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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 company, limited liability company, |
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limited liability partnership, or other legal entity, whether |
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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) "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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(10) "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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(11) "Members' meeting" means a regular or special |
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members' meeting. |
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(12) "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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(13) "Patron" means a person or entity that conducts |
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patronage business with a cooperative. |
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(14) "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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(15) "Patron member" means a member who holds a patron |
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membership interest. |
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(16) "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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[Sections 53.003-53.050 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, or privileges granted by |
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the laws of this state to other cooperatives, except those that are |
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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 lend to or borrow money from |
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individual members, cooperatives, or associations from which it is |
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constituted and give security that it considers sufficient in |
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dealing with the members, cooperatives, or associations. |
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(j) A cooperative may purchase, acquire, hold, or dispose of |
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an ownership interest in another business entity, whether organized |
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under the laws of this state or another state, and assume all |
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rights, interests, privileges, responsibilities, and obligations |
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arising out of the 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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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. ORGANIZATION |
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Sec. 53.101. 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. 53.102. COOPERATIVE NAME. (a) The name of a |
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cooperative must be distinguished from the names of other domestic |
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business entities and foreign business entities authorized or |
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registered to do business in this state and any name the right to |
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which is reserved at the time of organization. |
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(b) The cooperative name is reserved exclusively for the |
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cooperative during its existence. |
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Sec. 53.103. 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 and the name and address of its registered agent in this |
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state; |
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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 |
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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 |
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of voting power as provided for in this chapter; |
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(8) a statement that a membership interest held by a |
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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 |
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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 |
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basis of patronage and that the records of the cooperative are to |
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include the interests of patron membership interests and nonpatron |
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membership interests, which may be additionally described in the |
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bylaws of any class and in the reserves; and |
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(12) the registered address of the cooperative. |
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(b) The articles of organization shall contain the |
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provisions described by Subsection (a), except that the names and |
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mailing addresses of the directors of the initial board may be |
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omitted after their successors have been elected by the members or |
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the articles of organization are amended in their entirety. |
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(c) The articles of organization may contain any other |
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lawful provision. |
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(d) The articles of organization must be signed by the |
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organizers. |
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(e) The original articles of organization shall be filed |
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with the secretary of state. The secretary of state shall determine |
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the fee for filing the articles of organization. |
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(f) When the articles of organization are filed with the |
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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; |
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(2) the cooperative has been chartered by this state |
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as a separate legal entity; and |
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(3) the secretary of state will issue a certificate of |
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organization to the cooperative. |
