USA: Minnesota Statutes 1996


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     This document has been made available in electronic
     format by the International Co-operative Alliance (ICA)
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                         May 1997

          Minnesota Statutes 1996, Chapter 308A.

Copyright 1996 by the Office of Revisor of Statutes, State of
Minnesota.


308A.001 
308A.001 Citation. 
 
This chapter may be cited as the "Minnesota cooperative law."  
 
HIST: 1989 c 144 art 1 s 1 

308A.005 
308A.005 Definitions. 
 
Subdivision 1.  Applicability.  The definitions in this
section apply to this chapter.  
 
Subd. 2.  Articles.  "Articles" means the articles of
incorporation of a cooperative as originally filed and
amended.  
 
Subd. 3.  Association.  "Association" means an organization
conducting business on a cooperative plan that is incorporated
under other laws of this state or another state.  
 
Subd. 4.  Board.  "Board" means the board of directors of a
cooperative.  
 
Subd. 5.  Cooperative.  "Cooperative" means an association
conducting business on a cooperative plan that is organized
under this chapter or is subject to this chapter.  
 
Subd. 6.  Corporation.  "Corporation" means a company, limited
liability company, whether domestic or foreign, association,
or body vested with a corporate power or function. 
 
Subd. 7.  Domestic corporation.  "Domestic corporation"  
means a corporation organized under the laws of this state.  
 
Subd. 8.  Foreign corporation.  "Foreign corporation" means
a corporation that is not a domestic corporation.  
 
Subd. 8a.  Health care cooperative.  "Health care cooperative"
has the meaning given in section 62R.

Subd. 9.  Member.  "Member" means a member or a stockholder
of a cooperative who is entitled to vote.  
 
Subd. 10.  Members' meeting.  "Members' meeting" means a
regular or special members' meeting.  
 
Subd. 11.  Stockholder.  "Stockholder" means the holder of a
share of common stock of a cooperative.  
 
HIST: 1989 c 144 art 1 s 2; 1992 c 517 art 1 s 17; 1994 c 625 
art 11 s 9 

308A.011 

308A.011 Use of term cooperative restricted. 
 
Subdivision 1.  Only business subject to this chapter   may
use term cooperative.  

(a) A corporation or association   organized in this state may
not use the term "cooperative" as   part of its corporate or
business name or title, or to represent itself as a
cooperative, unless the corporation or association has
complied with and is subject to this chapter or has
incorporated under other laws of this state authorizing 
incorporation of business on a cooperative plan. 
 
(b) A cooperative formed pursuant to chapter 515B is   subject
to this chapter, except that in the event of a conflict  
between chapter 515B and this chapter, chapter 515B is  
controlling. 
 
Subd. 2.  Penalty for misuse of term cooperative.  A  
corporation or association is guilty of a misdemeanor that  
violates subdivision 1.  
 
HIST: 1989 c 144 art 1 s 3; 1993 c 222 art 5 s 1 

==308A.015
 
308A.015 Reservation of right. 
 
The state reserves the right to amend or repeal the  
provisions of this chapter by law.  A cooperative incorporated 
or governed by this chapter is subject to this reserved right. 

 
HIST: 1989 c 144 art 3 s 1 

308A.021 

308A.021 Filing fee. 
 
Unless otherwise provided, the filing fee for documents  
filed with the secretary of state is $35.  
 
HIST: 1989 c 144 art 1 s 4; 1989 c 335 art 1 s 201 

308A.025 

308A.025 Registered office. 
 
Subdivision 1.  Registered office.  A cooperative must  
continuously maintain a registered office in this state.  A  
registered office need not be the same as the principal place
of business of the cooperative.  
 
Subd. 2.  Registered agent.  A cooperative may designate a
registered agent.  The registered agent may be a natural
person residing in this state, a domestic corporation,   or a
foreign corporation authorized to transact business in this  
state.  The registered agent must maintain an office that is  
identical with the registered office.   

Subd. 3.  Designation or change of registered office or  
registered agent.  A cooperative may designate or change its  
registered office, designate or change its registered agent,
or state a change in the name of its registered agent, by
filing a statement with the secretary of state containing:  
 
(1) the name of the cooperative; 
 
(2) the new address of the cooperative's registered office; 
 
(3) the name of the cooperative's registered agent, if any; 
 
(4) a statement that the address of its registered office  
and the address of the office of its registered agent, as  
changed, will be identical; and 
 
(5) a statement that the change of registered office or  
registered agent was authorized by a resolution approved by
the affirmative vote of a majority of the board.  
 
Subd. 4.  Resignation of agent.  A registered agent of   a
cooperative may resign by filing with the secretary of state a 
signed written notice of resignation, including a statement
that a signed copy of the notice has been given to the
cooperative at its principal place of business or to a legal
representative of the cooperative.  The appointment of the
agent terminates 30 days after the notice is filed with the
secretary of state. 
 
Subd. 5.  Change of address or name of agent.  If the  
address or name of a registered agent changes, the agent must  
change the address of the registered office or the name of the 
registered agent of the cooperative represented by the agent
by filing with the secretary of state the statement required
in subdivision 3, except that the statement need only be
signed by the registered agent, need not be responsive to
subdivision 3, clause (5), but must state that a copy of the
statement has been mailed to the cooperative or to the legal
representative of the cooperative. 
 
HIST: 1989 c 144 art 3 s 2 

==308A.031 

 308A.031 Promotion expense not to be incurred. 
 
(a) Except as provided in paragraph (b), a cooperative may 
not spend money, issue or pledge capital stock of the  
cooperative, or incur indebtedness for payment of promotion of 
the cooperative or for the payment of commissions, salaries,
or expenses of any kind in connection with the promotion of
the cooperative.  

(b) An amount not more than ten percent of the par value of  
the capital stock sold may be used by officers or committees  
elected by the stockholders or for hiring responsible
solicitors to sell or solicit the sale of stock.   
HIST: 1989 c 144 art 1 s 5 

==308A.101 
308A.101 Organizational purpose. 
 
Subdivision 1.  General purpose.  A cooperative may be  
formed and incorporated on a cooperative plan for the purpose
of conducting an agricultural, dairy, marketing,
transportation, warehousing, commission, contracting,
building, mining, telephone, manufacturing, mechanical,
mercantile, electrical, heat, light, or power business, or for
any combination of these purposes or for any other lawful
purpose. 
 
Subd. 2.  Electric cooperative purpose.  An electric  
cooperative may only be formed by cooperatives engaged in the  
generation, transmission, and distribution of electric energy  
for the purpose of financing, or refinancing, the
construction, improvement, expansion, acquisition, and
operation of electric generating plants and electric
transmission and distribution lines, systems, facilities and
equipment and related facilities of its members.  
 
HIST: 1989 c 144 art 1 s 6 

==308A.105 
 308A.105 Incorporators. 
 
A cooperative may be organized by one or more   incorporators,
who may act for themselves as individuals or as   the agents
of other cooperatives or associations.  
 
HIST: 1989 c 144 art 1 s 7 

==308A.121 
 308A.121 Cooperative name. 
 
Subdivision 1.  Name.  The name of a cooperative must  
distinguish the cooperative upon the records in the office of  
the secretary of state from the name of a domestic
corporation, whether profit or nonprofit, or a limited
partnership, or a foreign corporation or a limited partnership
authorized or registered to do business in this state, whether
profit or nonprofit, a limited liability company, whether
domestic or foreign, a limited liability partnership, whether
domestic or foreign, or a name the right to which is, at the
time of incorporation, reserved or provided for in sections 

302A.117,  
317A.117, 322A.03, 322B.125, or 333.001 to 333.54. 
 
Subd. 2.  Name reserved.  The cooperative name shall   be
reserved for the cooperative during its corporate existence.  
 
Subd. 3.  Contest of registration of name.  A person   doing
business in this state may contest the subsequent registration
of a name with the office of the secretary of state as
provided in section 5.22. 
 
HIST: 1989 c 144 art 1 s 8; 1989 c 292 s 8,9; 1992 c 517 
art 1 s 18; 1995 c 128 art 2 s 2 

==308A.125 
 308A.125 Stock and nonstock organization. 
 
Subdivision 1.  Stock and nonstock cooperatives have   same
authority.  Cooperatives organized on a capital stock   basis
may be organized and have the same powers and authority as  
cooperatives organized without capital stock on a membership  
basis.  
 
Subd. 2.  Capital stock organization.  A cooperative   is
organized on a capital stock basis if holding shares of  
common stock entitles the holder of the stock to vote. 
 
Subd. 3.  Nonstock organization.  (a) The articles of   a
nonstock cooperative must contain the provisions required in  
the articles of a cooperative organized on a capital stock
basis if the provisions are applicable to a cooperative
organized upon a membership basis.  
 
