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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Corporations and Associations
Chapter : CORPORATIONS AND ASSOCIATIONS NOT FOR PROFIT
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10-2001 Definitions
In this article, unless the context otherwise requires:
1. "Active member" is a member growing a product handled by the association at the
time of the membership meeting, or who during the previous year, delivered products to
the association.
2. "Agricultural products" includes horticultural, viticultural, forestry, dairy,
livestock, poultry, bee and any farm products.
3. "Association" means a corporation organized under the provisions of this
article.
4. "Marketing agreement" means any agreement entered into between an association
organized under this article and its members, by the terms of which a subscribing grower,
and all other growers signing similar agreements, agree to sell their agricultural
products to or through such association.
5. "Member" includes members of associations.
10-2002 Law governing associations
Any law in conflict with this article shall not apply to the associations organized
hereunder, but general corporation laws shall apply to the associations except when they
conflict or are inconsistent with the express provisions of this article.
10-2003 Requirements for formation; limitation on association profits
A. Five or more persons engaged in the production of agricultural products may form
a nonprofit, cooperative association without capital stock under the provisions of this
article.
B. Associations organized under this article shall not make profits for themselves
or for their members, but only for their members as producers.
10-2004 Articles of incorporation; amendments
A. Articles of incorporation shall be filed setting forth:
1. The name of the association.
2. The purposes for which it is formed.
3. The place where its principal business will be transacted.
4. The term for which it is to exist.
5. The number of directors thereof, which shall not be less than five, and their
term of office.
B. The articles shall be subscribed and filed in accordance with the provisions of
general corporation law.
C. The articles of incorporation may be altered or amended at a regular meeting, or
at a special meeting called for that purpose, by the affirmative vote of a majority of
the active members of the association, and on at least thirty days notice in writing of
the proposed alteration or amendment. Amendments to the articles when adopted shall be
filed as required by law.
10-2005 Powers of association
An association incorporated under this article may:
1. Engage in any activity in connection with the marketing, harvesting, processing,
storing, handling or utilization of agricultural products or their by-products delivered
to it, or the providing of labor, or in connection with the purchase, hiring or use by
its patrons of supplies, machinery or equipment, or in the financing of any such
activities, but the associations shall not deal in the products of nonmembers to an
amount greater in value than that of products handled for members.
2. Borrow money and make advances on products delivered.
3. Act as the agent or representative of any member or patron in such activities.
4. Acquire, hold, own and exercise all rights of ownership in, and sell, transfer
or pledge shares of the capital stock or bonds, or become a member or a stockholder of
any corporation or association engaged in a related activity or in the handling,
marketing or financing of any products handled by the association, but stocks, bonds or
other securities owned by a subsidiary may not be pledged, sold or otherwise disposed of
until thirty days notice has been given to all members of the association in the manner
provided by its bylaws. Such stock, bonds and other securities of a subsidiary may be
placed with the state treasurer for safe keeping, and he shall not surrender them until
proof of notice as required by this article has been given.
5. Establish reserves and invest the funds thereof in stocks and bonds of any
corporation or association engaged in a related activity, or in the handling, marketing,
processing or financing of the products handled by the association, or in such other
property as the board of directors of the association deems satisfactory.
6. Do any act necessary to carry out the specific powers conferred by this article,
and do such acts within or without the state.
7. Possess the powers, rights and privileges of corporations organized under the
general law of the state, unless inconsistent with this article.
10-2006 Bylaws; renewal upon expiration of contract period
A. Each association shall within thirty days after incorporation adopt bylaws. A
majority vote of the members or their written assent is necessary to adopt such
bylaws. The bylaws may provide for:
1. The time, place and manner of calling and conducting meetings.
2. The number of members constituting a quorum.
3. The right of members to vote by proxy, by mail or by both methods, and the
conditions, manner, form and effect of the votes.
4. The number of directors constituting a quorum.
5. The qualifications, compensation, duties and term of office of directors and
officers, time of their election and the manner of giving notice of the election.
6. Penalties for violation of the bylaws.
7. The amount of entrance, organization and membership fees, if any, the method of
collecting them and the purposes for which they may be used.
8. The annual dues or assessments.
9. The charge to be paid by each member for services rendered by the association to
him, the time of payment and the manner of collection.
10. The marketing contract between the association and its members, which every
member may be required to sign.
11. The number and qualification of members of the association and the conditions
precedent to membership.
12. The method, time and manner of permitting members to withdraw.
13. The manner of assignment and transfer of the interest of members.
14. The conditions upon which, and time when membership of a member shall cease.
15. The automatic suspension of the rights of a member when he ceases to be eligible
to membership, and the manner and effect of the expulsion of a member.
16. The manner of determining the value of a member's interest, and providing for
purchase of such interest by the association upon his death, withdrawal, expulsion or
forfeiture of membership, at the option of the association.
17. If members are to be accorded unequal voting rights, the manner of determining
the number of votes to which each member is entitled.
B. Upon termination of each contract period, the board of directors of the
association may renew or revise the bylaws to be in effect for the next contract period,
and the renewal or revision shall be the bylaws of the association after thirty days
notice has been given to the members, unless more than fifty per cent of the members of
the association have filed objections thereto in writing, except that when property
rights of the members are affected, section 10-2007 shall apply.
10-2007 By-laws concerning property rights of members; amendment
The property rights and interest of each member, whether equal or unequal, shall be
set forth in the by-laws of the association as general rules applicable to all members by
which the property rights and interest of each member shall be determined and fixed. The
association may admit new members, who, when admitted, shall share in the property of the
association with the old members in accordance with such general rules. By-laws defining
the property rights of members shall not be altered, amended or repealed except by
written consent or the vote of three fourths of the members qualified to vote under the
by-laws of the association.
10-2008 Eligibility for membership
Under the terms and conditions prescribed in its by-laws, an association may admit
as members persons engaged in production of the agricultural products to be handled by or
through the association, including lessees and tenants of land used for production of
such products, lessors and landlords who receive as rent part of the crop raised on the
leased premises and persons or corporations regularly engaged in financing production of
the agricultural commodities.
10-2009 Membership certificates; voting; liability
If a member of an association established without capital stock has paid his
membership fee, he may receive a certificate of membership. Members are not liable for
debts of the association above the sum remaining unpaid on their membership fees. No
member is entitled to more than one vote unless the bylaws provide otherwise. In no
event is a member allowed to have more than five votes which are based on actual
patronage, and a member is not allowed more than one vote because of the amount of
membership capital he may own.
10-2010 Appraisal of interest and payment upon withdrawal or expulsion of member
If a member withdraws or is expelled, the board of directors shall, within three
years after withdrawal or expulsion, equitably appraise his property interest in the
association and pay him for that interest. The appraisal is conclusive.
10-2011 General powers of directors; election; compensation
A. The affairs of the association shall be managed by the board of directors
elected by the members from their number. The bylaws may provide that the territory in
which the association has members be divided into districts and that the directors be
elected according to such districts. If the territory is so divided the bylaws shall also
specify the number of directors to be elected by each district, the manner and method of
apportioning the directors and of dividing the territory into districts. The bylaws may
provide that primary elections be held in each district to elect the directors
apportioned to the districts, and the result of such elections shall be ratified by the
next regular meeting of the association. The bylaws may further provide that additional
directors be elected at large and the manner of their election.
B. The association may provide a fair remuneration for the time actually spent by
its officers and directors in its service.
C. If a vacancy on the board occurs other than by expiration of term, the remaining
members by a majority vote shall fill the vacancy.
10-2012 Organization of board of directors
The directors shall elect from their number a president and one or more
vice-presidents, and a secretary and treasurer, who need not be members. The offices of
secretary and treasurer may be combined. The funds of the association shall be deposited
only as authorized by the board.
10-2013 Removal of officer or director
A. A member may bring charges against an officer or director by filing them in
writing with the secretary of the association, together with a petition for removal
signed by ten per cent of the members. The removal shall be voted upon at the next
regular or special meeting and the association may remove the officer or director by a
majority vote of the members. The director or officer shall be informed in writing of
the charges previous to the meeting, and he and the person bringing the charges may be
heard in person or by counsel and may call witnesses at the meeting.
B. If the by-laws provide for election of directors by districts with primary
elections in each district, then the petition for removal of a director shall be signed
by twenty per cent of the members residing in the district from which he was
elected. The board shall call a special meeting of the members residing in that district
to consider the removal of the director, and he may be removed by a vote of the majority
of the members of that district.
10-2014 General and special meetings of association; notice
The by-laws shall provide for one or more regular meetings annually. The board of
directors may call a special meeting at any time, or ten per cent of the members may file
a request for a special meeting, stating the specific business to be brought before the
association, and the meeting shall thereupon be called by the directors. Notice of all
meetings, together with a statement of the purposes thereof, shall be mailed to each
member at least ten days prior to the meeting, but the by-laws may require that such
notice be given by publication in a newspaper.
10-2015 Referral to membership
Upon demand of one half of the entire board of directors any matter that has been
approved or passed by the board shall be referred to the membership or the shareholders
for decision at the next special or regular meeting.