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Sec. 53.104. AMENDMENT OF ARTICLES OF ORGANIZATION. (a) |
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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 |
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stating the text of the proposed amendment; |
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(2) the text of the proposed amendment and an attached |
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mail ballot if the board has provided for a mail ballot in the |
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resolution, or a description of an alternative voting method |
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approved by the board and stated in the resolution, must be mailed |
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or distributed with a regular or special meeting notice to each |
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member; |
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(3) the notice must designate the time and place of the |
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meeting for the proposed amendment to be considered and voted on; |
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and |
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(4) if a quorum of the members is registered as being |
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present or represented by alternative vote at the meeting, the |
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proposed amendment is adopted: |
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(A) when approved by a majority of the votes |
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cast; or |
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(B) if the cooperative has articles of |
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organization or bylaws that require more than majority approval or |
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other conditions for approval, when approved by a proportion of the |
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votes cast or a number of total members as required by the articles |
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of organization or bylaws and when the conditions for approval in |
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the articles of organization or bylaws have been complied with. |
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(b) After an amendment has been adopted, the amendment shall |
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be signed by the chair, vice chair, records officer, or assistant |
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records officer and a copy of the amendment filed with the secretary |
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of state. |
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(c) A certificate shall be prepared stating: |
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(1) the vote and meeting of the board adopting a |
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resolution of the proposed amendment; |
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(2) the notice given to members of the meeting at which |
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the amendment was adopted; |
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(3) the quorum registered at the meeting; and |
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(4) the votes cast adopting the amendment. |
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(d) The certificate shall be signed by the chair, vice |
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chair, records officer, or financial officer and filed with the |
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records of the cooperative. |
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(e) A majority of directors may amend the articles of |
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organization if the cooperative does not have any members with |
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voting rights. |
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Sec. 53.105. AMENDMENT OF ORGANIZATIONAL DOCUMENTS TO BE |
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GOVERNED BY THIS CHAPTER. (a) A business entity organized and |
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doing business under other laws of this state or under the laws of |
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another state that has or will conduct business as a cooperative may |
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become subject to this chapter by amending its organizational |
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documents to conform to the requirements of articles of |
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organization under this chapter. |
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(b) A business entity organized under other laws of this |
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state may amend its organizational documents to comply with the |
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provisions of this chapter and file the amended articles of |
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organization with the secretary of state to be a cooperative |
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governed under this chapter. The status of the business entity |
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under the other laws terminates with the filing of articles of |
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organization to be governed under this chapter. |
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(c) A business entity organized under laws of another state |
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may amend its organizational documents to comply with the |
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provisions of this chapter. After the organizational documents are |
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amended, the business entity shall file a certified copy of the |
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organizational documents as amended with the secretary of state to |
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comply with the provisions of this chapter, including the fees and |
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other requirements prescribed for filing articles of organization. |
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After filing, the business entity is a cooperative in this state |
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organized under and subject to the provisions of this chapter. |
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Sec. 53.106. EXISTENCE. (a) The existence of a cooperative |
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begins on the date the articles of organization are filed with the |
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secretary of state. |