(b) Except for cooperatives constituted partially or  
entirely of other cooperatives, a member of a cooperative  
organized on a membership basis may not have more than one
vote, and a membership is transferable only with the consent
and approval of the board.  
 
HIST: 1989 c 144 art 1 s 9 

==308A.131 
 308A.131 Articles of incorporation. 
 
Subdivision 1.  Contents.  (a) The incorporators shall  
prepare the articles, which must include:  
 
(1) the name of the cooperative; 
 
(2) the purpose of the cooperative; 
 
(3) the principal place of business for the cooperative; 
 
(4) the period of duration for the cooperative, if the  
duration is not to be perpetual; 
 
(5) the total authorized number of shares and the par value  
of each share if the cooperative is organized on a capital
stock basis; 
 
(6) a description of the classes of shares, if the shares  
are to be classified; 
 
(7) a statement of the number of shares in each class and  
relative rights, preferences, and restrictions granted to or  
imposed upon the shares of each class, and a provision that
only common stockholders have voting power; 
 
(8) a statement that individuals owning common stock shall  
be restricted to one vote in the affairs of the cooperative or
a statement that the cooperative is one described in section  

308A.641, subdivision 2; 
 
(9) a statement that shares of stock are transferable only  
with the approval of the board; 
 
(10) a statement that dividends on the capital stock of the  
cooperative may not exceed eight percent annually; 
 
(11) the names, post office addresses, and terms of office  
of the directors of the first board; 
 
(12) a statement that net income in excess of dividends and  
additions to reserves shall be distributed on the basis of  
patronage, and that the records of the cooperative may show
the interest of patrons, stockholders of any classes, and
members in the reserves; and 
 
(13) the registered office address of the cooperative and  
the name of the registered agent, if any, at that address.  
 
(b) The articles must always contain the provisions in  
paragraph (a), except that the names, post office addresses,
and terms of offices of the directors of the first board may
be omitted after their successors have been elected by the
members or the articles are amended in their entirety. 
 
(c) The articles may contain other lawful provisions.  
 
(d) The articles must be signed by the incorporators.  
 
Subd. 2.  Filing articles.  

(a) The original articles   must be filed with the secretary
of state. 
 
(b) The fee for filing the articles with the secretary of  
state is $60.  
 
Subd. 3.  Presumption in filing articles.  (a) When   the
articles of incorporation have been filed with the secretary  
of state and the required fee has been paid to the secretary
of state, it is presumed that:  
 
(1) all conditions precedent that are required to be  
performed by the incorporators have been complied with; 
 
(2) the cooperative has been incorporated; and 
 
(3) the secretary of state shall issue a certificate of  
incorporation to the cooperative.  
 
HIST: 1989 c 144 art 1 s 10; art 3 s 3,4; 1991 c 205 s 12; 
1995 c 150 s 1 

==308A.135 
308A.135 Amendment of articles. 
 
Subdivision 1.  Procedure.  (a) The articles of a  
cooperative must be amended as provided in this subdivision. 
 
(b) The board by majority vote must pass a resolution  
stating the text of the proposed amendment.  The text of the  
proposed amendment and an attached mail ballot, if the board
has provided for a mail ballot in the resolution, must be
mailed with a regular or special meeting notice to each
member. The notice must designate the time and place of the
meeting for the proposed amendment to be considered and voted
on.  A cooperative with more than 200 members may publish the
notice, proposed amendment, and ballot in the manner provided
for a regular meeting notice.  
 
(c) If a quorum of the members is registered as being  
present or represented by mail vote at the meeting, the
proposed amendment is adopted:  
 
(1) if approved by a majority of the votes cast; or 
 
(2) for a cooperative with articles or bylaws requiring   more
than majority approval or other conditions for approval,   the
amendment is approved by a proportion of the votes cast or a  
number of total members as required by the articles or bylaws  
and the conditions for approval in the articles or bylaws have 
 been satisfied.  
 
Subd. 2.  Filing.  After an amendment has been adopted   by
the members, the amendment must be signed by the chair,  
vice-chair, president, vice-president, secretary, or assistant 
secretary, and a copy of the amendment filed in the office of  
the secretary of state. 
 
Subd. 3.  Certificate.  

(a) A certificate must be prepared stating:  
 
(1) the vote and meeting of the board adopting a resolution  
of the proposed amendment; 
 
(2) the notice given to members of the meeting at which the  
amendment was adopted; 
 
(3) the quorum registered at the meeting; and 
 
(4) the vote cast adopting the amendment.  
 
(b) The certificate must be signed by the chair, vice-chair,
president, vice-president, secretary, or assistant secretary
and filed with the records of the cooperative.  
 
Subd. 4.  Amendment by board. A majority of directors may
amend the articles if the cooperative does not have any  
members or stockholders with voting rights.  
 
HIST: 1989 c 144 art 1 s 11; art 3 s 5; 1996 c 305 art 1 s 69; 
 1996 c 414 art 1 s 38

 ==308A.141  

308A.141 

Amendment of articles to be governed by this chapter.  

Subdivision 1.  Authority.  A corporation or association
organized and doing business under other statutes
of this state or under the laws of other states that has
conducted business on a cooperative plan may become subject to
this chapter by amending its articles of incorporation to
conform to the requirements of this chapter. 
 
Subd. 2.  Procedure for amendment.  

(a) A corporation or association organized under statutes of
this state may amend its articles of incorporation in the
manner provided under the statute that it is governed by for
the adoption of amendments.
 
(b) A corporation or association organized under laws of  
other states shall amend its articles of incorporation in the  
manner required by the laws of the state where it was  
incorporated.
 
After the articles of incorporation are amended,   the
corporation or association shall file a certified copy of  
the articles
of incorporation and amendments with the secretary   of state
with the fees and requirements prescribed for filing  
articles. 
After filing, the corporation or association is a  
cooperative
in this state and subject to the provisions of this   chapter. 

 
HIST: 1989 c 144 art 1 s 12 

==308A.145 
 308A.145 Amendment of articles to incorporate defectively
organized cooperative. 
 
Subdivision 1.  Amendment of articles.  An association   or
corporation organized defectively under other law of this  
state that has conducted its business upon the cooperative
plan and has in good faith carried on and transacted business,
may amend its articles of incorporation in their entirety to
be governed by this chapter.  The articles of amendment shall
be filed with the secretary of state. 
 
Subd. 2.  De facto corporation becomes corporation de jure. 
Upon the filing and recording of the articles of amendment of
a de facto corporation, the corporation is a legal and valid
corporation de jure.  Courts shall hold all transactions, past
and future, as if the organization was not defective.   

Subd. 3.  Pending litigation not affected.  This section does
not affect pending litigation.  
 
Subd. 4.  Not applicable if charter is forfeited.    This
section does not apply to a corporation whose charter has  
been declared forfeited by a court of competent jurisdiction
in this state. 

 
HIST: 1989 c 144 art 1 s 13; art 3 s 6 

==308A.151 
 308A.151 Amendment of articles to renew expired corporate
existence. 
 
Subdivision 1.  Amendment to renew corporate existence. If the 
period of corporate existence of a corporation organized under
any law of this state that has conducted its business on a
cooperative plan expires and the corporation continues in good
faith to carry on and transact business, the corporation may
renew its corporate existence by amending its articles of
incorporation to comply with this chapter.  The amended
articles must include a provision extending the corporate
duration for a limited period or making the corporate  
existence perpetual.  
 
Subd. 2.  Does not affect pending litigation.  This section
does not affect pending litigation.   

Subd. 3.  Does not apply to forfeited charter. This section
does not apply to a corporation whose charter has been  
declared forfeited by a court of competent jurisdiction.  
 
Subd. 4.  Corporate acts and contracts validated. If a
corporation complies with subdivisions 1, 2, and 3, corporate  
acts and contracts that were performed, made, and entered into 
after the expiration of the corporate existence are legal and 
valid against the objection that the period of duration of the
corporation had expired.  
 
HIST: 1989 c 144 art 1 s 14 

==308A.155 
 308A.155 Corporate existence. 
 
Subdivision 1.  Commencement of corporate existence. The
corporate existence of a cooperative begins when the articles
are filed with the secretary of state.
   
Subd. 2.  Perpetual existence unless limited. Cooperatives
have perpetual duration unless the cooperative provides for a
limited period of duration of corporate existence in the
articles.  
 
HIST: 1989 c 144 art 1 s 15; art 3 s 7 

==308A.161 
 308A.161 Commencement of business. 
 
A cooperative may commence business when ten percent of the  
authorized capital stock has been subscribed and paid in.  
 
