governed by this chapter by adopting and approving a plan of merger |
|
in the manner prescribed by the law governing the association, or if |
|
the law governing the association does not provide a method, in the |
|
same manner as a cooperative governed by this chapter. |
|
Sec. 53.405. EFFECT OF MERGER. (a) When a merger takes |
|
effect: |
|
(1) the separate existence of each domestic business |
|
entity that is a party to the merger, other than a surviving or new |
|
business entity, ceases; |
|
(2) all rights, title, and interests to all real |
|
property and other property owned by each entity that is a party to |
|
the merger is allocated to and vested, subject to any existing lien |
|
or other encumbrance on the property, in one or more of the |
|
surviving or new business entities as provided in the plan of merger |
|
without: |
|
(A) reversion or impairment; |
|
(B) any further act or deed; or |
|
(C) any transfer or assignment having occurred; |
|
(3) all liabilities and obligations of each entity |
|
that is a party to the merger are allocated to one or more of the |
|
surviving or new entities in the manner provided by the plan of |
|
merger; |
|
(4) each surviving or new domestic business entity to |
|
which a liability or obligation is allocated under the plan of |
|
merger is the primary obligor for the liability or obligation, and, |
|
except as otherwise provided by the plan of merger or by law or |
|
contract, no other party to the merger, other than a surviving |
|
domestic business entity liable or otherwise obligated at the time |
|
of the merger, and no other new domestic business entity created |
|
under the plan of merger is liable for the liability or obligation; |
|
(5) a proceeding pending by or against a cooperative |
|
or another business entity that is a party to the merger may be |
|
continued as if the merger did not occur, or the surviving or new |
|
cooperative or business entity to which the matter involved in the |
|
proceeding is allocated under the plan of merger may be substituted |
|
in the proceeding; |
|
(6) the articles of organization and bylaws of each |
|
surviving cooperative and the organizational documents and other |
|
governing documents of each surviving business entity shall be |
|
amended to the extent provided in the plan of merger; |
|
(7) each new cooperative, the articles of organization |
|
of which are included in the plan of merger under Section 53.403, is |
|
formed as a cooperative under this chapter; |
|
(8) each new business entity to be formed or organized |
|
under the laws of this state the organizational documents of which |
|
are included in the plan of merger is formed when an executed copy |
|
of the articles of merger is delivered to or filed with the |
|
governmental entity to which the organizational documents of the |
|
business entity are required to be delivered or filed and when any |
|
other requirements of law for formation are complied with; |
|
(9) the ownership or membership interests of each |
|
cooperative and business entity that is a party to the merger that |
|
are to be converted or exchanged, in whole or in part, into |
|
ownership or membership interests, obligations, rights to purchase |
|
securities, or other securities of one or more of the surviving or |
|
new entities, into cash or other property, including ownership or |
|
membership interests, obligations, rights to purchase securities, |
|
or other securities of any entity, or into any combination of these |
|
are converted and exchanged and the former owners or members who |
|
held ownership or membership interests of each cooperative and |
|
domestic business entity that is a party to the merger are entitled |
|
only to the rights provided by the plan of merger or, if applicable, |
|
any rights to receive the fair value for the ownership interests |
|
provided by other state law; and |
|
(10) notwithstanding Subdivision (4), the surviving |
|
or new entity named in the plan of merger as primarily obligated to |
|
pay the fair value of an ownership or membership interest under |
|
Section 53.401(c) is the primary obligor for that payment and all |
|
other surviving or new entities are secondarily liable for that |
|
payment. |
|
(b) If the plan of merger does not provide for the |
|
allocation and vesting of the right, title, and interest in any |
|
particular property, each surviving and new cooperative or business |