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(b) A cooperative has a perpetual duration unless the |
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articles of organization provide for a limited period of duration. |
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Sec. 53.107. REGISTERED AGENT; CHANGE OF REGISTERED OFFICE |
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OR REGISTERED AGENT. (a) Each cooperative must continuously |
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maintain in this state: |
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(1) a registered office, which may be the same as its |
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place of business; and |
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(2) a registered agent, which may be: |
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(A) an individual resident of this state whose |
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business office is the same as the cooperative's registered office; |
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or |
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(B) a domestic corporation, or a foreign |
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corporation authorized to transact business in this state, whose |
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business office is the same as the cooperative's registered office. |
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(b) A cooperative may change its registered office or agent |
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on filing with the secretary of state a statement that includes: |
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(1) the name of the cooperative; |
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(2) the address of the cooperative's current |
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registered office; |
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(3) the address of the cooperative's new registered |
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office if the cooperative is changing its registered office; |
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(4) the name of the cooperative's current registered |
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agent; |
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(5) the name of the cooperative's new registered agent |
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if the cooperative is changing its registered agent; |
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(6) a certification that the address of the |
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cooperative's registered office and the address of the business |
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office of the cooperative's registered agent are identical; and |
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(7) a certification that the change in the |
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cooperative's registered agent or registered office was authorized |
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by an affirmative vote of a majority of the board of directors of |
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the cooperative. |
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(c) The statement under Subsection (b) shall be signed and |
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delivered to the secretary of state. If the secretary of state finds |
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that the statement meets the requirements of this section, the |
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secretary of state shall file the statement. The change of address |
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of the registered office or the appointment of a new registered |
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agent is effective when filed by the secretary of state. |
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(d) A registered agent of a cooperative may resign as agent |
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by filing a written notice, signed with one original and one copy, |
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with the secretary of state. The secretary of state shall mail a |
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copy of the statement to the cooperative. The appointment of the |
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registered agent terminates on the 30th day after the date the |
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secretary of state receives notice. |
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(e) If a cooperative fails for 30 days or longer to appoint |
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and maintain a registered agent in this state, or fails for 30 days |
|
or longer after a change of its registered office or registered |
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agent to file a statement of the change, the cooperative is |
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considered to be transacting business without authority and |
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automatically forfeits any franchises, rights, or privileges |
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acquired under the laws of this state. |
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(f) When the secretary of state determines that a |
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cooperative is transacting business without authority under |
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Subsection (e), the secretary of state shall mail by certified mail |
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to the cooperative a notice of the failure. Unless the cooperative |
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provides a statement under Subsection (b) not later than the 30th |
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day after the date of the delivery of notice, the cooperative is |
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considered nonoperational and forfeits its certificate of |
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organization issued by the secretary of state. A cooperative |
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considered nonoperational under this subsection may at any time |
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within two years after the forfeiture of its certificate be revived |
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and reinstated by filing the necessary statement under this chapter |
|
and paying a reinstatement fee established by the secretary of |
|
state by rule, plus a penalty of $100. The reinstatement fee may |
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not exceed the costs of reinstating the certificate. The |
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cooperative retains its registered name during the two-year period |
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under this subsection. |