HIST: 1989 c 144 art 3 s 8 

==308A.165 
 308A.165 Bylaws. 
 
Subdivision 1.  General provisions.  A cooperative may, but
need not, have bylaws.  Subd. 2.  Adoption and amendment.  

(a) Except as provided in paragraph (b), the bylaws of a
cooperative may be adopted or amended at a regular or special
members' meeting if:  
 
(1) the notice of the meeting contains a summary statement  
of the proposed bylaws or amendment; 
 
(2) a quorum is registered as being present or represented  
by mail vote if authorized by the board; and 
 
(3) the bylaws or amendment is approved by a majority of   the
votes cast, or for a cooperative with articles or bylaws  
requiring more than majority approval or other conditions for  
approval, the bylaws or amendment is approved by a proportion
of the votes cast or a number of the total members as required
by the articles or bylaws and the conditions for approval in
the articles or bylaws have been satisfied. 
 
(b) Until the first annual members meeting, the majority of  
directors may adopt and amend bylaws for the cooperative that  
are consistent with subdivision 3 if the cooperative does not  
have any members or stockholders with voting rights. 
 
Subd. 3.  Contents.  Bylaws may contain any provision  
relating to the management or regulation of the affairs of the 
cooperative that are not inconsistent with law or the
articles, including: 
 
(1) the number of directors, and the qualifications, manner  
of election, powers, duties, and compensation, if any, of  
directors; 
 
(2) the qualifications of members, stockholders, and   patrons
and limitations on their number; 
 
(3) the manner of admission, withdrawal, suspensions, and  
expulsion of members; 
 
(4) property, voting, and other rights and privileges of  
members; 
 
(5) the appointment and authority of committees; 
 
(6) the appointment or election, duties, compensation, and  
tenure of officers; 
 
(7) the time, place, and manner of calling, conducting, and  
giving notice of member, board, and committee meetings, or of  
conducting mail ballots; and 
 
(8) the making of reports and financial statements to members. 
 
HIST: 1989 c 144 art 1 s 16; art 3 s 9,49; 1996 c 414 art 1 s 
  39 

==308A.201 
 308A.201 Powers. 
 
Subdivision 1.  General powers. In addition to other powers,
a cooperative as an agent or otherwise:  
 
(1) may perform every act and thing necessary or proper to  
the conduct of the cooperative's business or the
accomplishment of the purposes of the cooperative; 
 
(2) has other rights, powers, or privileges granted by the  
laws of this state to other corporations, except those that
are inconsistent with the express provisions of this chapter;
and 

(3) has the powers given in this section.  
 
Subd. 2.  Dealing in its own products.  (a) A   cooperative
may buy, sell, or deal in its own products, the   products of
the cooperative's individual members or patrons, the  
products of another cooperative or association or of its
members or patrons. 
 
(b) A cooperative may negotiate the price at which the  
products the cooperative is selling may be sold.  
 
Subd. 3.  Contracts and agreements.  A cooperative may   enter
into or become a party to a contract or agreement for the  
cooperative or for the cooperative's individual members or  
patrons, or between the cooperative and its members.  
 
Subd. 4.  Transactions of real estate and personal property. 
A cooperative may purchase and hold, lease, mortgage,
encumber, sell, exchange, and convey as a corporation real
estate, buildings, and personal property as the business of  
the cooperative may require.  
 
Subd. 5.  Construction of buildings and facilities.  A  
cooperative may erect buildings or other structures or  
facilities or the cooperative's owned or leased property, or
on a right-of-way legally acquired by the cooperative.  

Subd. 6.  Issuance of bonds and indebtedness.  A cooperative
may issue bonds or other evidence of indebtedness and to
borrow money to finance the business of the cooperative.  
 
Subd. 7.  Advances to members or patrons.  A cooperative may
make advances to the cooperative's members or patrons on
produce delivered by the members or patrons to the  
cooperative. 

 
Subd. 8.  Acceptance of deposits.  A cooperative may   accept
deposits of money from other cooperatives or associations  
from which it is constituted.  
 
Subd. 9.  Lending and borrowing money.  A cooperative   may
loan or borrow money to or from individual members,  
cooperatives, or associations from which it is constituted
with security that it considers sufficient in dealing with the 
 members, cooperatives, or associations.  
 
Subd. 10.  Acquisition and disposal of stock.  

(a) A   cooperative may purchase, acquire, hold, or dispose of
the stock of another association or corporation, whether
incorporated under the laws of this state or another state,
and assume all rights, interests, privileges,
responsibilities, and obligations arising out of the ownership
of the stock.  
 
(b) A cooperative may acquire and hold stock in another  
corporation organized under the law of this state or another  
state of the United States, including a corporation organized:
 
(1) as a federation of associations;   
(2) for the purpose of forming a district, state, or 
national marketing, sales, or service agency; or 
(3) for the purpose of acquiring marketing facilities at  
terminal or other markets in this state or other states.  
 
(c) A cooperative may purchase, own, and hold shares of  
capital stock, memberships, interests in nonstock capital,  
evidences of indebtedness of any domestic or foreign
corporation when reasonably necessary or incidental to
accomplish the purposes stated in the articles.  
 
Subd. 11.  Fiduciary powers.  

(a) A cooperative may exercise any and all fiduciary powers in
relations with members, cooperatives, or associations from
which it is constituted.  
 
(b) A cooperative may take, receive, and hold real and  
personal property, including the principal and interest of
money or other funds and rights in a contract, in trust for
any purpose not inconsistent with the purposes of the
cooperative in its articles, and may exercise fiduciary powers
in relation to  taking, receiving, and holding the real and
personal property. 
 
Subd. 12.  Electric cooperative powers.  (a) An   electric
cooperative has the power and authority to:   
(1) make loans to its members; 
 
(2) prerefund debt; 
 
(3) obtain funds through negotiated financing or public  
sale; 
 
(4) borrow money and issue its bonds, debentures, notes, or  
other evidence of indebtedness; 
 
(5) mortgage, pledge, or otherwise hypothecate its assets   as
may be necessary; 
 
(6) invest its resources; 
 
(7) deposit money in state and national banks and trust  
companies authorized to receive deposits; and 
 
(8) exercise all other powers and authorities granted to  
cooperatives.  
 
(b) A cooperative organized to provide rural electric power  
may enter agreements and contracts with other electric power  
cooperatives or with a cooperative constituted of electric
power cooperatives to share losses and risk of losses to their 
transmission and distribution lines, transformers,
substations, and related appurtenances from storm, sleet,
hail, tornado, cyclone, hurricane, or wind storm.  An
agreement or contract or a cooperative formed to share losses
under this paragraph is not subject to the laws of this state
relating to insurance and insurance companies.  
 
Subd. 13.  Utility cooperative condemnation power. A  
cooperative that is engaged in the electrical, heat, light,  
power, or telephone business may exercise the power of eminent 
 domain in the manner provided by state law for the exercise
of the power by other corporations engaged in the same
business. 

 
Subd. 14.  Creamery cooperative sewage condemnation power.  

(a) A creamery cooperative organized in this state has   the
right, power, and authority to condemn lands by eminent  
domain for easements for sewers and sites for filtration
plants to take care of all sewage and refuse made in the
operation of its business. The power and authority shall be
exercised as provided in chapter 117.  
 
(b) The establishment, maintenance, and operation of sewers  
or filtration plants shall be under the supervision of the
chair of the board of health as defined in section 145A.02,  
subdivision 2, of the town or city where the cooperative has
its operating plant.  
 
HIST: 1989 c 144 art 1 s 17; art 3 s 10-12 

==308A.205 
 308A.205 Agricultural marketing contracts. 
 
Subdivision 1.  Authority.  A cooperative and its members or
patrons may make and execute marketing contracts, requiring
the members or patrons to sell a specified portion of their
agricultural products or specified commodities exclusively  
to or through the cooperative or facilities established by the 
cooperative.  
 
Subd. 2.  Title to products.  If a sale is contracted to the
cooperative, the sale transfers title to the products
absolutely, except for recorded liens and security interest,
to the cooperative on delivery of the products or at another  
specified time if expressly provided in the contract.  The  
contract may allow the cooperative to sell or resell the  
products of its members, or patrons, with or without taking  
title to the product, and pay the resale price to the patron,  
after deducting all necessary selling, overhead, and other
costs and expenses, including other proper reserves, and
interest not exceeding eight percent per annum on common
stock.  
 
Subd. 3. Term of contract.The term of a marketing contract
may not exceed five years, but may be made self-renewing for
periods not exceeding five years each, subject to the right of
either party to terminate at the end of the original term and
each renewal term by giving written notice of the termination
during a period specified in the contract. The period for
notifying to terminate a contract may not be more than 180
days or less than 30 days before the end of the term.  
 