|
entity that is a party to the merger owns an undivided interest in |
|
the property pro rata to the total number of surviving and new |
|
cooperatives and business entities resulting from the merger. If |
|
the plan of merger does not provide for the allocation of a |
|
liability or obligation of a party to the merger, each surviving or |
|
new cooperative or business entity that is a party to the merger is |
|
jointly and severally liable for the liability or obligation. |
|
(c) The right of a creditor may not be impaired by a merger |
|
without the creditor's consent. |
|
(d) If a surviving entity in a merger is not a cooperative or |
|
domestic business entity, the surviving entity is considered to |
|
have: |
|
(1) appointed the secretary of state as the entity's |
|
agent for service of process in a proceeding to enforce any |
|
obligation of a cooperative or domestic business entity that is a |
|
party to the merger; and |
|
(2) agreed to promptly pay any dissenting owners or |
|
members of each cooperative or domestic business entity that is a |
|
party to the merger who have the right of dissent and appraisal |
|
under state law any amount to which the dissenting owners or members |
|
are entitled under the law governing the formation of the entity. |
|
(e) If the surviving entity in a merger is not a cooperative |
|
or domestic business entity, the entity must register to transact |
|
business in this state if the entity is required to register for |
|
that purpose by another law of this state. |
|
Sec. 53.406. CONVERSION TO OTHER FORM OF BUSINESS ENTITY. |
|
(a) A cooperative may convert to another form of business entity by |
|
adopting and approving a plan of conversion. |
|
(b) To initiate a conversion, the board or a committee |
|
selected by the board must prepare a written plan of conversion. |
|
The plan must include: |
|
(1) the name of the cooperative that is the converting |
|
entity; |
|
(2) the name, organizational form, and jurisdiction of |
|
formation of the converted entity; |
|
(3) a statement that the converting entity is |
|
continuing its existence in the organizational form of the |
|
converted entity; |
|
(4) the manner and basis of converting the membership |
|
interests of the cooperative into membership or ownership interests |
|
in the converted entity; |
|
(5) the terms of the conversion; |
|
(6) the proposed effect of the conversion on the |
|
members and patron members of the cooperative; and |
|
(7) if the converted entity is a domestic business |
|
entity, any certificate of formation or similar organizational |
|
document that is required by law to form the entity. |
|
(c) A plan of conversion may include other provisions |
|
relating to the conversion allowed by law. |
|
(d) After approval of the plan of conversion, a certificate |
|
of conversion must be filed with the secretary of state for the |
|
conversion to take effect. The certificate of conversion must |
|
include: |
|
(1) the plan of conversion, or a statement certifying: |
|
(A) the name of the cooperative that is the |
|
converting entity; |
|
(B) the name, entity type, and jurisdiction of |
|
organization of the business entity that is the converted entity; |
|
(C) that the converting entity is continuing its |
|
existence in the organizational form of the converted entity; |
|
(D) that a signed plan of conversion is on file at |
|
the principal place of business of the converting entity and |
|
certifying the address of the principal place of business; |
|
(E) that a signed plan of conversion will be on |
|
file at the principal place of business of the converted entity and |
|
certifying the address of the principal place of business; and |
|
(F) that a copy of the plan of conversion will be |
|
furnished, without cost, on written request to any owner or member |
|
of the converting entity or the converted entity by: |
|
(i) the converting entity before the |
|
conversion; or |
|
(ii) the converted entity after the |
|
conversion; |
|
(2) a statement that the plan of conversion has been |
|
approved as required by this section, by the law governing the |
|
converting entity, and by the governing documents of the converting |
|
entity; and |
|
(3) if the converted entity is a domestic business |
|
entity, any certificate of formation or organizational document |
|
required to form the entity under a law of this state. |
|
(e) When a conversion takes effect, each member of the |