10-2016 Marketing contract; remedies for breach
A. The association and its members may make and execute marketing contracts
requiring the members to sell, for any period of time not over ten years, all or any
specified part of their agricultural products, or specified commodities, exclusively to
or through the association or its facilities.
B. The membership contract may provide for membership for a longer period than ten
years but not exceeding thirty years, if the contract provides opportunity to the members
for withdrawal at least once each year.
C. The contract may provide that the association may sell the products of its
members, with or without taking title thereto, and pay to its members the average sale
price based on grade and quantity, after deducting all necessary selling, overhead and
other costs and expenses.
D. When provided in the by-laws, the marketing contract may fix, as liquidated
damages, specific sums to be paid by the members to the association upon the breach by
him of any provision of the marketing contract regarding the sale or delivery or
withholding of products, and that the member will pay all costs, premiums for bonds,
expenses and fees if an action is brought upon the contract by the association, and such
provision shall be valid and enforceable in the courts.
E. In event of a breach, or threatened breach, of the marketing contract by a
member, the association may apply for an injunction to prevent the further breach of the
contract, and to enforce specific performance thereof.
10-2017 Pilot agreement; list of other agreements; recording
The association may record one of the executed marketing agreements in the office of
the county recorder of the county in which the subscribing member is producing or
proposing to produce the products to be marketed for him, and such agreement shall be
known as the pilot agreement. After recording the pilot agreement, the association may,
from time to time, in lieu of recording other agreements obtained from its members, file
with the recorder an affidavit of its secretary stating that the association has executed
agreements with other members, giving their names and addresses, a description of the
premises owned or leased by each of the members and the date on which the agreements were
executed by the members. The affidavit, when so filed, shall be recorded in the book of
miscellaneous records, and shall constitute notice of the agreements.
10-2018 Investments; limitation; disposition of profits
A. An association may organize, form, operate, own, control, have an interest in,
own stock of or be a member of any other corporation, with or without capital stock,
engaged in processing, handling, utilizing, manufacturing, marketing, financing or
selling agricultural products handled by the association, or the by-products thereof.
B. Profits or income received from the investments provided for in subsection A may
be added to the reserves of the association to be distributed or handled according to the
discretion of the board of directors.
C. An association may enter into agreements and arrangements with another
cooperative corporation or association formed in this or any other state for the
cooperative and more economical carrying on of its business, or any part thereof. Any
two or more associations may by agreement unite in employing and using the same methods,
means and agencies for conducting their businesses.
10-2019 Annual reports
The association shall make an annual report on forms furnished by the corporation
commission, containing a general statement of its business during the fiscal year
showing:
1. The number of members and amount of membership fees received.
2. The total expense of operations.
3. Its indebtedness or liabilities, and its balance sheets.
10-2020 License and other fees; tax exemption
Each association shall pay an annual license fee of ten dollars, but shall be exempt
from all franchise or license taxes. For filing articles of incorporation, each
association shall pay ten dollars, and for filing an amendment to the articles, two
dollars and fifty cents.
10-2021 Distribution of unclaimed reserves
If, after ten years from the date of declaration of distribution of reserves, any
reserves so distributable remain unclaimed, they may be used by the association in its
research and educational work.
10-2022 Associations not deemed in restraint of trade
An association shall not be deemed to be a combination in restraint of trade, an
illegal monopoly or an attempt to lessen competition or fix prices arbitrarily. The
marketing contracts or agreements between the association and its members, or any
agreements or acts authorized by this article, shall not be considered in restraint of
trade.
10-2023 Inducing breach of contract; spreading false report; classification
A person knowingly inducing any member of an association to breach his marketing
contract with the association, or who knowingly spreads false reports concerning the
finances or management thereof, is guilty of a class 2 misdemeanor, and is also liable to
the injured association in a civil action in the sum of five hundred dollars.
10-2024 Producer-distributor agreement not to join, become or remain member of cooperative or trade association
Every undertaking or promise made, whether written or oral, express or implied, is
contrary to public policy and void and shall not afford any reason for granting legal or
equitable relief, when constituted or contained in a contract or agreement for the sale
of agricultural, horticultural or dairy products between a producer of such products and
a distributor or purchaser thereof, whereby either party to the contract or agreement
undertakes or promises not to join, become or remain a member of a cooperative
association organized under this article, or of a trade association of the producers,
distributors or purchasers of such products.
10-2025 Exemption from security law
Title 44, chapter 12 does not apply to the issuance of membership certificates or
other evidence of member interest, equity or contribution by any association organized
pursuant to this article.
10-2051 Definitions
In this article, unless the context otherwise requires:
1. "Cooperative" means a corporation that is organized under this article or that
becomes subject to this article in the manner provided in this article.
2. "Executed by the cooperative" means executed by manual or facsimile signature on
behalf of the cooperative by a duly authorized officer or, if the corporation is under
the control of a receiver or trustee, by the receiver or trustee.
3. "Person" means a natural person, firm, association, corporation, business trust,
partnership, federal agency, state or political subdivision or agency of a state or any
body politic.
10-2052 Purpose
A. Cooperative nonprofit membership corporations may be organized under this
article for any of the following purposes:
1. Supplying, purchasing, marketing, selling, transmitting or distributing electric
energy to persons and promoting and extending the use of electric energy.
2. Providing billing, metering, communications and other services related or
incidental to supplying, providing or transmitting electric energy, whether or not the
cooperative is itself supplying or transmitting that energy.
3. Engaging in activities designed to promote economic development of rural areas
as described in section 10-2057.
4. Engaging in activities for any lawful purpose.
B. In a rural area where there is no telephone service, a cooperative which is
supplying electric energy in the area may enter into a cooperative agreement with the
existing holder of a certificate of convenience and necessity for telephone service in
the general area to supply telephone service in the same area.
C. Generation and transmission cooperatives as defined in article 4 of this chapter
are subject to article 4 of this chapter and not to this article.
10-2053 Requirements for formation
Five or more natural persons, or two or more cooperatives, may organize a
cooperative in the manner provided in this article.
10-2054 Name
A. The name of a cooperative shall include the words "electric" and "cooperative,"
and the abbreviation "inc.," unless, in a statement executed by the cooperative and filed
with the corporation commission, or in an affidavit made by a person signing the articles
of incorporation, consolidation, merger or conversion, which relate to the cooperative,
and filed, together with the articles, with the corporation commission, it appears that
the cooperative desires to do business in another state and is or would be precluded from
doing so by reason of the inclusion of either or both of those words in its name.
B. The name of a cooperative shall be distinct from the name of any other
cooperative or corporation organized under the laws of, or authorized to do business in,
this state. Only a cooperative doing business in this state pursuant to this article
shall use both the words "electric" and "cooperative" in its name, but this section shall
not apply to any corporation which becomes subject to this article by complying with the
provisions of section 10-2076 and which elects to retain a corporate name which does not
comply with this section. The restriction on the use of the words "electric" and
"cooperative" does not apply to generation and transmission cooperatives organized under
article 4 of this chapter.
10-2055 Articles of incorporation
A. Articles of incorporation of a cooperative shall recite that they are executed
pursuant to this article and shall state:
1. The name of the cooperative.
2. The address of its principal office.
3. The names and addresses of the incorporators.
4. The names and addresses of its directors.
B. The articles may also contain provisions not inconsistent with this article
which are deemed necessary or advisable for the conduct of its business.
C. The articles shall be executed by an incorporator.
D. It is not necessary to recite in the articles of incorporation the purpose for
which the cooperative is organized or to recite any of its corporate powers.
10-2056 Amendment of articles
A. A cooperative may amend its articles by complying with the requirements
prescribed in subsection B of this section, but a change in location of its principal
office may be effected in the manner set forth in section 10-2066.
B. The proposed amendment shall be presented to a meeting of the members, and the
notice of the meeting shall set forth or have attached to it the proposed amendment. If
the proposed amendment, with any changes, is approved by the affirmative vote of not less
than two-thirds of those members voting or the number of members prescribed in the bylaws
but not less than a majority of those members voting, the articles of amendment shall be
executed by the cooperative.
C. The articles of amendment shall state:
1. The name of the cooperative.
2. The address of its principal office.
3. The amendment of its articles of incorporation.
10-2057 Powers of electric cooperative
A. A cooperative organized under this article may:
1. Sue and be sued in its corporate name.
2. Have perpetual existence.
3. Adopt and alter a corporate seal.
4. To compete more effectively with other entities in the electric energy market,
engage in the generation, manufacture, purchase, acquisition, accumulation, transmission,
marketing, sale, distribution, supply and disposition of electric energy, either
individually or jointly in collaboration with other corporations that have loans made or
guaranteed by the United States through the administrator of the rural utilities service
or that are nonprofit members of the corporation.
5. Assist persons to whom electric energy is or will be supplied by the cooperative
in wiring their premises and in acquiring and installing electrical and plumbing
appliances, equipment, fixtures and apparatus by means of financing.
6. Assist persons to whom electric energy is or will be supplied by the cooperative
in constructing, equipping, maintaining and operating electric cold storage or processing
plants by means of financing.