Subd. 4.  Damages for breach of contract. The bylaws or the
marketing contract may set specific sums, as liquidated  
damages to be paid by the member or patron to the cooperative  
for breach of any provisions of the marketing contract
regarding the sale or delivery or withholding of products and
may provide that the member or patron will pay the costs,
premiums for bonds, expenses, and fees if an action is brought
on the contract by the cooperative. The remedies for breach of 
contract are valid and enforceable in the courts of this
state. 

The provisions shall be enforced as liquidated damages and are 
not to be considered or regarded as a penalty.   

Subd. 5.  Injunction against breach of contract. If there is
a breach or threatened breach of a marketing contract by a
member or patron, the cooperative is entitled to an injunction
to prevent the further breach of the contract, and to a decree
of specific performance of the contract. Pending the
adjudication of the action after filing a certified complaint  
showing the breach or threatened breach and filing a
sufficient bond, the cooperative is entitled to a temporary
restraining order and preliminary injunction against the
member or patron.  
 
Subd. 6.  Presumption on action on contract. In an action on a
marketing contract, it is presumed that landowners, landlords,
and lessors are able to control the delivery of products
produced on their land by tenants or others and are liable for
and subject to remedies for the breach of delivery, if the
tenancy, possession, or work on the land or the terms of the
tenancy, possession, or labor on the land was created or
changed after execution by the landowners, landlords, or
lessors of the marketing contract.  
 
Subd. 7.  Penalties for contract interference and false  
reports.  

(a) A person or a corporation is guilty of a misdemeanor and
subject to a $500 civil penalty to be paid to the aggrieved
cooperative or association if the person or the corporation's
officers or employees: 
 
(1) knowingly induce or attempt to induce a member or  
stockholder of a cooperative or an association operating in
this state that is organized under similar statutes of other
states with similar restrictions and rights to break a
marketing contract with the cooperative or association; or 
 
(2) maliciously and knowingly spread false reports about   the
finances or management or activity of a cooperative or  
association.  
 
(b) Each violation is a separate offense and is subject to  
the penalties in paragraph (a). 
 
Subd. 8.  Contracts and cooperatives not in restraint of  
trade.
 
A cooperative exercising authority under this section is not
a combination in restraint of trade or an illegal monopoly, or
an attempt to lessen competition or fix prices arbitrarily. 
The marketing contracts and agreements under this section are
not illegal, or an unlawful restraint of trade, or a part of
a conspiracy or combination to accomplish an improper or  
illegal purpose.  
 
HIST: 1989 c 144 art 1 s 18; art 3 s 13,14 

==308A.301 
 308A.301 Board governs cooperative. 
 
A cooperative is governed by its board.  
 
HIST: 1989 c 144 art 1 s 19 

==308A.305 
 308A.305 Number of directors. 
 
The board must have at least five directors, except a  
cooperative housing corporation as defined in United States  
Code, title 26, section 216, subsection (b)(1), must have at  
least three directors who are members of the association.  
 
HIST: 1989 c 144 art 1 s 20 

==308A.311 
 
308A.311 Election of directors. 
 
Subdivision 1.  Generally.  Directors shall be elected for the
term, at the time, and in the manner provided in this section
and the bylaws. 
 
Subd. 2.  Election at regular meeting. Directors shall be
elected at the regular members' meeting for the terms of
office prescribed in the bylaws. Except for directors  
elected at district meetings, all directors shall be elected
at the regular members' meeting. 
 
Subd. 3.  District or local unit election of directors.    

(a) A cooperative with districts or other local units may  
elect directors on a district or local unit basis if provided
in the bylaws.  
 
(b) The directors may be nominated or elected at district  
meetings if provided in the bylaws.  Directors who are
nominated at district meetings shall be elected at the annual
regular members' meeting by vote of the members of the entire  
membership, unless the bylaws provide that directors who are  
nominated at district meetings are to be elected by vote of
the members of the district at the annual regular members'
meeting. 

 
Subd. 4.  Vote by mail.  (a) A member may not vote by   mail
for a director unless mail voting is authorized for   election
of directors by the articles or bylaws.  
 
(b) The ballot shall be in a form prescribed by the board.   
(c) The 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. 
 
(d) If the ballot of the member is received by the  
cooperative on or before the date of the regular members'  
meeting, the ballot shall be accepted and counted as the vote
of the absent member.  
 
Subd. 5.  Vote by mail for telephone cooperative.  If voting
by mail is authorized by the articles or the bylaws of a  
telephone cooperative, a member may vote by mail for the  
director in the manner prescribed in the articles or bylaws.   
The mail voting shall be by secret ballot.  
 
Subd. 6.  Farm corporation stockholder may be director. If a
member of a cooperative is a family farm corporation defined
in section 500.24, subdivision 2, clause (c), or an  
authorized farm corporation defined in section 500.24,  
subdivision 2, clause (d), the member may elect or appoint an  
individual stockholder of the farm corporation residing on or  
actively operating the farm to be eligible for election as a  
director to the board. 
 
Subd. 7.  Corporate members may nominate persons for  
director. If a member of a cooperative is not a natural  
person, family farm corporation, or an authorized farm  
corporation and the bylaws do not provide otherwise, the
member may appoint or elect one or, for a cooperative
constituted entirely of other cooperatives or associations,
one or more natural persons to be eligible for election as a
director to the board.  
 
HIST: 1989 c 144 art 1 s 21; art 3 s 15 

==308A.313 

 308A.313 Apportionment of directors among districts or   
units. 
 
The bylaws of an electric cooperative that has 35,000 or  
more members and that nominates, elects, or otherwise selects  
directors on a district or local unit basis must provide that  
representation on the board be apportioned equally throughout  
the different districts or local units in proportion to the  
membership residing in or belonging to the districts or units. 

The number of members in any one district or unit may not vary 
by more than ten percent from the average number of members
for the districts or units.  
 
The bylaws must provide for a survey to take place at least  
once every ten years to determine whether the number of
members in a district or local unit has changed. If the number
of members in a district or local unit changes by 15 percent
or more, the bylaws must provide for changes in the districts
or local units so that representation on the board continues
to be apportioned equally throughout the districts or units in 
proportion to the membership. 
 
HIST: 1992 c 401 s 1 

==308A.315 
 308A.315 Filling vacancies. 
 
If a director's position is vacant, the board may appoint a  
member of the cooperative to fill the director's position
until the next regular or special members' meeting.  At the
next regular or special members' meeting, the members must
elect a director to fill the unexpired term of the vacant
director's position.  
 
HIST: 1989 c 144 art 3 s 16 

==308A.321 
 308A.321 Removal of directors. 
 
Members may remove a director at a members' meeting for  
cause related to the duties of the position of director and
fill the vacancy caused by the removal. 
 
HIST: 1989 c 144 art 1 s 22; art 3 s 17,49 

==308A.325 
 308A.325 Limitation of director's liability. 
 
Subdivision 1.  Articles may limit liability. A director's
personal liability to the cooperative or members for  
monetary damages for breach of fiduciary duty as a director to 
be liminated or limited in the articles as provided in 
subdivision 2.  
 
Subd. 2.  Restrictions on liability limitation.  The  
articles may not eliminate or limit the liability of a
director:
  
(1) for a breach of the director's duty of loyalty to the  
cooperative or its members; 
 
(2) for acts or omissions that are not in good faith or  
involve intentional misconduct or a knowing violation of law; 
 
(3) for a transaction from which the director derived an  
improper personal benefit; or 
 
(4) for an act or omission occurring before the date when  
the provision in the articles eliminating or limiting
liability becomes effective.  
 
HIST: 1989 c 144 art 1 s 23 

==308A.327 
 308A.327 Electric cooperative; board meetings. 
 
A regular or special meeting of the board of directors of   an
electric cooperative that has more than 50,000 members must  
be open to all members of the cooperative.  The board shall
give reasonable prior notice of meetings.  The board may close
a meeting or a portion of a meeting, provided the board has
made a written determination that a closed meeting is
necessary for one of the following reasons: 
 
(1) to discuss personnel matters, compensation issues, labor
negotiations, billing and credit information, or an issue  
that may tend to prejudice the reputation of an individual; 
 
(2) to discuss threatened or pending litigation, issues  
subject to an attorney-client privilege, or other legal  
information, the knowledge of which may have an adverse effect 
on the cooperative's legal position; or 
 
(3) to discuss or disclose information that, if discussed in
an open meeting, would result in impairment of the c
operative's competitive or financial position, interfere with 
a business opportunity, or reveal proprietary information. 
 
For the purposes of clause (3), a business opportunity means
an opportunity for substantial financial improvement of the
cooperative that, if generally known, would likely jeopardize
the opportunity itself. 
 
