Guidelines for Cooperative Bylaws

University of Wisconsin Center for Cooperatives

These guidelines were developed several years ago, and are presented as an outline of the requirements for a good set of bylaws:

1.     A clear, concise statement of the purposes for which the association is formed and the powers which the association may exercise.  (By-laws must agree with Articles of Confederation.)

2.     Specific statement of who is eligible for membership, the requirements to become a member, voting rights.  Should include a section on issuing of membership certificates.

3.     Specific rules regarding suspension or termination of membership and compensation for investments in the association.

4.     If organized as an association with capital stock, requirements should be spelled out specifically.

5.     A section concerned with meetings of members, including:

(1) details concerning the regular annual meeting (including order of business);
 (2) special meetings, including requirements for calling a special meeting;
 (3) rules regarding notice of meetings;  (4) rules concerning voting (absentee ballots, etc.);  (5) the number and percentage of membership which constitutes a quorum (it is very important to include this).

6.     Number and qualifications of Directors.

7.     Election of Directors It is very importan to spell highly desirable to build in a rotation system. for replacement in case of death, resignation or during term of office.

8.     Procedure for election of officers, term of office, succession, desirable qualifications, the titles of officers, and the procedures for filling vacancies.

9.     A section of compensation for directors, including approval by the membership. (Compensation varies widely; amounts or rules for determining amount of compensation for directors should be approved at a regular or special meeting of the members.)

10.     A section describing the general duties of directors in detail (should include role in management, employment of manager, board and insurance), agreements with members, handling and depositing funds of the association.

11.     A section on specific duties of the officers (usually a minimum will cover President, Vice President, Secretary and Treasurer).

12.     Duties of committees (usually will cover the Executive and other permanent standing committees).

13.     Duties of the manager (very important--should include general duties, duty to account, and control of employees--preparation of this section should incorporate the principle of "letting the manager manage").

14.     A section on patron's and patrons' net margin (this section should exploit the principle of margins above costs, the member or patron share of these margins, how they are computed, how they are paid, and the association right to a first lien on these for all indebtedness of the patron to the association).

15.     A section explaining revolving funds and other methods used in financing.

16.     A section explaining the rules and procedures that will be followed if the association goes out of business.

17.     A section covering unclaimed money (such as unclaimed patron net margins or refunds, etc.) and the procedure that will be followed.

18.     The business or fiscal operating year of the association.

19.     A section on the procedure for amending the by-laws (very important).

20.     Miscellaneous provision such as printing and distributing by-laws, preparation of a corporate seal for the association, etc.