7. Construct, purchase, lease or otherwise acquire, and equip, maintain and
operate, and sell, assign, convey, lease, mortgage, pledge or otherwise dispose of or
encumber electric transmission and distribution lines or systems, electric generating
plants, lands, buildings, structures, dams, plants and equipment, and any other real or
personal property, tangible or intangible, that is deemed necessary, convenient or
appropriate to accomplish any purpose for which the cooperative is organized or that it
elects to undertake.
8. Purchase, lease or otherwise acquire, and use, and exercise and sell, assign,
convey, mortgage, pledge or otherwise dispose of or encumber, franchises, rights,
privileges, licenses and easements.
9. Borrow money and otherwise contract indebtedness, and issue notes, bonds and
other evidences of indebtedness, and secure the payment thereof by mortgage, pledge or
deed of trust of, or any other encumbrance upon, any or all of its presently owned or
after-acquired real or personal property, assets, franchises or revenues.
10. Construct, maintain and operate electric transmission and distribution lines
along, upon, under and across publicly owned lands and public thoroughfares, including,
without limitation, all roads, highways, streets, alleys, bridges and causeways, and
acquire for such purposes franchises, licenses, permits, easements, rights-of-way and all
similar rights and privileges relating to such purposes.
11. Exercise the power of eminent domain in the manner and to the extent provided by
the laws of this state for the exercise of such power by other corporations constructing
or operating electric transmission and distribution lines or systems.
12. Become a member of other cooperatives or corporations or own stock in those
cooperatives or corporations or otherwise financially participate and invest in those
cooperatives or corporations.
13. Conduct its business and exercise its powers within or without this state.
14. Adopt, amend and repeal bylaws.
15. Do and perform other acts and things and have and exercise other powers that may
be necessary, convenient or appropriate to accomplish the purpose for which the
cooperative is organized or to carry out its business and affairs.
16. Subject to any limitation imposed by federal law, invest its own monies, make
loans or guarantees or participate in rural community infrastructure projects, in job
creation activities and in other activities to promote economic development in rural
areas if the rural development activities are approved by the rural utilities service.
B. The authority granted in subsection A, paragraph 16 shall be used only for
economic development in rural areas, and the electric cooperative shall not use monies
intended for rural economic development to purchase or acquire electrical works or
electrical facilities, whether real or personal property, or both, by the exercise of the
right of eminent domain or condemnation nor shall such monies be used to purchase,
construct, lease or acquire any electrical works or electrical facilities or make any
extensions or additions designed to serve areas or territories already being lawfully
served. In subsection A, paragraph 16 and this subsection:
1. "Economic development" includes project feasibility studies, start-up costs,
incubator projects and other reasonable expenses for the purpose of fostering rural
economic development.
2. "Invest" means to commit monies in order to earn a financial return on assets
which are not expected to be used or useful in furnishing electric service. The total
amount which the electric cooperative invests, loans or uses as a guarantee is limited to
those monies authorized under federal law for rural development programs.
3. "Job creation activities" includes activities such as providing technical,
financial and managerial assistance.
4. "Rural community infrastructure projects" includes projects such as water and
waste systems and garbage collection services.
C. Beginning on January 1, 1999 the indemnification of members, directors,
officers, employees and agents of a cooperative shall be in accordance with chapter 31,
article 5 of this title.
10-2058 Board of directors; compensation; term; quorum A. The business of a cooperative shall be managed by a board of directors. Unless the bylaws provide otherwise, each of the directors shall be a member of the cooperative or of another cooperative that is a member. The bylaws shall prescribe the number of directors, their qualifications other than those prescribed in this article and the manner of holding meetings of the board of directors and of electing successors to directors who resign or die or who are otherwise incapable of acting. The bylaws may also provide for the removal of directors from office and for the election of their successors. B. Unless the bylaws provide otherwise, the directors shall not receive salaries for services as directors and, except in emergencies, shall not be employed by the cooperative in any capacity involving compensation without the approval of the members. The bylaws may allow a payment of a fee and provide that expenses of attendance may be allowed to each director for attendance at each meeting of the board of directors. C. The directors of a cooperative named in the articles of incorporation, consolidation, merger or conversion shall hold office until successors are elected and qualify. The bylaws shall prescribe the manner of electing directors and the number and terms of the directors, including whether the terms are staggered. If stated in the bylaws, at each annual meeting, or, in case of failure to hold the annual meeting as specified in the bylaws, at a special meeting called for that purpose, the members shall elect directors to hold office until the next annual meeting of the members, except as otherwise provided in this article. Each director shall hold office for the term for which THE DIRECTOR is elected and until A successor is elected and qualifies. A DIRECTOR MAY RESIGN AT ANY TIME BY DELIVERING WRITTEN NOTICE TO THE BOARD OF DIRECTORS, ITS PRESIDING OFFICER OR THE COOPERATIVE. A RESIGNATION IS EFFECTIVE WHEN THE NOTICE IS DELIVERED UNLESS THE NOTICE SPECIFIES A LATER EFFECTIVE DATE OR EVENT. D. A majority of the board of directors shall constitute a quorum. E. If a husband and wife hold a joint membership in a cooperative, either one, but not both, may be elected a director. F. The board of directors may take any action without a meeting if the action would be allowed at a meeting and if before the board takes the action all of the directors who are normally required to approve the action at a meeting provide prior consent by signing a written statement that explains and approves the action. G. The board of directors may exercise all the powers of a cooperative not conferred upon the members by this article, or its articles of incorporation or bylaws. H. Any person who serves as a director OR OFFICER or who serves on a board or council in an advisory capacity to the cooperative or board of directors of a cooperative is immune from civil liability and is not subject to a suit directly or by way of contribution for any act or omission that results in damage or injury if that person was acting in good faith and within the scope of that person's official capacity and the damage or injury was not caused by the wilful conduct or gross negligence of that person. Nothing in this subsection limits or modifies in any manner the duties or liabilities of a director or person who serves in any advisory capacity to the cooperative or the cooperative members. For the purposes of this subsection, "official capacity" means any decision, act or event the cooperative undertakes in furtherance of the purposes for which the cooperative is organized or operating. 10-2059 Officers of cooperative
The officers of a cooperative shall consist of a president, vice-president,
secretary and treasurer, who shall be elected annually by and from the board of
directors. If stated in the bylaws, the officers of the cooperative do not have to be
directors. Unless the bylaws provide otherwise, if a person holding any office ceases to
be a director the person shall cease to hold the office. The offices of secretary and
treasurer may be held by the same person. The board of directors may also elect or
appoint all other officers, agents or employees it deems necessary or advisable and shall
prescribe their powers and duties. An officer may be removed from office and his
successor may be elected in the manner prescribed in the bylaws.
10-2060 Members in cooperative
Each incorporator of a cooperative shall be a member of the cooperative, but no
other person may become a member unless the person agrees to use electric energy or other
services furnished by the cooperative as the cooperative establishes in its bylaws. A
husband and wife may hold a joint membership in a cooperative. Membership in a
cooperative is not transferable, except as provided in the bylaws. The bylaws may
prescribe additional qualifications, limitations, classifications and rights concerning
membership.
10-2061 Nonliability of members for cooperative indebtedness
A member shall not be liable or responsible for the acts, debts, liabilities or
obligations of the cooperative and the property of the members shall not be subject to
execution therefor.
10-2062 Annual and special meetings of members; notice; quorum; voting
A. An annual meeting of the members of a cooperative shall be held at such time and
place as provided in the bylaws. Special meetings of the members may be called by the
president, by the board of directors, by any three directors or by not less than ten per
cent of the members.
B. Except as otherwise provided in this article, written or printed notice stating
the time and place of each meeting of the members and, in the case of a special meeting,
the purpose for which the meeting is called shall be given to each member, either
personally or by mail, not less than ten nor more than twenty-five days before the date
of the meeting. If mailed, the notice shall be deemed to be given when deposited in the
United States mail with postage prepaid addressed to the member at the member's address
appearing on the records of the cooperative.
C. Unless the bylaws prescribe the presence of a greater percentage or number of
the members for a quorum, a quorum for the transaction of business at all meetings of the
members of a cooperative having not more than one thousand members shall be five per cent
of all members present in person or by ballot, and of a cooperative having more than one
thousand members, shall be fifty members present in person or by ballot. If less than a
quorum is present at any meeting, a majority of those present in person may adjourn the
meeting from time to time without further notice.
D. Unless the bylaws provide otherwise, each member shall be entitled to one vote
on each matter submitted to a vote at a meeting of the members. Voting shall be in person
but, if the bylaws so provide, may also be by mail or by proxy.
10-2063 Waiver of notice of meeting
A person entitled to notice of a meeting may waive notice in writing either before
or after the meeting. If the person attends the meeting, his attendance constitutes a
waiver of notice of the meeting, unless he participates therein solely to object to the
transaction of any business because the meeting has not been legally called or convened.
10-2064 Bylaws
The board of directors shall adopt the first bylaws of a cooperative to be adopted
following incorporation, conversion, merger or consolidation. Thereafter either the
board of directors or the members may amend or repeal the bylaws. The bylaws shall set
forth the rights and duties of members and directors and may contain other provisions for
the regulation and management of the affairs of the cooperative not inconsistent with
this article or with its articles of incorporation.