The board may close a portion of a meeting after announcing  
during an open meeting the item of business to be discussed  
during the closed portion. 
 
HIST: 1992 c 435 s 1 

==308A.401 
 308A.401 Officers. 
 
Subdivision 1.  Required officers.  

(a) The board shall elect: 
 
(1) a president; 
 
(2) one or more vice-presidents; 
 
(3) a secretary; and 
 
(4) a treasurer.  
 
(b) The board may elect additional officers as the articles  
or bylaws authorize or require.  
 
Subd. 2.  Secretary and treasurer may be combined. The offices
of secretary and treasurer may be combined and if combined the
person filling the office shall be termed secretary-treasurer. 

 
Subd. 3.  Chair and vice-chair.  If the bylaws provide, the
board may elect directors as a chair and one or more
vice-chairs. 
 
Subd. 4.  Officers that must be stockholders. The president
and vice-president must be directors and members unless the
articles or bylaws provide for a chair and one or more
vice-chairs and the articles or bylaws do not require  
otherwise. The treasurer, secretary, and additional officers  
need not be directors or members.   

Subd. 5.  Removal of officers. Members may remove an officer
at a members' meeting for cause related to the duties of   
the position of the officer and fill the vacancy caused by the 
removal.  
 
HIST: 1989 c 144 art 1 s 24; art 3 s 18 

==308A.501 
 308A.501 Capital stock. 
 
Subdivision 1.  Authorized amounts.  The amount, number of
shares, and par value of the authorized capital stock may be
increased or decreased and classes of the capital stock   may
be established or altered by amending the articles at a  
regular members' meeting or at a special members' meeting
called for the purpose of the amendment.  
 
Subd. 2.  Issuance of shares.  A share of stock may not be
issued until at least the par value of the share has been  
paid for in cash or a cash equivalent.  
 
Subd. 3.  Sale of stock to be approved by board. Stock in a
cooperative may only be sold or transferred with the  
approval of the board.  
 
Subd. 4.  Repurchase by cooperative.  

(a) The bylaws must provide that the cooperative has the first
privilege of purchasing stock of any class offered for sale by
a stockholder. 
 
(b) Stock acquired by the cooperative may be held as  
treasury stock or may be retired and canceled.   

HIST: 1989 c 144 art 1s 25 

==308A.503 
 308A.503 Health care cooperative members. 
 
Subdivision 1.  Health care network cooperative.  For a health
care network cooperative, the policyholder is the member
provided that if the policyholder is an individual enrollee,
the individual enrollee is the member, and if the policyholder
is an employer or other group type, entity, or association,
the group policyholder is the member. 
 
Subd. 2.  Health provider cooperative.  For a health  
provider cooperative, the licensed health care provider,  
professional corporation, partnership, hospital, or other  
licensed provider is the member, as provided in the articles
or bylaws. 
 
Subd. 3.  State and hospital members authorized.  The state,
or any agency, instrumentality, or political subdivision of
the state, may be a member of a health care cooperative.  Any  
governmental hospital authorized, organized or operated under  
chapter 158, 250, 376, or 397 or under section 412.221, 447.05 
to 447.13, or 471.50, or under any special law authorizing or 
establishing a hospital or hospital district, may be a member
of a health care provider cooperative. 
 
HIST: 1994 c 625 art 11 s 10; 1995 c 186 s 64 

==308A.505 
 308A.505 Subject to securities law. 
 
Cooperatives are subject to the provisions of chapter 80A,  
except as specifically provided in section 80A.15.  
 
HIST: 1989 c 144 art 1 s 26 

==308A.601 
 308A.601 Grouping of members. 
 
Subdivision 1.  Authorization.  A cooperative may in the
articles or bylaws group members in districts, local units,  
or another basis.  
 
Subd. 2.  Implementation.  The board may do things  necessary
to implement the use of districts or local units including
setting the time and place and prescribing the rules of
conduct for holding meetings by districts or local units to  
elect delegates to members' meetings.  
 
HIST: 1989 c 144 art 1 s 27 

==308A.605 
 308A.605 Member and stockholder violations. 
 
Subdivision 1.  Stockholder violations.  

(a) A   stockholder who knowingly, intentionally, or
repeatedly violates a provision of the bylaws may be required
by the board to surrender stock of any class owned by the
stockholder.  
 
(b) The cooperative shall refund to the stockholder for the  
surrendered stock the lesser of the par value or the book
value of the stock.  
 
(c) Stock required to be surrendered shall be retired and  
canceled by the board. 
 
Subd. 2.  Member violations.  A member who knowingly,  
intentionally, or repeatedly violates a provision of the
bylaws may be required by the board to surrender membership in
the cooperative.  
 
HIST: 1989 c 144 art 1 s 28; art 3 s 19 

==308A.611 
 308A.611 Regular members' meetings. 
 
Subdivision 1.  Annual meeting.  Regular members' meetings
must be held annually at a time determined by the board,
unless
otherwise provided for in the articles or bylaws. 

Subd. 2.  Location. 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. A cooperative constituted entirely or partially
of other cooperatives or associations organized under the laws
of another state, or doing business in another state, may hold
regular members' meetings at a place within or outside of the
state, as designated in the notice of the meeting.  
 
Subd. 3.  Business and fiscal reports.  The officers   must
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 close of the fiscal year.  
 
Subd. 4.  Election of directors.  All directors shall be
elected at the regular members' meeting for the terms of  
office prescribed in the bylaws, except for directors elected
at district or local unit meetings.  
 
Subd. 5.  Notice.  

(a) The secretary shall give notice of regular members'
meetings by:  

(1) publication in a legal newspaper published in the county
of the principal place of business of the cooperative; 
 
(2) publication in a magazine, periodical, or other
publication of the cooperative that is regularly published by
or on behalf of the cooperative and circulated generally among 
members; or 
 
(3) mailing the regular members' meeting notice to each  
member personally at the person's last known post office  
address, which for a member cooperative means notice mailed to 
the secretary of the cooperative.  
 
(b) The regular members' meeting notice must be published at
least two weeks before the date of the meeting or mailed at  
least 15 days before the date of the meeting.   

HIST: 1989 c 144 art 1 s 29; art 3 s 20 

==308A.615 
 308A.615 Special members' meetings. 
 
Subdivision 1.  Calling meeting.  Special members' meetings of
the members may be called by: 
 
(1) a majority vote of the board; or 
 
(2) the written petition of at least 20 percent of the  
members submitted to the president.  
 
Subd. 2.  Notice.  

(a) The chair or president shall give notice of a special
members' meeting by:  
 
(1) publication in a legal newspaper published in the county
of the principal place of business of the cooperative; 
 
(2) publication in a magazine, periodical, or other
publication of the cooperative that is regularly published by
or on behalf of the cooperative and circulated generally among 
members; or 
 
(3) mailing the special members' meeting notice to each  
member personally at the person's last known post office  
address, which for a member cooperative means notice mailed to 
the secretary of the cooperative.  
 
(b) The special members' meeting notice shall state the  
time, place, and purpose of the special members' meeting.  
 
(c) The special members' meeting notice shall be issued  
within ten days from and after the date of the presentation of
a members' petition, and the special members' meeting must be
held by 30 days after the date of the presentation of the
members' petition.  
 
HIST: 1989 c 144 art 1 s 30; art 3 s 21 

==308A.621 
 308A.621 Certification of mailed meeting notice. 
 
(a) After mailing special or regular members' meeting  
notices, the secretary shall execute a certificate containing: 
 
(1) a correct copy of the mailed or published notice; 
 
(2) the date of mailing or publishing the notice; and 
 
(3) a statement that the special or regular members' meeting
notices were mailed or published as prescribed by section
308A.611, subdivision 5, or 308A.615, subdivision 2.   

(b) The certificate shall be made a part of the record of  
the meeting. 
 
HIST: 1989 c 144 art 1 s 31; art 3 s 22; 1990 c 612 s 7 

==308A.625 
 308A.625 Failure to receive meeting notice. 
 
Failure of a member to receive a special or regular members'
meeting notice does not invalidate an action that is taken by
the members at a members' meeting.  
 
HIST: 1989 c 144 art 1 s 32 

==308A.631 
 308A.631 Quorum. 
 
Subdivision 1.  Quorum.  (a) Except as provided in paragraph
(b), the quorum for a members' meeting to transact business
is: 

(1) ten percent of the total number of members for a
cooperative with 500 or less members; or 
 
(2) 50 members for cooperatives with more than 500 members. 
 