|
converting entity has a membership or ownership interest in the |
|
converted entity. This subsection does not apply to a member who |
|
agrees to an alternative disposition of the person's interest under |
|
the conversion. |
|
(f) A cooperative may not convert under this section if, as |
|
a result of the conversion, a member of the converting entity would |
|
become personally liable for a liability or other obligation of the |
|
converted entity without that person's consent. |
|
(g) When the conversion takes effect: |
|
(1) the converting entity continues to exist without |
|
interruption in the organizational form of the converted entity |
|
rather than in the organizational form of the entity before the |
|
conversion; |
|
(2) all rights, title, and interests to all property |
|
owned by the converting entity continues to be owned, subject to any |
|
existing lien or other encumbrance on the property, by the entity as |
|
converted without: |
|
(A) reversion or impairment; |
|
(B) further act or deed; or |
|
(C) any transfer or assignment having occurred; |
|
(3) all liabilities and obligations of the converting |
|
entity continue to be liabilities and obligations of the converted |
|
entity in its new organizational form without impairment or |
|
diminution because of the conversion; |
|
(4) the rights of creditors or other parties with |
|
respect to or against the previous members of the converting entity |
|
in their capacities as members continue to exist and may be enforced |
|
by the creditors and obligees as if the conversion had not occurred; |
|
(5) a proceeding pending by or against the converting |
|
entity or by or against any of the converting entity's members in |
|
their capacities as members may be continued by or against the |
|
converted entity and by or against the previous members without |
|
substituting a party; |
|
(6) the membership interests of the converting entity |
|
are converted into ownership or membership interests of the |
|
converted entity as provided in the plan of conversion, and the |
|
former members of the converting entity are entitled only to the |
|
rights provided in the plan of conversion or under a right of |
|
dissent and appraisal as provided by law; and |
|
(7) if a member of the converted entity is liable after |
|
the conversion takes effect for the liabilities or obligations of |
|
the converted entity in the person's capacity as a member, the |
|
person is liable for the liabilities and obligations of the |
|
converting entity that existed before the conversion took effect |
|
only to the extent that the person: |
|
(A) agrees in writing to be liable for the |
|
liabilities or obligations; |
|
(B) was liable before the conversion took effect |
|
for the liabilities or obligations; or |
|
(C) becomes liable under other applicable law for |
|
the existing liabilities and obligations of the converted entity as |
|
a result of becoming an owner or member of the converted entity. |
|
Sec. 53.407. ABANDONMENT OF MERGER OR CONVERSION. (a) At |
|
any time after a plan of merger or plan of conversion is approved as |
|
provided by this chapter and before the merger or conversion takes |
|
effect, a cooperative or domestic business entity that is a party to |
|
the plan may abandon the plan, without action by the owners or |
|
members, under the procedures provided by the plan of merger or plan |
|
of conversion. A cooperative or domestic business entity's right |
|
to abandon a plan of merger or plan of conversion is subject to the |
|
contractual rights of any party to the merger or conversion. |
|
(b) If the plan of merger or plan of conversion does not |
|
provide procedures for abandonment, the board of directors or |
|
governing authority of the parties to the plan may determine the |
|
procedures for abandonment. |
|
(c) If articles of merger or a certificate of conversion has |
|
been filed, the merger or conversion may be abandoned before its |
|
effectiveness in accordance with Section 53.102. |
|
[Sections 53.408-53.450 reserved for expansion] |
|
SUBCHAPTER J. LIQUIDATION |
|
Sec. 53.451. LIQUIDATION. (a) A cooperative may be |
|
liquidated as provided in the articles of organization in a manner |
|
consistent with other business entities formed or organized in this |
|
state or, if not provided, may be liquidated in the same manner as a |
|
limited liability company formed or organized in this state. |