10-2065 Districts; boundaries
The bylaws may provide for the division of the territory served or to be served by a
cooperative into two or more districts for any purpose, including, without limitation,
the nomination and election of directors and the election and functioning of district
delegates. The bylaws shall prescribe the boundaries of the districts, or the manner of
establishing the boundaries, the manner of changing such boundaries and the manner in
which the districts shall function. 10-2066 Change of location of principal office
A cooperative may, upon authorization of its board of directors or its members,
change the location of its principal office by filing in the office of the corporation
commission a certificate reciting the change of principal office, executed by the
cooperative.
10-2067 Nonprofit operation
A cooperative shall be operated on a nonprofit basis for the mutual benefit of its
members and patrons. The by-laws of a cooperative or its contracts with consumers shall
contain such provisions relative to the disposition of revenues and receipts as may be
necessary and appropriate to establish and maintain its nonprofit and cooperative
character.
10-2068 Disposition of property
A. The board of directors of a cooperative, without authorization by the members of
the cooperative, may authorize the execution and delivery of mortgages or deeds of trust
pledging or encumbering any or all of the property, assets, rights, privileges, licenses,
franchises and permits of the cooperative, whether acquired or to be acquired, and
wherever situated, as well as the revenues therefrom, all upon such terms and conditions
as the board of directors determines, to secure any indebtedness of the
cooperative. Any such mortgages or deeds of trust shall be exempt from the
mortgage recording tax.
B. A cooperative may not sell, lease or otherwise dispose of all or a substantial
portion of its property unless the sale, lease or other disposition is authorized by the
affirmative vote of not less than a majority of those members of the cooperative present
at the meeting of the members.
10-2069 Recording of mortgages; effect
A. Any mortgage, deed of trust or other instrument executed by a cooperative doing
business in this state pursuant to this article, which affects real and personal property
and which is recorded in the office of the county recorder in any county in which the
property is located or is to be located, shall have the same force and effect as if the
mortgage, deed of trust or other instrument were also recorded, filed or indexed as
provided by law in the office of the county recorder in such county as a mortgage of
personal property. All after-acquired property of the cooperative described or referred
to as being mortgaged or pledged in the mortgage, deed of trust or other instrument,
shall become subject to the lien thereof immediately upon acquisition of such property by
the cooperative whether or not such property was in existence at the time of execution of
such mortgage, deed of trust or other instrument. Recording of the mortgage, deed of
trust or other instrument constitutes notice and otherwise has the same effect with
respect to after-acquired property as it has under the laws relating to recording with
respect to property owned by the cooperative at the time of execution of the mortgage,
deed of trust or other instrument and therein described or referred to as being mortgaged
or pledged thereby.
B. The lien upon personal property of the mortgage, deed of trust or other
instrument shall, after recording, continue in existence and of record for the period of
time specified therein without refiling or the filing of a renewal certificate, affidavit
or other supplemental information required by law relating to renewal, maintenance or
extension of liens upon personal property.
10-2070 Use of roads and streets; notice; protest
A. A cooperative shall have the use of, and the right is expressly granted to it to
use, the public highways, county highways and streets and alleys in or outside the
service area of the cooperative. The cooperative may construct and operate lines
connecting any points within the state and connect at the state boundary with like lines.
B. Within the confines of municipal corporations however, use and occupancy of
streets shall be under such rights as may be acquired by franchises according to law, and
subject to control and regulation by municipal authorities, and the use of public
highways, except state highways, by cooperatives not within the confines of an
incorporated city or town, shall be regulated by the board of supervisors of the county,
by license or franchise. The board of supervisors in granting the license or franchise,
or at any time after it is granted, may impose such restrictions and limitations as to
the use of the public roads as may be deemed best for the public safety or
welfare. Every franchise granted under this section shall include provisions requiring
the grantee to bear all expenses, including damage and compensation for any alteration of
the direction, surface, grade or alignment of any county road, made for the purpose of
such franchise.
C. The board of supervisors before granting the privileges contemplated by this
section, shall give public notice of its intention to make the grant, by publishing
notice in some newspaper of general circulation, published within the county, for at
least once a week for three weeks prior to the day set for the consideration of such
action. If, on or before such date, more than fifty per cent of the qualified electors
of the county petition the board of supervisors to deny the privilege, they shall so act,
and any privilege granted contrary to the petition shall be void.
10-2073 Consolidation
A. Any two or more cooperatives, each of which is designated in this article a
"consolidating cooperative", may consolidate into a new cooperative, designated in this
article the "new cooperative", by complying with the following requirements:
1. The proposition for the consolidation of the consolidating cooperatives into the
new cooperative and proposed articles to accomplish the consolidation shall be submitted
to a meeting of the members of each consolidating cooperative, the notice of which shall
have attached a copy of the proposed articles of consolidation.
2. If the proposed consolidation and the proposed articles of consolidation, with
any amendments, are approved by the affirmative vote of not less than two-thirds of those
members of each consolidating cooperative voting at the meeting, articles of
consolidation in the form approved shall be executed by each consolidating cooperative.
B. The articles of consolidation shall recite that they are executed pursuant to
this article and shall state:
1. The name of each consolidating cooperative and the address of its principal
office.
2. The name of the new cooperative and the address of its principal office.
3. A statement that each consolidating cooperative agreed to the consolidation.
4. The names and addresses of the directors of the new cooperative.
5. The terms and conditions of the consolidation and the mode of carrying it into
effect, including the manner in which members of the consolidating cooperatives may or
shall become members of the new cooperative. The articles may also contain any
provisions not inconsistent with this article deemed necessary or advisable for the
conduct of the business of the new cooperative.
10-2074 Merger
A. Any one or more electric cooperatives, each of which is designated in this
article a "merging cooperative", may merge into another cooperative, designated in this
article the "surviving cooperative", by complying with the following requirements:
1. The proposition for the merger of the merging cooperatives into the surviving
cooperative and proposed articles of merger to give effect to the merger shall be
submitted to a meeting of the members of each merging cooperative and of the surviving
cooperative, the notice of which shall have attached a copy of the proposed articles of
merger.
2. If the proposed merger and proposed articles of merger, with any amendments, are
approved by the affirmative vote of not less than two-thirds of those members of each
cooperative voting at each such meeting, articles of merger in the form approved shall be
executed by each merging cooperative.
B. The articles of merger shall recite that they are executed pursuant to this
article and shall state:
1. The name of each merging cooperative and the address of its principal office.
2. The name of the surviving cooperative and the address of its principal office.
3. A statement that each merging cooperative and the surviving cooperative agree to
the merger.
4. The names and addresses of the directors of the surviving cooperative.
5. The terms and conditions of the merger and the manner of carrying it into
effect, including the manner in which members of the merging cooperatives may or shall
become members of the surviving cooperative. The articles may also contain any
provisions not inconsistent with this article deemed necessary or advisable for the
conduct of the business of the surviving cooperative.
10-2075 Effect of consolidation or merger
A. In case of a consolidation the existence of the consolidating cooperatives shall
cease and the articles of consolidation shall be deemed to be the articles of
incorporation of the new cooperative. In case of a merger the separate existence of the
merging cooperatives shall cease and the articles of incorporation of the surviving
cooperative shall be deemed amended to the extent, if any, that changes therein are
provided for in the articles of merger.
B. All rights, privileges, immunities and franchises and all property, real and
personal, including, without limitation, applications for membership, all debts due on
whatever account and other choses in action belonging to each of the consolidating or
merging cooperatives shall be deemed transferred and vested in the new or surviving
cooperative without further act or deed.
C. The new or surviving cooperative shall be responsible and liable for all
liabilities and obligations of each of the consolidating or merging cooperatives, and any
claim existing or action or proceeding pending by or against any of the consolidating or
merging cooperatives may be prosecuted as if the consolidation or merger had not taken
place, but the new or surviving cooperative may be substituted in its place.
D. Neither the rights of creditors nor liens upon the property of any of such
cooperatives shall be impaired by the consolidation or merger.
10-2076 Conversion of existing corporations
A. A corporation organized under the laws of this state and supplying or having the
corporate power to supply electric energy may be converted into a cooperative by
complying with the following requirements and shall then become subject to this article
with the same effect as if originally organized under this article:
1. The proposition for the conversion of the corporation into a cooperative and
proposed articles of conversion to give effect to the conversion shall be submitted to a
meeting of the members or stockholders of the corporation, or in case of a corporation
having no members or stockholders, to a meeting of the incorporators of the corporation,
the notice of which shall have attached a copy of the proposed articles of conversion.
2. If the proposition for the conversion of the corporation into a cooperative and
the proposed articles of conversion, with any amendments, are approved by the affirmative
vote of not less than two-thirds of those members of the corporation voting at the
meeting, or, if the corporation is a stock corporation, by the affirmative vote of the
holders of not less than two-thirds of those shares of the capital stock of that
corporation represented at the meeting and voting, or, in the case of a corporation
having no members and no shares of its capital stock outstanding, by the affirmative vote
of not less than two-thirds of its incorporators, articles of conversion in the form
approved shall be executed by the cooperative.
B. The articles of conversion shall state:
1. The name of the corporation and the address of its principal office prior to its
conversion into a cooperative.