(b) The quorum provisions of paragraph (a) apply  
notwithstanding quorum requirements of the articles or the  
bylaws, except for:  
 
(1) a larger quorum in articles filed by a cooperative   after
March 26, 1949; or 
 
(2) a larger quorum provided by amending the articles or  
bylaws after May 1, 1959. 
 
Subd. 2.  Quorum for voting by mail.  In determining a  
quorum at a meeting, on a question submitted to a vote by
mail, members present in person or represented by mail vote
shall be counted. The attendance of a sufficient number of
members to constitute a quorum shall be established by a
registration of the members of the cooperative present at the
meeting. The registration shall be verified by the president
and secretary of the cooperative and shall be reported in the
minutes of the meeting.  
 
Subd. 3.  Meeting action invalid without quorum. An action by
a cooperative is not valid or legal in the absence of a quorum
at the meeting at which the action was taken.  
 
HIST: 1989 c 144 art 1 s 33 

==308A.635 
 308A.635 Member voting rights. 
 
Subdivision 1.  Member has one vote. A member of a cooperative
is only entitled to one vote, except that a member of a
cooperative described in section 308A.641 may be entitled to
more than one vote as provided in that section. 

Subd. 2.  Spouse may vote for member.  If a vote of members is
taken on any matter, including a petition pursuant to section
216B.02, subdivision 4, the spouse of the member may vote on
behalf of the member unless the member has indicated
otherwise. 
 
Subd. 3.  Right to vote at meeting. A member or delegate may
exercise voting rights on any matter that is before the
members at a members' meeting from the time the member or  
delegate arrives at the members' meeting, unless the articles
or bylaws specify an earlier and specific time for closing the 
right to vote.  
 
Subd. 4.  Voting method.  A member's vote at a members'
meeting must be in person or by mail if a mail vote is  
authorized by the board, and not by proxy except as provided
in subdivisions 2 and 5.   

Subd. 5.  Members represented by delegates.  

(a) A cooperative may provide in the articles or bylaws that
local units of members are entitled to be represented at
members'meetings by delegates chosen by the members of the
unit. 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 and with the number of
votes as prescribed in the articles or bylaws.  
 
(b) If the approval of a certain portion of the members is  
required for 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. 

 
Subd. 5a.  Health care cooperative. Notwithstanding the
provisions of this section, the requirements and procedures  
for membership voting for a health care cooperative shall be
as provided in the bylaws. 
 
Subd. 6.  Absentee ballots.  

(a) A member who is absent from a members' meeting may vote by
mail on the ballot prescribed in this subdivision on any
motion, resolution, or amendment that the board submits for
vote by mail to the members. 

(b) The ballot shall be in the form prescribed by the board 
and contain: 
 
(1) the exact text of the proposed motion, resolution, or  
amendment to be acted on at the meeting; and 
 
(2) spaces opposite the text of the motion, resolution, or  
amendment in which the member may indicate an affirmative or 
negative vote.  
 
(c) The member shall express a choice by marking an "X" in  
the appropriate space on the ballot and mail or deliver the  
ballot to the cooperative in a plain, sealed envelope inside  
another envelope bearing the member's name.  
 
(d) A properly executed ballot shall be accepted by the  
board and counted as the vote of the absent member at the  
meeting. 
 
HIST: 1989 c 144 art 1 s 34; art 3 s 23,24; 1991 c 320 s 15; 
1994 c 625 art 11 s 11; 1995 c 150 s 2 

==308A.641 

308A.641 Voting in cooperatives constituted entirely or   
partially of other cooperatives or associations. 
 
Subdivision 1.  Voting by members that are cooperatives or
associations.  A cooperative that is constituted entirely or
partially of other cooperatives or associations may authorize  
by the articles or the bylaws for affiliated cooperative
members to have an additional vote for:  
 
(1) a stipulated amount of business transacted between the  
member cooperative and the cooperative central organization; 
 
(2) a stipulated number of members in the member  
cooperative; 
 
(3) a certain stipulated amount of equity allocated to or  
held by the member cooperative in the cooperative central 
organization; or 
 
(4) a combination of methods in clauses (1) to (3). 
 
Subd. 2.  Voting by members who are not cooperatives or  
associations. A cooperative that is constituted partially of  
other cooperatives or associations and partially of members
who are not cooperatives or associations, and that has its
members who are not cooperatives or associations organized
into local units of members, may, by the articles or the
bylaws, authorize the delegates elected by its members who are
not cooperatives or associations, and who are organized into
local units of members, to have an additional vote for: 
 
(1) a stipulated amount of business transacted between the  
members in the voting units and the cooperative; 
 
(2) a certain stipulated amount of equity allocated to or  
held by the members of the voting units in the cooperative; or 
 
(3) a combination of methods in clauses (1) and (2). 
 
HIST: 1989 c 144 art 1 s 35; 1989 c 356 s 3; 1995 c 150 s 3 

==308A.645 
 308A.645 Vote of corporate stock held by cooperative. 
 
A cooperative that holds stock of another corporation may by
direction of the cooperative's board or members elect or
appoint a person to represent the cooperative at a meeting of  
the corporation. The representative has authority to represent 
 the cooperative and may cast the cooperative's vote at the  
corporation's meeting.  
 
HIST: 1989 c 144 art 1 s 36 

==308A.701 
 308A.701 Reserves. 
 
Subdivision 1.  Capital reserve. A cooperative may set aside
a portion of net income as the board determines advisable to
create or maintain a capital reserve.   

Subd. 2.  Additional reserves. In addition to a capital
reserve, the board may: 
 
(1) set aside an amount not to exceed five percent of the  
annual net income of the cooperative for promoting and  
encouraging cooperative organization; and  

(2) establish and accumulate reserves for new buildings,  
machinery and equipment, depreciation, losses, and other
proper purposes.  
 
HIST: 1989 c 144 art 1 s 37 

==308A.705 
 308A.705 Distribution of income. 
 
Subdivision 1.  Distribution of net income.  Net income in
excess of dividends on capital stock and additions to  
reserves shall be distributed on the basis of patronage. 
 
Subd. 2.  Frequency of income distribution.  

(a) Distribution of net income shall be made at least
annually.  
 
(b) A cooperative with income from trucking operations may 
only distribute net income annually. The board shall present
to the members at their annual meeting a report covering the 
operations of the cooperative during the preceding fiscal
year. 

 
Subd. 3.  Dividends.  Dividends may be paid on capital stock
only if the net income of the cooperative for the previous  
fiscal year is sufficient. The dividends are not cumulative.  
 
Subd. 4.  Form of distribution.  A cooperative may distribute
net income in cash, capital stock credits, allocated patronage
equities, revolving fund certificates, or its own or other
securities.  
 
Subd. 5.  Eligible nonmember patrons.  

(a) The members may provide in the bylaws that nonmember
patrons are allowed to participate in the distribution of net
income on equal terms with member patrons. 
 
(b) If a nonmember patron is qualified and eligible for  
membership, the amount of patronage refund due shall be
credited to the patron's individual account.  
 
(c) If the credits equal the value of a share of common  
stock that entitles the stockholder to vote, or a membership,
a share of stock or a membership shall be issued to the
nonmember patron. 
 
Subd. 6.  Patronage credits for ineligible members.  
If a nonmember patron with patronage credits is not qualified
or eligible for membership, a refund due may be credited to
the patron's individual account. If the credited amount in the
individual account of a patron ineligible for membership
equals the value of a share of common stock and does not
entitle the holder to vote, or to preferred stock or a
certificate of interest, the board may issue a share of
preferred stock or a certificate of interest. After the patron
is issued preferred stock or a certificate of interest, the
patron may participate in the distribution of income on the
same basis as a stockholder or member.  
 
HIST: 1989 c 144 art 1 s 38; art 3 s 25 

==308A.711 
 308A.711 Distribution of unclaimed property. 
 
Subdivision 1.  Alternate procedure to disburse property. 
Notwithstanding the provisions of section 345.43, a
cooperative may, in lieu of paying or delivering to the  
commissioner of commerce the unclaimed property specified in
its report of unclaimed property, distribute the unclaimed
property to a corporation or organization that is exempt from
taxation under section 290.05, subdivision 1, paragraph (b),
or 2. A cooperative making the election to distribute
unclaimed property shall, within 20 days after the time
specified in section 345.42 for claiming the property from the
holder, file with the commissioner of commerce: 
 
(1) a verified written explanation of the proof of claim of  
an owner establishing a right to receive the abandoned
property; 
 
(2) any errors in the presumption of abandonment; 
 
(3) the name, address, and exemption number of the  
corporation or organization to which the property was or is to 
be distributed; and 
 
(4) the approximate date of distribution. 
 