|
(b) In addition to the methods in Subsection (a), the |
|
members may authorize a liquidation by adopting a resolution at a |
|
members' meeting. The notice of the members' meeting shall include |
|
a statement that the disposition of all of the assets of the |
|
cooperative will be considered at the meeting. If a quorum is |
|
present in person, by mail ballot, or alternative method approved |
|
by the board at the members' meeting, the resolution approving of |
|
the liquidation is adopted if: |
|
(1) approved by two-thirds of the votes cast; or |
|
(2) for a cooperative with articles of organization or |
|
bylaws requiring more than two-thirds for approval or other |
|
conditions for approval, the conditions for approval in the |
|
articles of organization or bylaws are complied with. |
|
(c) The board of directors by resolution may liquidate a |
|
cooperative if the board obtains an opinion of an accountant that |
|
the cooperative is unlikely to continue as a business, based on its |
|
current finances. |
|
[Sections 53.452-53.500 reserved for expansion] |
|
SUBCHAPTER K. DISSOLUTION |
|
Sec. 53.501. METHODS OF DISSOLUTION. A cooperative may be |
|
dissolved by the members or by the order of a court. |
|
Sec. 53.502. WINDING UP. (a) After a notice of intent to |
|
dissolve has been filed with the secretary of state, the board or |
|
the officers acting under the direction of the board shall proceed |
|
as soon as possible to: |
|
(1) collect or make provision for the collection of |
|
all debts due or owing to the cooperative, including unpaid |
|
subscriptions for shares; and |
|
(2) pay or make provision for the payment of all debts, |
|
obligations, and liabilities of the cooperative according to their |
|
priorities. |
|
(b) After a notice of intent to dissolve has been filed with |
|
the secretary of state, the board may sell, lease, transfer, or |
|
otherwise dispose of all or substantially all of the property and |
|
assets of the cooperative without a vote of the members. |
|
(c) Tangible and intangible property, including money, |
|
remaining after the discharge of the debts, obligations, and |
|
liabilities of the cooperative may be distributed to the members |
|
and former members as provided in the bylaws. If previously |
|
authorized by the members, the tangible and intangible property of |
|
the cooperative may be liquidated and disposed of at the discretion |
|
of the board. |
|
Sec. 53.503. REVOCATION OF DISSOLUTION PROCEEDINGS. (a) |
|
Dissolution proceedings may be revoked before the articles of |
|
dissolution are filed with the secretary of state. |
|
(b) The chair may call a members' meeting to determine |
|
whether to revoke the dissolution proceedings. The question of the |
|
proposed revocation shall be submitted to the members at the |
|
members' meeting called to consider the revocation. The |
|
dissolution proceedings are revoked if the revocation is approved |
|
at the members' meeting by a majority of the members of the |
|
cooperative, or for a cooperative with articles of organization or |
|
bylaws requiring a greater number of members, the number of members |
|
required by the articles of organization or bylaws. |
|
(c) Revocation of the dissolution proceedings is effective |
|
when a notice of revocation is filed with the secretary of state. |
|
After the notice is filed, the cooperative may resume business. |
|
Sec. 53.504. STATUTE OF LIMITATIONS. The claim of a |
|
creditor or claimant against a dissolving cooperative is barred if |
|
the claim has not been enforced by legal, administrative, or |
|
arbitration proceedings relating to the claim initiated not later |
|
than two years after the date the notice of intent to dissolve is |
|
filed with the secretary of state. |
|
Sec. 53.505. ARTICLES OF DISSOLUTION. (a) Articles of |
|
dissolution of a cooperative may be filed with the secretary of |
|
state only after payment of the claims of all known creditors and |
|
claimants has been made or provided for and the remaining property |
|
distributed by the board. The articles of dissolution must state |
|
that: |
|
(1) all debts, obligations, and liabilities of the |
|
cooperative have been paid or discharged or adequate provisions |
|
have been made for them or time periods allowing claims have run and |
|
other claims are not outstanding; |
|
(2) the remaining property, assets, and claims of the |
|