2. The statute or statutes under which it was organized.
3. A statement that the corporation elects to become a cooperative nonprofit
membership corporation subject to this article.
4. Its name as a cooperative.
5. The address of the principal office of the cooperative.
6. The names and addresses of the directors of the cooperative.
7. The manner in which members, stockholders or incorporators of the corporation
may or shall become members of the cooperative. The articles may also contain any
provisions not inconsistent with this article deemed necessary or advisable for the
conduct of the business of the cooperative.
C. The articles of conversion shall be deemed the articles of incorporation of the
cooperative.
10-2077 Dissolution
A. A cooperative which has not commenced business may be dissolved by delivering to
the corporation commission articles of dissolution which shall be executed by the
cooperative and which shall state:
1. The name of the cooperative.
2. The address of its principal office.
3. That the cooperative has not commenced business.
4. That any monies received by the cooperative, less any part disbursed for
expenses of the cooperative, have been returned or paid to those entitled to the monies.
5. That no debt of the cooperative is unpaid.
6. That a majority of the incorporators elect that the cooperative be dissolved.
B. A cooperative which has commenced business may be dissolved in the following
manner:
1. The proposition to dissolve shall be submitted to the members of the cooperative
at any annual or special meeting, the notice of which shall set forth the proposition.
2. The members at the meeting shall approve, by the affirmative vote of not less
than a majority of all members of the cooperative, the proposition that the cooperative
be dissolved.
3. Upon approval, a certificate of election to dissolve designated in this
subsection as the "certificate", shall be executed by the cooperative.
4. The certificate shall state:
(a) The name of the cooperative.
(b) The address of its principal office.
(c) That the members of the cooperative have duly voted that the cooperative be
dissolved.
5. The certificate shall be submitted to the corporation commission for filing.
6. Upon filing the certificate with the corporation commission the cooperative
shall cease to carry on its business except to the extent necessary for winding up, but
its corporate existence shall continue until articles of dissolution have been filed with
the corporation commission.
7. The board of directors shall immediately cause notice of the dissolution
proceedings to be mailed to each known creditor of and claimant against the cooperative
and such notice shall be published once a week for two successive weeks in a newspaper of
general circulation in the county in which the principal office of the cooperative is
located.
8. The board of directors shall wind up and settle the affairs of the cooperative,
collect monies owing to it, liquidate its property and assets, pay and discharge its
debts, obligations and liabilities, other than those to patrons arising by reason of
their patronage, and do all other things required to wind up its business. After paying
or discharging or adequately providing for the payment or discharge of all its debts,
obligations and liabilities, other than those to patrons arising by reason of their
patronage, the board of directors shall distribute any remaining sums, first to patrons
for the pro rata return of all amounts standing to their credit by reason of their
patronage, and second to members for the pro rata repayment of membership fees. Any sums
then remaining shall be distributed among its members and former members in proportion to
their patronage.
9. The board of directors shall thereupon authorize the execution of articles of
dissolution, which shall be executed by the cooperative.
10. The articles of dissolution shall recite that they are executed pursuant to this
article and shall state:
(a) The name of the cooperative.
(b) The address of its principal office.
(c) The date on which the certificate of election to dissolve was filed by the
corporation commission.
(d) That there are no actions or suits pending against the cooperative.
(e) That all debts, obligations and liabilities of the cooperative have been paid
and discharged or that adequate provision has been made for payment and discharge.
(f) That the preceding provisions of this subsection have been duly complied with.
10-2078 Filing of articles
Articles of incorporation, amendment, consolidation, merger, conversion or
dissolution, when executed by the cooperative, shall be delivered to the corporation
commission for filing. If the corporation commission finds that the articles presented
conform to the requirements of this article, it shall, upon the payment of the fees as
provided in this article, file the articles, and upon such filing, the incorporation,
amendment, consolidation, merger, conversion or dissolution shall be in effect. The
provisions of this section shall also apply to certificates of election to dissolve.
10-2079 Fees
The corporation commission shall charge and collect for:
1. Filing articles of incorporation, ten dollars.
2. Filing articles of amendment, ten dollars.
3. Filing articles of consolidation or merger, ten dollars.
4. Filing articles of conversion, ten dollars.
5. Filing certificate of election to dissolve, ten dollars.
6. Filing articles of dissolution, ten dollars.
7. Filing certificate of change of principal office, five dollars.
10-2080 Exemption from securities regulations
The provisions of chapter 12 of title 44 shall not apply to any note, bond or other
evidence of indebtedness issued by a cooperative doing business in this state pursuant to
this article to the United States or any agency or instrumentality thereof, or to any
mortgage, deed of trust or other instrument executed to secure such note, bond or other
evidence of indebtedness, nor shall such provisions apply to the issuance of membership
certificates or other evidence of member interest by a cooperative.
10-2081 Exemption from antitrust statutes
The provisions of title 44, chapter 10, article 1 do not apply to any conduct or
activity of a cooperative organized pursuant to this article, if the conduct or activity
is approved by a statute of this state or of the United States or by the corporation
commission or an administrative agency of this state or of the United States that has
jurisdiction of the subject matter. This section does not apply to the provision of
competitive electric generation service and other services.
10-2082 Taking of acknowledgments by officer or member
A person authorized to take acknowledgments under the laws of this state shall not
be disqualified from taking acknowledgments of instruments executed in favor of a
cooperative or to which it is a party, by reason of being an officer, director or member
of the cooperative.
10-2083 Construction of article
This article shall be construed liberally, and the enumeration of any object,
purpose, power, manner, method or thing shall not be deemed to exclude like or similar
objects, purposes, powers, manners, methods or things.
10-2101 Requirements for formation
A. The members of a grand lodge or division, or of a subordinate lodge or division,
acting under the authority of a grand lodge or division of Free Masons, Odd Fellows,
Knights of Pythias, Workmen, Elks or of any other society constituted in a manner
generally similar thereto, whether or not acting under the jurisdiction of a grand lodge
or division, may assemble at their usual place of meeting, and in accordance with the
rules of their society, elect not less than three nor more than nine of their number
trustees for the purpose of preserving the property belonging to the society and
transacting all business relating to the investment and disposal thereof.
B. The trustees may have a common seal and alter it at pleasure, and for all
purposes for which they are authorized to act shall be deemed a corporation.
10-2102 Powers of trustees
In pursuance of the rules and regulations of the society, and in conformity with the
rules and regulations of the grand lodge, division or society from which they derive
their charter, the trustees may manage, purchase, lease, hold, convey, mortgage, execute
deeds of trust and improve the property of the society, including burial places owned by
the society, and as trustees may sue and be sued in all matters pertaining to such
property, and to claims, demands and liabilities thereof.
10-2103 Title to property of society
The property conveyed or acquired by devise, gift, purchase or otherwise to the
society, or to any person as trustee for the use thereof, shall vest in the trustees and
their successors in office as fully as if originally conveyed to them, and shall be held
by them and by their successors in trust for the society.
10-2104 Election, removal and meetings of trustees
A. The trustees shall be elected annually and they shall severally hold office for
one year and until their successors are elected, but the society may classify the
trustees so that the term of office of one third of them shall expire each year, and when
so classified the term of office of the trustees shall be three years and until their
successors are elected. A trustee may be removed in accordance with the rules or by-laws
of the society and vacancies may be filled for the remainder of the term.
B. Any two of the trustees may call a meeting thereof, and a majority may transact
business.
10-2105 Filing facsimile of society insignia
Benevolent, fraternal or secret societies or organizations in this state may file in
the office of the secretary of state a facsimile of its insignia, distinctive ribbon,
membership rosette or button prescribed and adopted by the society or organization for
the use of its members. The secretary of state shall keep the facsimile on file and
shall receive for such filing two dollars and fifty cents.
10-2106 Wearing insignia of patriotic or fraternal order without authority to obtain aid; classification
A person who wears the insignia, badge, emblem, distinctive ribbon or membership
rosette or button of a benevolent, fraternal, patriotic or veterans' organization, or
secret society or organization, or its auxiliary, a facsimile of which has been filed in
the office of the secretary of state, or uses such insignia, badge, emblem, distinctive
ribbon or membership rosette or button to obtain aid or assistance within this state,
unless the person is entitled to use or wear them, is guilty of a class 3 misdemeanor.
10-2121 Definitions
In this article, unless the context otherwise requires:
1. "Electric utility" means any corporation, governmental agency, political
subdivision or other entity or combination of such entities which produces, generates,
purchases, sells, transmits or distributes electricity to another electric utility or to
a user of electricity.
2. "Executed by the cooperative" means executed by manual or facsimile signature on
behalf of the cooperative by a duly authorized officer or, if the corporation is under
the control of a receiver or trustee, by the receiver or trustee.
3. "Generation and transmission cooperative" means a corporation that is organized
under this article or that becomes subject to this article as provided in this article.
4. "Person" means a natural person, firm, association, corporation, business trust
or partnership or any agency or political subdivision of the United States or of this
state or any other political body.
10-2122 Purpose
Nonprofit electric generation and transmission cooperative corporations may be
organized under this article for the purpose of:
1. Producing and generating, purchasing, marketing or selling electric energy or
transmitting such energy to other electric utilities or persons.