Subd. 2.  Reporting and claiming procedure not affected.   
This subdivision does not alter the procedure provided in  
sections 345.41 and 345.42 for cooperatives to report
unclaimed property to the commissioner of commerce and the
requirement that claims of owners are made to the cooperatives
for a period of 65 days following the publication of lists of
abandoned property. 
 
Subd. 3.  Owner's right extinguished on disbursement. The
right of an owner to unclaimed property held by a cooperative
is extinguished when the property is disbursed by the
cooperative to a tax-exempt organization in accordance with  
this section.  
 
HIST: 1989 c 144 art 1 s 39 

==308A.801 
 308A.801 Merger and consolidation. 
 
Subdivision 1.  Authorization.  Unless otherwise prohibited,
cooperatives or associations organized under the laws of this
state may merge or consolidate with each other or with
associations incorporated under the laws of another state by
complying with the provisions of this section or the law of  
the state where the surviving or new association will exist.   

Subd. 2.  Plan.  To initiate a merger or consolidation, a
written plan of merger or consolidation must be prepared by
the board or by a committee selected by the board or the
members to prepare a plan. The plan must state:   

(1) the names of the constituent cooperatives or 
associations; 
 
(2) the name of the surviving or new cooperative or  
association; 
 
(3) the manner and basis of converting stock or membership  
of the constituent cooperatives or associations into stock or  
membership in the surviving or new cooperative or association; 
 
(4) the terms of the merger or consolidation; 
 
(5) the proposed effect of the consolidation or merger on the
members of the cooperative; and 
 
(6) for a consolidation, the plan must contain the articles  
of the new association.  
 
Subd. 3.  Notice.  

(a) The board must mail a merger or consolidation 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 or association with more than 200 members  
may publish the merger or consolidation notice in the same  
manner as a regular members' meeting notice. 
 
Subd. 4.  Adoption of 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 or bylaws requiring more than  
two-thirds of the votes cast or other conditions for approval, 
the plan is approved by a proportion of the votes cast or a  
number of total members as required by the articles or bylaws  
and the conditions for approval in the articles or bylaws have 
been satisfied.  
 
(b) After the plan has been adopted, articles of merger or  
consolidation stating the plan and that the plan was adopted  
according to this chapter shall be signed by the chair,  
vice-chair, president, vice-president, secretary, or assistant 
secretary of each cooperative or association merging or  
consolidating.  
 
(c) The articles of merger or consolidation shall be filed  
in the office of the secretary of state.  
 
(d) For a merger, the articles of the surviving cooperative 
or association are deemed 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 the 
merged or consolidated cooperative or association.  
 
Subd. 5.  Effect of merger.  

(a) After the effective date, the cooperatives and
associations that are parties to the plan become a single
association. For a merger, the surviving association is the
association designated in the plan. For a consolidation, the
new cooperative is the association provided for in the plan. 
Except for the surviving or new association, the separate
existence of all cooperatives and associations that are
parties to the plan cease on the effective date of the 
merger or consolidation.  
 
(b) The surviving or new association possesses all of the 
rights and property of each of the merged or consolidated 
cooperatives or associations, and is responsible for all their 
obligations. The title to property of the merged or 
consolidated association is vested in the surviving or new 
association 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.  
 
Subd. 6.  Filing fee. The fee to be paid to the secretary of
state for filing articles of merger or consolidation is $60.  
 
HIST: 1989 c 144 art 1 s 40; art 3 s 26-28; 1991 c 205 s 13 

==308A.901 
 308A.901 Liquidation. 
 
Subdivision 1.  Members may authorize liquidation. If a
liquidation is authorized by the members, the board may
dispose of all or substantially all of the property of the 
cooperative on terms and conditions determined by the board. 

 
Subd. 2.  Resolution at members' meeting. The members 
may authorize a liquidation by adopting a resolution at a 
members' meeting. The notice of the members' meeting must 
include a statement that the disposition of the property of
the cooperative will be considered at the meeting. If a quorum
is present in person or by mail ballot 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 or bylaws requiring 
more than two-thirds for approval or other conditions for 
approval, the resolution is approved by the proportion of the 
votes cast or a number of total members as required by the 
articles or bylaws and the conditions for approval in the 
articles or bylaws have been satisfied.  
 
HIST: 1989 c 144 art 1 s 41; art 3 s 29 

==308A.905 
 308A.905 Methods of dissolution. 
 
A cooperative may be dissolved by the members or by order 
of the court.  
 
HIST: 1989 c 144 art 1 s 42; art 3 s 30,49 

==308A.911 
308A.911 Voluntary dissolution by members. 
 
Subdivision 1.  Meeting to consider dissolution.  A regular or
a special members' meeting may be called to consider
dissolution of a cooperative. 
 
Subd. 2.  Approval. The proposed dissolution must be submitted
for approval at the members' meeting. The dissolution must be
started if a quorum is present and the proposed dissolution is
approved at a meeting by two-thirds of the votes cast, or for
a cooperative with articles or bylaws requiring a  greater
proportion of the votes cast or other conditions for approval,
the dissolution is approved by the proportion of votes 
cast or the number of total members required by the articles
or bylaws and the conditions for approval in the articles or
bylaws are satisfied. 
 
Subd. 3.  Revocation of dissolution. The members retain the
right to revoke the dissolution proceedings and the right to
remove directors and fill vacancies on the board. 
 
Subd. 4.  Notice of intent to dissolve. Before a cooperative
begins dissolution, a notice of intent to dissolve must be
filed with the secretary of state. The notice must contain: 
 
(1) the name of the cooperative; 
 
(2) the date and place of the members' meeting at which the 
resolution was approved; and 
 
(3) a statement that the requisite vote of the members 
approved the proposed dissolution. 
 
Subd. 5.  Business after dissolution begins.  After 
the notice of intent to dissolve has been filed with the 
secretary of state, the cooperative may carry on its business 
only to the extent necessary for the winding up of the 
cooperative unless the members revoke the dissolution 
proceedings.  The existence of the cooperative continues to
the extent necessary to wind up the affairs of the cooperative
until the dissolution proceedings are revoked or articles of 
dissolution are filed with the secretary of state.  
 
Subd. 6.  Remedies continued. The filing with the secretary of
state of a notice of intent to dissolve does not affect a
remedy in favor of the cooperative or a remedy against 
the cooperative or its directors, officers, or members in
their capacities, except as provided in section 308A.981.  
 
HIST: 1989 c 144 art 1 s 43; art 3 s 31,49 

==308A.915 
 308A.915 Winding up. 
 
Subdivision 1.  Collection and payment of debts. After the
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:  
 
(1) to collect or make provision for the collection of all 
debts due or owing to the cooperative, including unpaid 
subscriptions for shares; and 
 
(2) to pay or make provision for the payment of all debts, 
obligations, and liabilities of the cooperative according to 
their priorities.  
 
Subd. 2.  Transfer of assets.  After the 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 dissolving
cooperative without a vote of the members.  
 
Subd. 3.  Distribution to members.  Tangible and intangible
property, including money, remaining after the discharge of
the debts, obligations, and liabilities of the cooperative or
association 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.  
 
HIST: 1989 c 144 art 3 s 32 

==308A.921 
 308A.921 Revocation of dissolution proceedings. 
 
Subdivision 1.  Authority to revoke.  Dissolution  proceedings
may be revoked before the articles of dissolution are filed
with the secretary of state.  
 
Subd. 2.  Revocation by members.  The chair or president may
call a members' meeting to consider the advisability of
revoking the dissolution proceedings. The question of the
proposed revocation must be submitted to the members at the
members' meeting called to consider the revocation. The
dissolution proceedings are revoked if the proposed revocation
is approved at the members' meeting by a majority of the
members of the cooperative, or for a cooperative with articles
or bylaws requiring a greater number of members, the number of
members required by the articles or bylaws. 

Subd. 3.  Filing with secretary of state.  Revocation of
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.  
 
HIST: 1989 c 144 art 3 s 33 

==308A.925 
 308A.925 Statute of limitations. 
 
The claim of a creditor or claimant against a dissolving
cooperative is barred if the claim has not been enforced by 
initiating legal, administrative, or arbitration proceedings 
concerning the claim by two years after the date the notice of 
intent to dissolve is filed with the secretary of state,
subject to the provisions of section 308A.981. 
 
HIST: 1989 c 144 art 3 s 34 

==308A.931 
 308A.931 Articles of dissolution. 
 
Subdivision 1.  Conditions to file.  Articles of dissolution
of a cooperative shall be filed with the secretary of state
after payment of the claims of all known creditors and
claimants has been made or provided for and the remaining 
property has been distributed by the board.  
 