cooperative have been distributed among the members or under a |
|
liquidation authorized by the members; and |
|
(3) legal, administrative, or arbitration proceedings |
|
by or against the cooperative are not pending or that adequate |
|
provision has been made for the satisfaction of a judgment, order, |
|
or decree that may be entered against the cooperative in any pending |
|
proceeding. |
|
(b) The cooperative is dissolved when the articles of |
|
dissolution are filed with the secretary of state. |
|
(c) The secretary of state shall issue to the dissolved |
|
cooperative or its legal representative a certificate of |
|
dissolution that contains: |
|
(1) the name of the dissolved cooperative; |
|
(2) the date the articles of dissolution were filed |
|
with the secretary of state; and |
|
(3) a statement that the cooperative is dissolved. |
|
Sec. 53.506. APPLICATION FOR COURT-SUPERVISED VOLUNTARY |
|
DISSOLUTION. After a notice of intent to dissolve is filed with the |
|
secretary of state and before a certificate of dissolution is |
|
issued, the cooperative, or, for good cause shown, a member or |
|
creditor, may apply to a district court for the county in which the |
|
registered address is located to have the dissolution conducted or |
|
continued under the supervision of the court as provided by Section |
|
53.513. |
|
Sec. 53.507. COURT-ORDERED REMEDIES OR DISSOLUTION. (a) A |
|
district court may grant equitable relief that it considers just |
|
and reasonable in the circumstances or may dissolve a cooperative |
|
and liquidate its assets and business: |
|
(1) in a supervised voluntary dissolution that is |
|
applied for by the cooperative; |
|
(2) in an action brought by a member if it is |
|
established that: |
|
(A) the directors or the persons having the |
|
authority otherwise vested in the board are deadlocked in the |
|
management of the cooperative's affairs and the members are unable |
|
to break the deadlock; |
|
(B) the directors or those in control of the |
|
cooperative in their capacities as members, directors, or officers |
|
have acted fraudulently, illegally, or in a manner unfairly |
|
prejudicial toward one or more members; |
|
(C) the members of the cooperative are so divided |
|
in voting power that, for a period that includes the time when two |
|
consecutive regular members' meetings were held, they have failed |
|
to elect successors to directors whose terms have expired or would |
|
have expired on the election and qualification of their successors; |
|
(D) the cooperative assets are being misapplied |
|
or wasted; or |
|
(E) the period of duration as provided in the |
|
articles of organization has expired and has not been extended as |
|
provided in this chapter; |
|
(3) in an action by a creditor when: |
|
(A) the claim of the creditor against the |
|
cooperative has been reduced to judgment and an execution on the |
|
judgment has been returned unsatisfied; or |
|
(B) the cooperative has admitted in writing that |
|
the claim of the creditor against the cooperative is due and payable |
|
and it is established that the cooperative is unable to pay its |
|
debts in the ordinary course of business; or |
|
(4) in an action by the attorney general to dissolve |
|
the cooperative under this chapter if it is established that a |
|
decree of dissolution is appropriate. |
|
(b) In determining whether to order equitable relief or |
|
dissolution, the court shall take into consideration the financial |
|
condition of the cooperative but may not refuse to order equitable |
|
relief or dissolution solely on the ground that the cooperative has |
|
accumulated operating net income or current operating net income. |
|
(c) In deciding whether to order dissolution of the |
|
cooperative, the court shall consider whether lesser relief |
|
suggested by one or more parties, such as a form of equitable relief |
|
or a partial liquidation, would be adequate to permanently relieve |
|
the circumstances established under Subsection (a)(2)(B) or (C). |
|
Lesser relief may be ordered if it would be appropriate under the |
|
facts and circumstances of the case. |
|
(d) If the court finds that a party to a proceeding brought |
|
under this section has acted arbitrarily, vexatiously, or otherwise |
|
not in good faith, the court in its discretion may award reasonable |
|
expenses, including attorney's fees and disbursements, to any of |
|
the other parties. |
|