2. Providing services relating to producing and generating, purchasing, marketing
or selling electric energy or transmitting this energy to other electric utilities or
persons or services relating to any other lawful purpose.
10-2123 Incorporators
Two or more electric utilities or persons that fulfill the requirements for being a
member may organize a generation and transmission cooperative as provided in this
article.
10-2124 Use of name
A. The name of a generation and transmission cooperative shall include the word
"cooperative" and the abbreviation "inc.", unless, in a statement executed by the
cooperative and filed with the corporation commission, it appears that the generation and
transmission cooperative desires to transact business in another state and would be
precluded from doing so by reason of including these words in its name.
B. The name of the generation and transmission cooperative must be distinct from
the name of any other cooperative or corporation organized under the laws of or
authorized to do business in this state. Only a generation and transmission cooperative
doing business in this state pursuant to this article may use all of the words
"electric", "power" and "cooperative" in its name.
10-2125 Articles of incorporation
A. Articles of incorporation of a generation and transmission cooperative shall
recite that they are executed pursuant to this article and shall state:
1. The name of the generation and transmission cooperative.
2. The address of its principal office.
3. The names and addresses of its incorporators.
4. The names and addresses of persons who constitute its first board of directors.
5. Any provisions not inconsistent with this article which is deemed necessary or
advisable for the conduct of its business.
B. The articles shall be signed by a duly appointed representative of each
incorporator and shall then be filed with the corporation commission as provided in this
article.
C. It is not necessary to recite in the articles of incorporation the purpose for
which the generation and transmission cooperative is organized or to recite any of its
corporate powers.
10-2126 Amendment of articles; change of location of principal office
A. A generation and transmission cooperative may amend its articles of
incorporation by complying with the following requirements:
1. A proposed amendment shall be presented to a meeting of the members. The meeting
notice shall state or have attached to it all proposed amendments. A proposed amendment,
with any changes, shall be approved by the affirmative vote of either:
(a) At least two-thirds of the total number of voting delegates voting at the
meeting.
(b) The number prescribed in the bylaws but not less than a majority of the total
number of voting delegates voting at the meeting.
2. After approval, the articles of amendment shall be executed by the cooperative.
3. The articles of amendment shall recite that they are executed pursuant to this
article and shall state:
(a) The name of the generation and transmission cooperative.
(b) The address of its principal office.
(c) The amendment of its articles of incorporation.
B. On authorization of the board of directors or its members, a generation and
transmission cooperative may, without amending its articles of incorporation, change the
location of its principal office by filing with the corporation commission a certificate
that recites the change of principal office and that is executed by the cooperative.
10-2127 Powers of a generation and transmission cooperative
A. A generation and transmission cooperative may:
1. Sue and be sued and complain and defend in its corporate name.
2. Have perpetual existence by its corporate name.
3. Adopt a corporate seal and alter the seal at its pleasure, and use the seal by
causing it, or a facsimile of it, to be impressed or affixed or in any other manner
reproduced, but failure to have or to affix a corporate seal does not affect the validity
of any instrument or any action taken in pursuance of in reliance on the seal.
4. Own, operate, lease or control plants, property and facilities for the
generation or transmission, sale or furnishing of electricity for light, heat or power or
other uses, and generate, manufacture, purchase, acquire, accumulate and transmit
electric energy.
5. To compete more effectively with other entities in the electric energy market,
engage in, individually or jointly in collaboration with other corporations that have
loans made or guaranteed by the United States through the administrator of the rural
utilities service or that are nonprofit members of the corporation, the acquisition,
purchase, marketing, sale, supply and disposition of electric energy to or for its
members and persons, entities, governmental agencies and political subdivisions and other
electric utilities.
6. Purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote,
exercise rights arising out of the ownership or possession, use, employ, sell, assign,
transfer, convey, mortgage, lend, pledge, hypothecate or otherwise use and deal in and
with shares, rights, memberships or other interests in, or notes, bonds, debentures,
mortgages, passbooks, certificates of deposit or other obligations of other domestic or
foreign corporations, associations, partnerships, limited partnerships or individuals, or
direct or indirect obligations or securities of individuals, associations, cooperatives,
partnerships, corporations or of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality thereof.
7. Construct, purchase, take, receive, lease as lessee or otherwise acquire, and
own, hold, improve, use, equip, maintain and operate, and sell, assign, transfer, convey,
exchange, lease as lessor, mortgage, pledge or otherwise dispose of or encumber electric
transmission lines and systems, electric generating plants, lands, buildings, structures,
dams, plants and equipment, and any and all kinds and classes of real or personal
property, tangible or intangible, that are deemed necessary, convenient or appropriate to
accomplish the purpose for which the generation and transmission cooperative is organized
or that it elects to undertake.
8. Purchase or otherwise acquire, and own, hold, use and exercise and sell, assign,
transfer, convey, mortgage, pledge, hypothecate or otherwise dispose of or encumber
franchises, rights, privileges, licenses, rights-of-way and easements.
9. Make contracts and guarantees and incur liabilities, borrow money and otherwise
contract indebtedness, and issue its notes, bonds and other evidence of indebtedness, and
secure the payment of any indebtedness by mortgage, pledge, deed of trust, assignment,
security agreement or any other hypothecation or encumbrance on any or all of its real or
personal property, assets, franchises, revenue or income.
10. Construct, maintain and operate electric transmission lines along, on, under and
across publicly owned lands and public thoroughfares, including all roads, highways,
streets, alleys, bridges and causeways, and acquire for such purposes franchises,
licenses, permits, easements, rights-of-way, and all similar rights and privileges
relating to such purposes.
11. Exercise the power of eminent domain in the manner and to the extent provided by
the laws of this state for the exercise of such power by other corporations constructing
or operating electric transmission lines or systems.
12. Become a member of other cooperative organizations or corporations or own stock
in or otherwise financially participate and invest in those other organizations or
corporations.
13. Conduct its business, carry on its operations, have offices and exercise the
powers granted it by this article in any state, territory, district or possession of the
United States or in any foreign country.
14. Adopt, amend and repeal bylaws consistent with this article.
15. Cease its corporate activities and surrender its corporate franchise.
16. Do and perform other acts and things, and have and exercise other powers, that
may be necessary, convenient or appropriate to accomplish the purpose for which the
generation and transmission cooperative is organized or to carry out its business and
affairs.
B. Beginning on January 1, 1999 the indemnification of members, directors,
officers, employees and agents of a cooperative shall be in accordance with chapter 31,
article 5 of this title.
10-2128 Membership in a generation and transmission cooperative; voting; nonliability
A. Only electric utilities and other persons as the bylaws provide are eligible to
be members of a generation and transmission cooperative. All incorporators shall be
original members of a generation and transmission cooperative, and new members may be
admitted by a majority vote of all voting delegates. The bylaws may prescribe additional
qualifications, limitations and classifications and rights concerning membership.
B. The articles of incorporation or the bylaws of a generation and transmission
cooperative may provide for classifications of members in a generation and transmission
cooperative.
C. The bylaws shall provide the number of voting delegates that each member may
designate. The bylaws may provide that each classification of members may designate a
different number of voting delegates.
D. Members are entitled to vote as members only through their duly designated
voting delegate. A reference in this article to approval or votes by members refers to
the members approving or voting through their voting delegates.
E. A member is not liable or responsible for the acts, debts, liabilities or
obligations of the generation and transmission cooperative, and the property of the
members is not subject to execution for such acts, debts, liabilities or obligations
unless the member otherwise agrees.
10-2129 Annual and special meetings of members; notice; quorum
A. An annual meeting of the members of a generation and transmission cooperative
shall be held at a time and place provided in the bylaws. Special meetings of the
members may be called by the president, by the board of directors, by any three directors
or by not less than twenty-five per cent of the voting delegates.
B. Except as otherwise provided in this article, written or printed notice stating
the time and place of each meeting of the members and, in the case of a special meeting,
the purpose for which the meeting is called shall be given to each member, either
personally or by mail, not less than ten nor more than twenty-five days before the date
of the meeting. If mailed, the notice is deemed to be given when deposited in the United
States mail with postage prepaid addressed to the member at his address appearing on the
records of the generation and transmission cooperative.
C. Unless the bylaws prescribe the presence of a greater percentage or number of
the members for a quorum, a quorum for the transaction of business at all meetings of the
members of a generation and transmission cooperative consists of at least fifty per cent
of the voting delegates.
D. A member entitled to notice of a meeting may waive notice in writing either
before or after the meeting. If any voting delegate of a member attends the meeting, his
attendance constitutes a waiver of notice of the meeting, unless he participates solely
to object to the transaction of any business because the meeting has not been legally
called or convened.
10-2130 Board of directors; term; compensation; quorum
A. A board of directors shall manage the business of a generation and transmission
cooperative. The directors named in the articles of incorporation, consolidation, merger
or conversion hold office until the directors' successors are elected and qualify. The
bylaws shall prescribe the number and terms of directors and the manner of electing the
directors. Each director shall hold office for the term for which the director is
elected and until the director's successor is elected and qualifies. A director may
resign at any time by delivering written notice to the board of directors, its presiding
officer or the cooperative. A resignation is effective when the notice is delivered
unless the notice specifies a later effective date or event.