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Sec. 53.108. RULES; FILING FEES. The secretary of state |
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may adopt rules necessary to implement this chapter and may |
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determine the filing fee for documents under this chapter. |
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[Sections 53.109-53.150 reserved for expansion] |
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SUBCHAPTER D. BYLAWS |
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Sec. 53.151. BYLAWS. (a) A cooperative shall adopt bylaws |
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governing the cooperative's business affairs and structure, the |
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qualifications, classification, rights, and obligations of its |
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members, and the classifications, allocations, and distributions |
|
of membership interests. |
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(b) The bylaws of a cooperative may be adopted or amended by |
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the directors as provided by Subsection (c) or at a regular or |
|
special members' meeting if: |
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(1) the notice of the meeting contains a statement |
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that the bylaws or restated bylaws will be voted on and copies are |
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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 |
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(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 53.152-53.200 reserved for expansion] |
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SUBCHAPTER E. MEMBERSHIP INTERESTS |
|
Sec. 53.201. 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. 53.202. 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. 53.203. 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 53.204-53.250 reserved for expansion] |
|
SUBCHAPTER F. MEMBERS |
|
Sec. 53.251. 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. 53.252. MEMBER VIOLATIONS; LIABILITY FOR COOPERATIVE |
|
DEBTS. (a) A member who knowingly, intentionally, or repeatedly |
|
violates a provision of the articles of organization, bylaws, |
|
member control agreement, or marketing contract with the |
|
cooperative may be required by the board to surrender the financial |
|
right of membership interest of any class owned by the member. |
|
(b) The cooperative shall refund to the member for the |
|
surrendered financial right of membership interest the lesser of |
|
the book value or market value of the financial right of the |
|
membership interest payable in not more than seven years from the |
|
date of surrender or transfer all of any patron member's financial |
|
rights to a class of financial rights held by members who are not |
|
patron members, or to a certificate of interest that carries |
|
liquidation rights on par with a membership interest and is |
|
redeemable within seven years after the transfer as provided in the |
|
certificate. |
|
(c) A membership interest required to be surrendered may be |
|
reissued or retired and canceled by the board. |
|
(d) A member who knowingly, intentionally, or repeatedly |
|
violates a provision of the articles of organization, bylaws, |
|
member control agreement, or marketing contract may be required by |
|
the board to surrender the member's entitlement to vote in the |
|
cooperative. |
|
(e) A member is not, merely because of the member's status, |
|
personally liable for the acts, debts, liabilities, or obligations |
|
of a cooperative. A member is liable for any unpaid subscription |
|
for the membership interest, unpaid membership fees, or debt for |
|
which the member has separately contracted with the cooperative. |
|
Sec. 53.253. REGULAR MEMBERS' MEETINGS. (a) Regular |
|
members' meetings shall be held annually at a time determined by the |
|
board, unless otherwise provided for in the bylaws. |
|
(b) The regular members' meeting shall be held at the |
|
principal place of business of the cooperative or at another |
|
conveniently located place as determined by the bylaws or the |
|
board. |
|
(c) The officers shall submit reports to the members at the |
|
regular members' meeting covering the business of the cooperative |
|
for the previous fiscal year that show the condition of the |
|
cooperative at the end of the fiscal year of the organization. |
|
(d) Directors shall be elected at the regular members' |
|
meeting for the terms of office prescribed in the bylaws, other than |
|
directors elected at a district or unit meeting. |
|
(e) The cooperative shall give notice of regular members' |
|
meetings by mailing a notice to each member at the member's last |
|
known mailing address or by other notification approved by the |
|
board and agreed to by the members. Notice of a regular members' |
|
meeting shall be published or otherwise given by an approved method |
|
at least two weeks before the date of the meeting or mailed at least |
|
15 days before the date of the meeting. |
|
Sec. 53.254. SPECIAL MEMBERS' MEETINGS. (a) A special |
|
members' meeting may be called by: |
|
(1) a majority vote of the board; or |
|
(2) a written petition submitted to the chair of at |
|
least 20 percent of the patron members, 20 percent of the nonpatron |
|
members, or 20 percent of all members collectively. |
|
(b) The cooperative shall give notice of a special members' |
|
meeting by mailing a notice to each member personally at the |
|
person's last known mailing address or an alternative method |
|
approved by the board and the member individually or the members |
|
generally. For a member that is an entity, notice mailed or |
|
delivered by an alternative method must be to an officer of the |
|
entity. The notice shall state the time, place, and purpose of the |
|
special members' meeting. The notice shall be issued not later than |
|
the 10th day after the date the members' petition is submitted and |
|
the meeting held within 30 days after the date the members' petition |
|
is submitted. |
|
Sec. 53.255. CERTIFICATION OF MEETING NOTICE. (a) After |
|
mailing or delivering of the special or regular members' meeting |
|
notices, the chair or records officer shall execute a certificate |
|
containing the date of mailing or delivery of the notices and a |
|
statement that the notices were mailed or delivered as prescribed |
|
by law. |
|
(b) The certificate shall be made a part of the record of the |
|
meeting. |
|
Sec. 53.256. FAILURE TO RECEIVE MEETING NOTICE. Failure of |
|
a member to receive notice of a special or regular members' meeting |
|
does not invalidate an action taken by the members at the meeting. |
|
Sec. 53.257. QUORUM. (a) The quorum for a members' meeting |
|
is: |
|
(1) 10 percent of the total number of members for a |
|
cooperative with 500 or fewer members; or |
|
(2) 50 members for a cooperative with more than 500 |
|
members. |
|