(e) Proceedings under this section must be brought in a |
|
district court for the county in which the registered address of the |
|
cooperative is located. |
|
(f) Members are not necessary parties to the action or |
|
proceeding unless relief is sought against them personally. |
|
Sec. 53.508. PROCEDURE IN INVOLUNTARY OR COURT-SUPERVISED |
|
VOLUNTARY DISSOLUTION. (a) In dissolution proceedings, before a |
|
hearing is completed the court may: |
|
(1) issue an injunction; |
|
(2) appoint a receiver with all powers and duties that |
|
the court directs; and |
|
(3) take action required to preserve the cooperative's |
|
assets wherever located and to carry on the business of the |
|
cooperative. |
|
(b) After a hearing is completed, on notice directed to be |
|
given to the parties to the proceedings and to other parties in |
|
interest designated by the court, the court may appoint a receiver |
|
to collect the cooperative's assets, including an amount owed to |
|
the cooperative by a subscriber on account of an unpaid portion of |
|
the consideration for the issuance of shares. The receiver may, |
|
subject to the order of the court, continue the business of the |
|
cooperative and sell, lease, transfer, or otherwise dispose of the |
|
property and assets of the cooperative at either a public or private |
|
sale. |
|
(c) The assets of the cooperative or the proceeds resulting |
|
from a sale, lease, transfer, or other disposition shall be applied |
|
in the following order of priority: |
|
(1) the costs and expenses of the proceedings, |
|
including attorney's fees and disbursements; |
|
(2) debts, taxes, and assessments due the United |
|
States, this state, and other states, in that order; |
|
(3) claims proved and allowed to employees under the |
|
provisions of the workers' compensation law, except that claims |
|
under this subdivision may not be allowed if the cooperative |
|
carried workers' compensation insurance at the time the injury was |
|
sustained; |
|
(4) claims, including the value of all compensation |
|
paid in a medium other than money, proved and allowed to employees |
|
for any services performed within the three months before the date |
|
the receiver was appointed; and |
|
(5) other claims proved and allowed. |
|
(d) After payment of the expenses of receivership and claims |
|
of creditors are proved, any remaining assets may be distributed to |
|
the members or distributed under an approved liquidation plan. |
|
Sec. 53.509. RECEIVER QUALIFICATIONS AND POWERS. (a) A |
|
receiver must be a natural person or a domestic or foreign |
|
corporation authorized to transact business in this state. A |
|
receiver shall give a bond as directed by the court with the |
|
sureties required by the court. |
|
(b) A receiver may sue and defend in all courts as receiver |
|
of the cooperative. The court appointing the receiver has |
|
exclusive jurisdiction of the cooperative and its property. |
|
Sec. 53.510. DISSOLUTION ACTION BY ATTORNEY GENERAL; |
|
ADMINISTRATIVE DISSOLUTION. (a) A cooperative may be dissolved |
|
involuntarily by order of a court in this state in an action filed |
|
by the attorney general if it is established that: |
|
(1) the articles and certificate of organization were |
|
procured through fraud; |
|
(2) the cooperative was organized for a purpose not |
|
permitted by this chapter or prohibited by state law; |
|
(3) the cooperative has flagrantly violated a |
|
provision of this chapter, violated a provision of this chapter |
|
more than once, or violated more than one provision of this chapter; |
|
or |
|
(4) the cooperative has acted or failed to act in a |
|
manner that constitutes a surrender or abandonment of the |
|
cooperative's franchise, privileges, or enterprise. |
|
(b) An action may not be brought under Subsection (a) before |
|
the 31st day after the date notice is given to the cooperative by |
|
the attorney general of the reason for filing the action. If the |
|
reason for filing the action is an act or omission of the |
|
cooperative and the act or omission may be corrected by an amendment |
|
of the articles of organization or bylaws or by performance of or |
|
abstention from the act, the attorney general may file the action |
|
only if the cooperative fails to make the correction before the 31st |
|
day after notice is given to the cooperative by the attorney |
|
general. |
|
Sec. 53.511. FILING CLAIMS IN COURT-SUPERVISED DISSOLUTION |