B. The bylaws shall prescribe the number of directors as provided in subsection A,
the directors' qualifications other than those prescribed in this article and the manner
of holding meetings of the board of directors and of electing successors to directors who
resign or die or who are otherwise incapable of acting. The bylaws may also provide for
the removal of directors from office and for the election of the directors' successors.
C. Unless the bylaws provide otherwise, the directors shall not receive salaries
for services as directors and, except in emergencies, shall not be employed by the
generation and transmission cooperative in any capacity involving compensation without
the approval of the members. The bylaws may allow a payment of a fee and may provide
that expenses of attendance are allowed to each director for attendance at each meeting
of the board of directors.
D. A majority of the board of directors constitutes a quorum.
E. Any action which may be taken at a meeting may be taken without a meeting if a
writing stating and approving the action taken is signed prior to the action being taken
by the number of directors normally required to approve the action at a meeting. This
prior consent has the same force and effect as a vote at a meeting.
F. The board of directors may exercise all the powers of a cooperative not
conferred on the members by this article, or its articles of incorporation or bylaws.
G. Any person who serves as a director or officer or who serves on a board or
council in an advisory capacity to the cooperative or board of directors of a cooperative
is immune from civil liability and is not subject to a suit directly or by way of
contribution for any act or omission that results in damage or injury if that person was
acting in good faith and within the scope of that person's official capacity and the
damage or injury was not caused by the wilful or grossly negligent conduct of that
person. Nothing in this subsection limits or modifies in any manner the duties or
liabilities of a director or person who serves in an advisory capacity to the cooperative
or the cooperative's members. For the purposes of this subsection, "official capacity"
means any decision, act or event undertaken by the cooperative in furtherance of the
purposes for which that cooperative is organized or operating.
10-2131 Officers of a generation and transmission cooperative
The officers of a generation and transmission cooperative consist of a president,
vice-president, secretary and treasurer, who are elected annually by and from the board
of directors. If stated in the bylaws, the officers of the cooperative do not need to be
members of the board of directors. Unless the bylaws provide otherwise, if a person
holding any office ceases to be a director, the person ceases to hold the office. The
offices of secretary and treasurer may be held by the same person. The board of
directors may also elect or appoint such other officers, agents or employees it deems
necessary or advisable and shall prescribe their powers and duties. An officer may be
removed from office and the officer's successor may be elected in the manner prescribed
in the bylaws.
10-2132 Bylaws
The board of directors shall adopt the first bylaws of a generation and transmission
cooperative to be adopted following incorporation, conversion, merger or consolidation.
Thereafter, bylaws shall be adopted, amended or repealed either by the board of directors
or by a majority of the members acting through their voting delegates present in person
or by proxy at any regular meeting or special meeting called for that purpose at which a
quorum is present. The bylaws shall state the rights and duties of members and directors
and may contain other provisions for the regulation and management of the affairs of the
generation and transmission cooperatives if the provisions are not inconsistent with this
article or with articles of incorporation.
10-2133 Nonprofit operation
A generation and transmission cooperative shall be operated on a nonprofit basis for
the mutual benefit of its members and patrons. The bylaws of a generation and
transmission cooperative or its contracts with consumers shall contain such provisions
relative to the disposition of revenues and receipts as are necessary and appropriate to
establish and maintain its nonprofit and cooperative character.
10-2134 Disposition of property
A. The board of directors of a generation and transmission cooperative may, without
authorization by the members, authorize the execution and delivery of mortgages or deeds
of trust pledging or encumbering any or all of the property, assets, rights, privileges,
licenses, franchises and permits of the generation and transmission cooperative, whether
acquired or to be acquired, and wherever situated, as well as their revenues, all upon
terms and conditions as the board of directors determines, to secure any indebtedness of
the generation and transmission cooperative. Any such mortgages or deeds of trust are
exempt from the mortgage recording tax.
B. A generation and transmission cooperative may not sell, lease or otherwise
dispose of all or a substantial portion of its property unless the sale, lease or other
disposition is authorized by the affirmative vote of not less than a majority of those
members of the generation and transmission cooperative, acting through their voting
delegates, present at a meeting of the members.
10-2135 Recording of mortgages; effect
A. Any mortgage, deed of trust or other instrument executed by a generation and
transmission cooperative doing business in this state pursuant to this article, which
affects real and personal property which is recorded in the office of the county recorder
in any county in which the property is located or is to be located, has the same force
and effect as if the mortgage, deed of trust or other instrument were also recorded,
filed or indexed as provided by statute in the office of the county recorder in the
county as a mortgage of personal property. All property of the generation and
transmission cooperative described or referred to as being mortgaged or pledged in the
mortgage, deed of trust or other instrument becomes subject to the lien immediately upon
acquisition of the property by the generation and transmission cooperative whether or not
the property was in existence at the time of execution of the mortgage, deed of trust or
other instrument. Recording of the mortgage, deed of trust or other instrument
constitutes notice and otherwise has the same effect with respect to after-acquired
property as it has under the statutes relating to recording with respect to property
owned by the generation and transmission cooperative at the time of execution of the
mortgage, deed of trust or other instrument and described or referred to as being
mortgaged or pledged.
B. The lien on personal property of the mortgage, deed of trust or other
instrument, after recording, continues in existence and of record for the period of time
specified without refiling or the filing of a renewal certificate, affidavit or other
supplemental information required by statute relating to renewal, maintenance or
extensions of liens upon personal property.
10-2136 Use of roads and streets; notice; protest
A. A generation and transmission cooperative has the use of, and the right is
expressly granted to it to use, the public highways, county highways and streets and
alleys in any area of this state. The generation and transmission cooperative may
construct and operate lines connecting any points within this state and connect at the
state boundary with like lines.
B. Within the confines of municipal corporations, the use and occupancy of streets
shall be under such rights as are acquired by franchises according to law and subject to
control and regulation by municipal authorities, and the use of public highways, except
state highways, by generation and transmission cooperatives not within the confines of an
incorporated city or town shall be regulated by the board of supervisors of the county by
license or franchise. The board of supervisors in granting the license or franchise, or
at any time after it is granted, may impose such restrictions and limitations concerning
the use of the public roads as deemed best for the public safety or welfare. Every
franchise granted under this section must include provisions requiring the grantee to
bear all expenses, including damage and compensation for any alteration of the direction,
surface, grade or alignment of any county road, made for the purpose of the franchise.
C. The board of supervisors before granting the privilege contemplated by this
section shall give public notice of its intention to make the grant by publishing notice
in some newspaper of general circulation, published within the county, for at least once
a week for three weeks prior to the day set for the consideration of the action. If, on
or before the date, more than fifty per cent of the qualified electors of the county
petition the board of supervisors to deny the privilege, they shall so act, and any
privilege granted contrary to the petition is void.
10-2138 Prohibition of duplication of service
A generation and transmission cooperative organized pursuant to this article is
expressly prohibited from supplying electric generation service in the certificated
service territory of or to any corporation in the certificated service territory of or to
any member of a member owned nonprofit cooperative corporation unless the cooperative has
the consent of that corporation.
10-2139 Consolidation
A. Any two or more generation and transmission cooperatives, each of which is
designated in this article as a "consolidating cooperative", may consolidate into a new
generation and transmission cooperative, designated in this article as the "new
cooperative", by complying with the requirements of this section.
B. A proposition for the consolidation of consolidating cooperatives into a new
cooperative and proposed articles to accomplish the consolidation shall be submitted to a
meeting of the members of each consolidating cooperative. A copy of the proposed
articles of consolidation shall be attached to the meeting notice. The articles of
consolidation shall state:
1. The name of each consolidating cooperative and the address of its principal
office.
2. The name of the new cooperative and the address of its principal office.
3. A statement that each consolidating cooperative agreed to the consolidation.
4. The names and addresses of the directors of the new cooperative.
5. The terms and conditions of the consolidation and the mode of carrying it into
effect, including the manner in which members of the consolidating cooperatives may or
shall become members of the new cooperative. The articles may also contain any
provisions not inconsistent with this article deemed necessary or advisable for the
conduct of the business of the new cooperative.
C. If the proposed consolidation and the proposed articles of consolidation, with
any amendments, are approved by the affirmative vote of not less than two-thirds of those
members of each consolidating cooperative, acting through their voting delegates voting
at the meeting, articles of consolidation in the form approved shall be executed by each
consolidating cooperative.
10-2140 Merger
A. Any one or more electric generation and transmission cooperatives, each of which
is designated in this article as a "merging cooperative", may merge into another
generation and transmission cooperative, designated in this article as the "surviving
cooperative", by complying with the requirements of this section.
B. A proposition for the merger of the merging electric cooperatives into the
surviving cooperative and proposed articles of merger to give effect to the merger shall
be submitted to a meeting of the members of each merging cooperative and of the surviving
cooperative. The meeting notice must have attached to it a copy of the proposed articles
of merger. The articles of merger shall recite that they are executed pursuant to this
article and shall state:
1. The name of each merging cooperative and the address of its principal office.
2. The name of the surviving cooperative and the address of its principal office.
3. A statement that each merging cooperative and the surviving cooperative agree to
the merger.