(b) In determining a quorum at a meeting, on a question |
|
submitted to a vote by mail or an alternative method, members |
|
present in person or represented by mail vote or the alternative |
|
voting method shall be counted. The attendance of a sufficient |
|
number of members to establish a quorum shall be determined by a |
|
registration of the members of the cooperative present at the |
|
meeting. Registration shall be verified by the chair or the records |
|
officer and reported in the minutes of the meeting. |
|
(c) An action by a cooperative is invalid in the absence of a |
|
quorum at the meeting at which the action was taken. |
|
Sec. 53.258. MEMBER VOTING RIGHTS. (a) A patron member is |
|
only entitled to one vote on an issue to be voted on by members who |
|
hold a patron membership interest, except that a patron member of a |
|
cooperative described by Section 53.259 may be entitled to more |
|
than one vote as provided by that section. On any matter of the |
|
cooperative, the entire patron members' voting power shall be voted |
|
collectively based on the vote of the majority of patron members |
|
voting on the issue. A nonpatron member has voting rights according |
|
to the member's nonpatron membership interest granted in the |
|
bylaws, subject to the provisions of this chapter. |
|
(b) A member or delegate may exercise the member's voting |
|
rights on any matter that is before the members as provided by the |
|
articles of organization or bylaws at a members' meeting from the |
|
time the member or delegate arrives at the members' meeting, unless |
|
the articles of organization or bylaws specify an earlier and |
|
specific time for the expiration of the member's right to vote. |
|
(c) A member's vote at a members' meeting must be in person |
|
or by mail if a mail vote is authorized by the board or by an |
|
alternative method authorized by the board and not by proxy except |
|
as provided by Subsection (d). |
|
(d) A cooperative may provide in the articles of |
|
organization or bylaws that a unit or district of members is |
|
entitled to be represented at a members' meeting by delegates |
|
chosen by the members of the unit or district. The delegates may |
|
vote on matters at the members' meeting in the same manner as a |
|
member. The delegates may only exercise the voting rights on a |
|
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 |
|
members is required for the adoption of amendments, a dissolution, |
|
a merger, a consolidation, or a sale of assets, the votes of |
|
delegates shall be counted as votes by the members represented by |
|
the delegate. Patron members may be represented by a delegate who |
|
is a patron member. Nonpatron members may be represented by a |
|
delegate if authorized in the bylaws. |
|
(e) A member who is or will be absent from a members' meeting |
|
may vote by mail or by an approved alternative method on any motion, |
|
resolution, or amendment that the board submits for vote by mail or |
|
alternative method to the members. A properly executed ballot |
|
shall be accepted by the board and counted as the vote of the absent |
|
member at the meeting. |
|
(f) The ballot used for a vote under Subsection (e) must: |
|
(1) be in the form prescribed by the board; |
|
(2) contain the exact text of the proposed motion, |
|
resolution, or amendment to be acted on at the meeting; |
|
(3) contain the text of the motion, resolution, or |
|
amendment for which the member may indicate an affirmative or |
|
negative vote; and |
|
(4) allow the member to express a choice by marking an |
|
appropriate choice on the ballot and mailing, delivering, or |
|
otherwise submitting the ballot to the cooperative in a plain, |
|
sealed envelope inside another envelope bearing the member's name |
|
or by an alternative method approved by the board. |
|
Sec. 53.259. PATRON MEMBER VOTING IN COOPERATIVES |
|
CONSTITUTED ENTIRELY OR PARTIALLY OF OTHER COOPERATIVES OR |
|
ASSOCIATIONS. (a) The articles of organization or the bylaws of a |
|
cooperative that is constituted wholly or partly of other |
|
cooperatives or associations may authorize the patron members of a |
|
subsidiary cooperative to have an additional vote for: |
|
(1) a stipulated amount of business transacted between |
|
the parent cooperative and the subsidiary cooperative to which the |
|
patron member is a member; |
|
(2) a stipulated number of patron members in the |
|
subsidiary cooperative; |
|
(3) a stipulated amount of equity allocated to or held |
|
by the subsidiary cooperative in the parent cooperative; or |
|
(4) a combination of the reasons in Subdivisions |
|
(1)-(3). |
|
(b) The articles of organization or the bylaws of a |
|
cooperative that is organized into units or districts of patron |
|
members may authorize the delegates elected by its patron members |
|
to have an additional vote for: |
|
(1) a stipulated amount of business transacted between |
|
the patron members in the unit or district and the cooperative; |
|
(2) a stipulated amount of equity allocated to or held |
|
by the patron members of the units or districts of the cooperative; |
|
or |
|
(3) a combination of the reasons in Subdivisions (1) |
|
and (2). |
|
[Sections 53.260-53.300 reserved for expansion] |
|
SUBCHAPTER G. ADMINISTRATION |
|
Sec. 53.301. GOVERNANCE. A cooperative is governed by its |
|
board. |
|
Sec. 53.302. NUMBER OF DIRECTORS. The board must have at |
|
least three directors. |
|
Sec. 53.303. ELECTION OF DIRECTORS. (a) Directors are |
|
elected for the term, at the time, and in the manner provided by |
|
this section and the bylaws. A majority of the directors must be |
|
members, and at least one director must be elected exclusively by |
|
the members holding patron membership interests. The voting |
|
entitlement of the directors may be allocated according to |
|
allocation units or equity classifications of the cooperative |
|
provided that at least one-half of the voting power on general |
|
matters of the cooperative must be allocated to one or more |
|
directors elected by members holding a patron membership interest. |
|
(b) Directors are elected for the terms of office prescribed |
|
in the bylaws. Other than directors elected at a district meeting, |
|
all directors are elected at the regular members' meeting. |
|
(c) For a cooperative with districts or other units, members |
|
may elect directors on a district or unit basis if provided for by |
|
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' |
|
meeting by vote of the entire membership unless the bylaws provide |
|
that a director who is nominated at a district meeting is to be |
|
elected by vote of the members of the district at the annual regular |
|
members' meeting. |
|
(d) A member must vote in person at a meeting for a director |
|
unless an alternative method of voting is authorized for the |
|
election of directors by the articles of organization or bylaws. |
|
(e) If alternative voting for directors is authorized: |
|
(1) the ballot must be in a form prescribed by the |
|
board; |
|
(2) a member shall mark the ballot for the candidate |
|