|
PROCEEDINGS. (a) In a proceeding to dissolve a cooperative, the |
|
court may require a creditor or claimant of the cooperative to file |
|
a claim made under oath with the court administrator or with the |
|
receiver in a form prescribed by the court. |
|
(b) If the court requires the filing of claims, the court |
|
shall: |
|
(1) set a date, by order, at least 120 days after the |
|
date the order is filed, as the last day for filing claims; and |
|
(2) prescribe the form of a notice of the date set to |
|
be given to creditors and claimants. |
|
(c) Before the date set by the court, the court may extend |
|
the time for filing claims. A creditor or claimant who fails to file |
|
a claim on or before the date may be barred by order of the court |
|
from claiming an interest in or receiving payment from the property |
|
or assets of the cooperative. |
|
Sec. 53.512. DISCONTINUANCE OF COURT-SUPERVISED |
|
DISSOLUTION PROCEEDINGS. The involuntary or supervised voluntary |
|
dissolution of a cooperative may be discontinued at any time during |
|
the dissolution proceedings if it is established that cause for |
|
dissolution does not exist. The court shall dismiss the |
|
proceedings and direct the receiver, if any, to redeliver to the |
|
cooperative its remaining property and assets. |
|
Sec. 53.513. COURT-SUPERVISED DISSOLUTION ORDER. (a) In |
|
an involuntary or supervised voluntary dissolution, the court shall |
|
enter an order dissolving the cooperative after the costs and |
|
expenses of the proceedings and all debts, obligations, and |
|
liabilities of the cooperative have been paid or discharged and the |
|
remaining property and assets have been distributed to its members |
|
or, if its property and assets are not sufficient to satisfy and |
|
discharge the costs, expenses, debts, obligations, and |
|
liabilities, when all the property and assets have been applied to |
|
their payment according to their priorities. |
|
(b) When the court enters the order dissolving the |
|
cooperative or association, the cooperative or association is |
|
dissolved. |
|
Sec. 53.514. FILING OF DISSOLUTION ORDER. After the court |
|
enters an order dissolving a cooperative, the court administrator |
|
shall cause a certified copy of the dissolution order to be filed |
|
with the secretary of state. The secretary of state may not charge |
|
a fee for filing the dissolution order. |
|
Sec. 53.515. BARRING OF CLAIMS. (a) A person who is or |
|
becomes a creditor or claimant before, during, or after the |
|
conclusion of dissolution proceedings, who does not file a claim or |
|
pursue a remedy in a legal, administrative, or arbitration |
|
proceeding during the pendency of the dissolution proceeding, or |
|
who does not initiate a legal, administrative, or arbitration |
|
proceeding before the dissolution proceedings commenced and all |
|
those claiming through or under the creditor or claimant are |
|
forever barred from suing on that claim or otherwise realizing upon |
|
or enforcing it, except as provided by this section. |
|
(b) Not later than the first anniversary of the date the |
|
articles of dissolution are filed with the secretary of state or a |
|
dissolution order is entered, a creditor or claimant who shows good |
|
cause for not having previously filed the claim may apply to a court |
|
in this state to allow a claim: |
|
(1) against the cooperative to the extent of |
|
undistributed assets; or |
|
(2) if the undistributed assets are not sufficient to |
|
satisfy the claim, against a member up to the amount distributed to |
|
the member. |
|
(c) A debt, obligation, or liability incurred during the |
|
dissolution proceedings shall be paid or provided for by the |
|
cooperative before the distribution of assets to a member. A person |
|
to whom such a debt, obligation, or liability is owed but not paid |
|
may pursue any remedy against the officers, directors, or members |
|
of the cooperative before the expiration of the applicable statute |
|
of limitations. This subsection does not apply to dissolution |
|
under the supervision or order of a court. |
|
Sec. 53.516. RIGHT TO SUE OR DEFEND AFTER DISSOLUTION. |
|
After a cooperative has been dissolved, any of its former officers, |
|
directors, or members may assert or defend, in the name of the |
|
cooperative, a claim by or against the cooperative. |
|
SECTION 2. This Act takes effect September 1, 2007. |