Subd. 2.  Contents of articles.  The articles of 
dissolution must state: 
 
(1) that all debts, obligations, and liabilities of the 
cooperative have been paid or discharged or adequate
provisions have been made for them or time periods under
section 308A.921  have run and other claims are not
outstanding; 
 
(2) that the remaining property, assets, and claims of the 
cooperative have been distributed among the members or
pursuant to a liquidation authorized by the members; and 
 
(3) that legal, administrative, or arbitration proceedings 
by or against the cooperative are not pending or adequate 
provision has been made for the satisfaction of a judgment, 
order, or decree that may be entered against the cooperative
in a pending proceeding. 
 
Subd. 3.  Dissolution effective on filing. The cooperative is
dissolved when the articles of dissolution have been filed
with the secretary of state. 
 
Subd. 4.  Certificate. 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.  
 
HIST: 1989 c 144 art 3 s 35 

==308A.935 
 308A.935 Application for court-supervised voluntary 
dissolution. 
 
After a notice of intent to dissolve has been filed with 
the secretary of state and before a certificate of dissolution 
has been issued, the cooperative or, for good cause shown, a 
member or creditor may apply to a court within the county
where the registered office is located to have the dissolution 
conducted or continued under the supervision of the court as 
provided in section 308A.945. 
 
HIST: 1989 c 144 art 3 s 36 

==308A.941 
 308A.941 Court-ordered remedies or dissolution. 
 
Subdivision 1.  Conditions for relief.  A court may grant
equitable relief that it deems 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 by a member when it is established that:  
 
(i) 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 shareholders or members
are unable to break the deadlock; 
 
(ii) the directors or those in control of the cooperative 
have acted fraudulently, illegally, or in a manner unfairly 
prejudicial toward one or more members in their capacities as 
members, directors, or officers; 
 
(iii) 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 upon the election and
qualification of their successors; 
 
(iv) the cooperative assets are being misapplied or wasted; 
or 
 
(v) the period of duration as provided in the articles has 
expired and has not been extended as provided in this chapter; 
 
(3) in an action by a creditor when:  
 
(i) the claim of the creditor against the cooperative has 
been reduced to judgment and an execution on the judgment has 
been returned unsatisfied; or 
 
(ii) the cooperative has admitted in writing that the claim 
of the creditor against the cooperative is due and owing 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 in accordance with this chapter when it is
established that a decree of dissolution is appropriate.  
 
Subd. 2.  Condition of cooperative or association.  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.
 
Subd. 3.  Dissolution as remedy. In deciding whether to order
dissolution of the cooperative, the court must 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 subdivision 1, clause (2) or (3).  Lesser
relief may be ordered if it would be appropriate under the
facts and circumstances of the case.  
 
Subd. 4.  Expenses.  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 may in
its discretion award reasonable expenses, including 
attorneys' fees and disbursements, to any of the other
parties. 
 
Subd. 5.  Venue.  Proceedings under this section shall 
be brought in a court within the county where the registered 
office of the cooperative is located.  
 
Subd. 6.  Parties.  It is not necessary to make members
parties to the action or proceeding unless relief is 
sought against them personally.  

HIST: 1989 c 144 art 3 s 37 

==308A.945 

308A.945 Procedure in involuntary or court-supervised 
voluntary dissolution. 
 
Subdivision 1.  Action before hearing.  In dissolution 
proceedings before a hearing can be completed the court may: 

 
(1) issue injunctions; 
 
(2) appoint receivers with all powers and duties that the 
court directs; 
 
(3) take actions required to preserve the cooperative's 
assets wherever located; and 
 
(4) carry on the business of the cooperative. 
 
Subd. 2.  Action after hearing.  After a hearing is 
completed, on notice the court directs to be given to 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 amounts owing to the
cooperative by subscribers on account of an unpaid portion of
the consideration for the issuance of shares. A receiver has 
authority, subject to the order of the court, to continue the 
business of the cooperative and to sell, lease, transfer, or 
otherwise dispose of the property and assets of the
cooperative either at public or private sale. 
 
Subd. 3.  Discharge of obligations.  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 or: 
 
(1) the costs and expenses of the proceedings, including 
attorneys' fees and disbursements; 
 
(2) debts, taxes and assessments due the United States, the 
state of Minnesota and their subdivisions, and other states
and their subdivisions, in that order; 
 
(3) claims duly proved and allowed to employees under the 
provisions of the workers' compensation act except that claims 
under this clause may not be allowed if the cooperative has 
carried workers' compensation insurance, as provided by law,
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 
services performed within three months preceding the
appointment of the receiver, if any; and 

(5) other claims proved and allowed.  
 
Subd. 4.  Remainder to members.  After payment of the expenses
of receivership and claims of creditors are proved, the 
remaining assets, if any, may be distributed to the members or 
distributed pursuant to an approved liquidation plan.  
 
HIST: 1989 c 144 art 3 s 38 

==308A.951 
 308A.951 Receiver qualifications and powers. 
 
Subdivision 1.  Qualifications.  A receiver must be a 
natural person or a domestic corporation or a foreign 
corporation authorized to transact business in this state.  A 
receiver must give a bond as directed by the court with the 
sureties required by the court.  
 
Subd. 2.  Powers.  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.  
 
HIST: 1989 c 144 art 3 s 39 

==308A.955 
 308A.955 Dissolution action by attorney general. 
 
Subdivision 1.  Conditions to begin action.  A cooperative may
be dissolved involuntarily by a decree 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 incorporation were 
procured through fraud; 
 
(2) the cooperative was incorporated for a purpose not 
permitted by this chapter; 
 
(3) the cooperative has flagrantly violated a provision of 
this chapter, has violated a provision of this chapter more
than once, or has violated more than one provision of this
chapter; or 
 
(4) the cooperative has acted, or failed to act, in a manner
that constitutes surrender or abandonment of the cooperative's
franchise, privileges, or enterprise. 
 
Subd. 2.  Notice to cooperative.  An action may not be
commenced under this section until 30 days after notice to the 
cooperative by the attorney general of the reason for the
filing of the action. If the reason for filing the action is
an act that the cooperative has done, or omitted to do, and
the act or omission may be corrected by an amendment of the
articles or bylaws or by performance of or abstention from the
act, the attorney general shall give the cooperative 30
additional days to make the correction before filing the
action.  
 
HIST: 1989 c 144 art 3 s 40 

==308A.961 
 308A.961 Filing claims in court-supervised dissolution 
proceedings. 
 
Subdivision 1.  Filing under oath.  In proceedings to 
dissolve a cooperative, the court may require all creditors
and claimants of the cooperative to file their claims under
oath with the court administrator or with the receiver in a
form prescribed by the court.  
 
Subd. 2.  Date to file claim.  (a) 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 the filing of claims;  
and 
 
(2) prescribe the notice of the fixed date that shall be 
given to creditors and claimants.  
 
(b) Before the fixed date, the court may extend the time 
for filing claims.  Creditors and claimants failing to file 
claims on or before the fixed date may be barred, by order of 
court, from claiming an interest in or receiving payment out
of the property or assets of the cooperative.  
 
HIST: 1989 c 144 art 3 s 41 

==308A.965 
 308A.965 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.  
 
HIST: 1989 c 144 art 3 s 42 

==308A.971 
 308A.971 Court-supervised dissolution order. 
 
Subdivision 1.  Conditions for dissolution order. In an
involuntary or supervised voluntary dissolution 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 so far as they will go to their
payment according to their priorities, the court shall enter
an order dissolving the cooperative.  
 
Subd. 2.  Dissolution effective on filing order.  When the
order dissolving the cooperative or association has been 
entered, the cooperative or association is dissolved.  
 
HIST: 1989 c 144 art 3 s 43 

==308A.975 

 308A.975 Filing court's 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.  
 
HIST: 1989 c 144 art 3 s 44 

==308A.981 
 308A.981 Barring of claims. 
 
Subdivision 1.  Claims barred.  A person who is or becomes a
creditor or claimant before, during, or following 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 has not initiated a legal, administrative, or
arbitration proceeding before the commencement of the
dissolution proceedings, 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 in this section. 
 
Subd. 2.  Certain unfiled claims allowed.  By one year 
after articles of dissolution have been filed with the
secretary of state pursuant to this chapter, or a dissolution
order has been 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, the claim may be allowed against a member
to the extent of the distributions to members in dissolution 
received by the member. 
 
Subd. 3.  Omitted claims allowed.  Debts, obligations, 
and liabilities incurred during dissolution proceedings must
be paid or provided for by the cooperative before the
distribution of assets to a member. A person to whom this kind
of debt, obligation, or liability is owed but is 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 subdivision does not apply to
dissolution under the supervision or order of a court.  
 
HIST: 1989 c 144 art 3 s 45 

==308A.985 

 308A.985 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. 

 
HIST: 1989 c 144 art 3 s 46