chosen and mail the ballot to the cooperative in a sealed plain |
|
envelope inside another envelope bearing the member's name, or |
|
shall vote in the alternative manner prescribed by the board; and |
|
(3) the ballot shall be accepted and counted as the |
|
vote of the absent member if the ballot of the member is received by |
|
the cooperative on or before the date of the regular members' |
|
meeting. |
|
(f) If a member is not a natural person and the bylaws do not |
|
provide otherwise, the member may nominate one or more natural |
|
persons for election to the board. |
|
Sec. 53.304. FILLING VACANCIES. If a director who was |
|
elected by patron members vacates the director's position, the |
|
board shall appoint a patron member of the cooperative to fill the |
|
vacancy until the next regular or special members' meeting. If the |
|
vacating director was not a patron member, the board shall appoint a |
|
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. |
|
Sec. 53.305. REMOVAL OF DIRECTORS. At a members' meeting |
|
the class of members who elected a director may remove the director |
|
for cause related to the duties of the position and fill the vacancy |
|
caused by the removal. |
|
Sec. 53.306. LIMITATION OF DIRECTOR'S LIABILITY. (a) |
|
Except as provided by Subsection (b), a director's personal |
|
liability to the cooperative or its members for monetary damages |
|
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 |
|
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. |
|
Sec. 53.307. OFFICERS. (a) The board shall: |
|
(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. |
|
Sec. 53.308. VOTE OF OWNERSHIP INTERESTS HELD BY |
|
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. |
|
[Sections 53.309-53.350 reserved for expansion] |
|
SUBCHAPTER H. MERGER AND CONSOLIDATION |
|
Sec. 53.351. MERGER AND CONSOLIDATION. (a) Unless |
|
otherwise prohibited, cooperatives organized under the laws of this |
|
state may merge or consolidate with each other or other business |
|
entities organized under the laws of this state or another state by |
|
complying with the provisions of this section or the law of the |
|
state where the surviving or new business entity will exist. |
|
(b) To initiate a merger or consolidation of a cooperative, |
|
a written plan of merger or consolidation must be prepared by the |
|
board or by a committee selected by the board to prepare a plan. The |
|
plan shall contain: |
|
(1) the names of the constituent cooperatives and |
|
other business entities; |
|
(2) the name of the surviving or new cooperative or |
|
other business entity; |
|
(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 or consolidation; |
|
(5) the proposed effect of the consolidation or merger |
|
on the members and patron members of the cooperative; and |
|
(6) for a consolidation, the articles of organization |
|
of the entity or organizational documents to be filed with the state |
|
in which the entity is organized. |
|
Sec. 53.352. NOTICE. (a) The board shall mail a merger or |
|
consolidation 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 or consolidation notice in the same manner as the notice of a |
|
regular members' meeting. |
|
Sec. 53.353. ADOPTION OF MERGER OR CONSOLIDATION PLAN. (a) |
|
A plan of merger or consolidation 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 or |
|
consolidation that contain the plan and state that the plan was |
|
adopted according to this chapter shall be signed by the chair, vice |
|
chair, records officer, or documents officer of each cooperative |
|
merging or consolidating. |
|
(c) If the new business entity will exist in this state, the |
|
articles of merger or consolidation shall be filed in the office of |
|
the secretary of state. |
|
(d) For a merger, the articles of organization of the |
|
surviving cooperative subject to this chapter are considered |
|
amended to the extent provided in the articles of merger. |
|
(e) Unless a later date is provided in the plan, the merger |
|
or consolidation is effective when the articles of merger or |
|
consolidation are filed in the office of the secretary of state. |
|
(f) The secretary of state shall issue a certificate of |
|
organization of the merged or consolidated cooperative. |
|
Sec. 53.354. EFFECT OF MERGER OR CONSOLIDATION. (a) After |
|
the effective date, the cooperatives or other business entities |
|
that are parties to the plan become a single entity. For a merger, |
|
the surviving business entity is the business entity designated in |
|
the plan. For a consolidation, the new cooperative or other |
|
business entity is the business entity provided for in the plan. |
|
Except for the surviving or new business entity, the separate |
|
existence of each business entity that is a party to the plan ceases |
|
on the effective date of the merger or consolidation. |
|
(b) The surviving or new business entity possesses all of |
|
the rights and property of each of the merged or consolidated |
|
business entities and is responsible for all their obligations. |
|
The title to property of the merged or consolidated business entity |
|
is vested in the surviving or new business entity without reversion |
|
or impairment of the title caused by the merger or consolidation. |
|
(c) The right of a creditor may not be impaired by the merger |
|
or consolidation without the creditor's consent. |
|
Sec. 53.355. FEE. The secretary of state shall set the |
|
filing fee for a merger or consolidation plan under this |
|
subchapter. |
|
[Sections 53.356-53.400 reserved for expansion] |
|
SUBCHAPTER I. LIQUIDATION |
|
Sec. 53.401. LIQUIDATION. (a) A cooperative may be |
|
liquidated as provided in the articles of organization in a manner |
|
consistent with other business entities organized in this state or, |
|
if not provided, may be liquidated in the same manner as a limited |
|
liability company 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 53.402-53.450 reserved for expansion] |
|
SUBCHAPTER J. DISSOLUTION |
|
Sec. 53.451. METHODS OF DISSOLUTION. A cooperative may be |
|
dissolved by the members or by the order of a court. |
|
Sec. 53.452. 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. 53.453. 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. 53.454. 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. 53.455. 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. 53.456. 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 |
|
53.463. |
|
Sec. 53.457. 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. 53.458. 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. 53.459. 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. 53.460. 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. 53.461. 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. 53.462. 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. 53.463. 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. 53.464. 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. 53.465. 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. 53.466. 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. |