4. The names and addresses of the directors of the surviving cooperative.
5. The terms and conditions of the merger and the manner of carrying it into
effect, including the manner in which members of the merging cooperatives may or shall
become members of the surviving cooperative. The articles may also contain any
provisions not inconsistent with this article deemed necessary or advisable for the
conduct of the business of the surviving cooperative.
C. If the proposed merger and proposed articles of merger, with any amendments, are
approved by the affirmative vote of not less than two-thirds of those members of each
cooperative acting through their voting delegates, voting at each meeting, articles of
merger in the form approved shall be executed by each merging cooperative.
10-2141 Conversion of cooperatives into generation and transmission cooperatives
A cooperative created pursuant to article 2 of this chapter and which meets the
requirements of this article may be converted into a generation and transmission
cooperative authorized to do business and entitled to all privileges and immunities of a
generation and transmission cooperative organized pursuant to this article upon the
adoption of a resolution to such effect by its board of directors and the submission of
the resolution to the corporation commission.
10-2142 Effect of consolidation or merger
A. The generation and transmission cooperatives which are parties to a
consolidation or merger become a single generation and transmission cooperative which, in
the case of a consolidation, is the new cooperative provided for in the articles of
consolidation and, in the case of a merger, is the cooperative designated in the articles
of merger as the surviving cooperative, and the separate existence of all cooperatives
which are parties to the consolidation or merger, except the new or surviving
cooperative, ceases.
B. The new or surviving generation and transmission cooperative has all rights,
privileges, immunities and powers and is subject to all the duties and liabilities of a
generation and transmission cooperative organized under this article and possesses all
the rights, privileges, immunities and franchises of a public or private nature, and all
property, real and personal, applications for membership, all debts due on whatever
account and all other choses in action of each of the consolidating or merging generation
and transmission cooperatives and every interest of, belonging or due to, each of the
generation and transmission cooperatives so consolidated or merged shall be taken and is
deemed transferred to and vested in the new or surviving generation and transmission
cooperative without further act or deed. The title to any real estate or any interest in
the real estate under the laws of this state vested in any such generation and
transmission cooperatives does not revert to be in any way impaired by reason of the
consolidation or merger.
C. The new or surviving generation and transmission cooperative is responsible and
liable for all of the liabilities and obligations of each of the generation and
transmission cooperatives so consolidated or merged, and any claim existing, or action or
proceeding pending, by or against any of the generation and transmission cooperatives may
be prosecuted as if the consolidation or merger had not taken place, but the new or
surviving generation and transmission cooperative may be substituted in its place.
D. The rights of creditors or any liens upon the property of any of the generation
and transmission cooperatives are not impaired by the consolidation or merger.
E. In the case of a consolidation, the articles of consolidation are deemed to be
the articles of incorporation of the new generation and transmission cooperative. In the
case of a merger, the articles of incorporation of the surviving generation and
transmission cooperative are deemed to be amended to the extent, if any, that changes are
provided for in the articles of merger.
10-2143 Dissolution
A. A generation and transmission cooperative which has not commenced business may
dissolve voluntarily by delivering to the corporation commission articles of dissolution,
executed and acknowledged on behalf of the generation and transmission cooperative by a
majority of the incorporators, which shall state:
1. The name of the generation and transmission cooperative.
2. The address of its principal office.
3. The date of its incorporation.
4. That the generation and transmission cooperative has not commenced business.
5. That the amount, if any, actually paid in on account of membership fees, less
any part disbursed for necessary expenses, has been returned to those entitled and that
all easements have been released to the grantors.
6. That no debt of the generation and transmission cooperative remains unpaid.
7. That a majority of the incorporators elects that the generation and transmission
cooperative be dissolved. The articles of dissolution shall be submitted to the
corporation commission for filing as provided in this article.
B. A generation and transmission cooperative which has commenced business may
dissolve voluntarily and wind up its affairs in the following manner:
1. The proposition that the generation and transmission cooperative be dissolved
must be submitted to the members of the generation and transmission cooperative at any
meeting. The meeting notice shall state the proposition. The proposed voluntary
dissolution is deemed to be approved on the affirmative vote of not less than two-thirds
of those members acting through their voting delegates voting at the meeting.
2. On approval, a certificate of election to dissolve, designated the
"certificate", shall be executed by the generation and transmission cooperative.
The certificate shall state:
(a) The name of the generation and transmission cooperative.
(b) The address of its principal office.
(c) The names and addresses of its directors.
(d) The total number of voting delegates of the generation and transmission
cooperative and the number of voting delegates who voted for and against the voluntary
dissolution of the generation and transmission cooperative.
The certificate shall be submitted to the corporation commission for filing as
provided in this article.
3. On the filing of the certificate with the corporation commission, the generation
and transmission cooperative shall cease to carry on its business except as is necessary
for the winding up of business, but its corporate existence continues until articles of
dissolution have been filed with the corporation commission.
4. After the filing of the certificate with the corporation commission, the board
of directors shall immediately mail notice of the winding up of proceedings to each known
creditor and claimant and publish notice once a week for two successive weeks in a
newspaper of general circulation in the county in which the principal office of the
generation and transmission cooperative is located.
5. The board of directors has full power to wind up and settle the affairs of the
cooperative and shall proceed to collect the debts owing to the generation and
transmission cooperative, convey and dispose of its property and assets, pay, satisfy and
discharge its debts, obligations and liabilities and do all other things required to
liquidate its business and affairs and, after paying or adequately providing for the
payment of all its debts, obligations and liabilities, shall distribute the remainder of
its property and assets among its members without priority in proportion to the aggregate
patronage of each member during the seven years next preceding the date of filing the
certificate, or, if the generation and transmission cooperative was not in existence for
such period, during the period of its existence.
6. When all debts, liabilities and obligations of the generation and transmission
cooperative have been paid and discharged or adequate provision has been made for them,
and all the remaining property and assets of the generation and transmission cooperative
have been distributed to the members pursuant to this section, the board of directors
shall authorize the execution of articles of dissolution. The articles of dissolution
shall state:
(a) The name of the generation and transmission cooperative.
(b) The address of the principal office of the generation and transmission
cooperative.
(c) That the generation and transmission cooperative has previously delivered to
the corporation commission a certificate of election to dissolve and the date on which
the certificate was filed by the corporation commission.
(d) That all debts, obligations and liabilities of the generation and transmission
cooperative have been paid and discharged or that adequate provision has been made for
them.
(e) That all the remaining property and assets of the generation and transmission
cooperative have been distributed among the members in accordance with this section.
(f) That there are no actions or suits pending against the generation and
transmission cooperative.
The articles of dissolution accompanied by proof of the publication required in this
subsection shall be submitted to the corporation commission for filing as provided in
this article.
10-2144 Filing of articles
Articles of incorporation, amendment, consolidation, merger, conversion or
dissolution, when executed by the cooperative, shall be delivered to the corporation
commission for filing. If the corporation commission finds that the articles presented
conform to the requirements of this article, it shall, on the payment of the required
fees, file the articles, and on filing, the incorporation, amendment, consolidation,
merger, conversion or dissolution becomes effective. This section also applies to a
certificate of election to dissolve as provided in section 10-2143, subsection B,
paragraph 2.
10-2145 Fees
The corporation commission shall charge and collect the following fees:
1. Filing articles of incorporation, ten dollars.
2. Filing articles of amendment, ten dollars.
3. Filing articles of consolidation or merger, ten dollars.
4. Filing articles of conversion, ten dollars.
5. Filing certificate of election to dissolve, ten dollars.
6. Filing articles of dissolution, ten dollars.
7. Filing certificate of change of principal office, five dollars.
10-2146 Exemption from securities regulations
The provisions of title 44, chapter 12 do not apply to any note, bond or other
evidence of indebtedness issued by a generation and transmission cooperative doing
business in this state pursuant to this article, to the United States or any agency or
instrumentality of the United States or to any mortgage, deed of trust or other
instrument executed to secure the note, bond or other evidence of indebtedness, and such
provisions do not apply to the issuance of membership certificates or other evidence of
member interest by a generation and transmission cooperative.
10-2147 Exemption from antitrust statutes
The provisions of title 44, chapter 10, article 1 do not apply to any conduct or
activity of a generation and transmission cooperative organized pursuant to this article,
which conduct or activity is approved by a statute of this state or of the United States
or by the corporation commission or an administrative agency of this state or of the
United States having jurisdiction of the subject matter.
10-2148 Taking of acknowledgments by officer or member
A person authorized to take acknowledgments under the laws of this state shall not
be disqualified from taking acknowledgments of instruments executed in favor of a
generation and transmission cooperative or to which it is a party, by reason of being an
officer, director or member of the generation and transmission cooperative.
10-2149 Admission of foreign generation and transmission cooperatives
A foreign generation and transmission cooperative is entitled to all rights,
exemptions, privileges and immunities of a generation and transmission cooperative
organized under this article, except that a foreign generation and transmission
cooperative need not comply with section 10-2124. A foreign distributive cooperative is
eligible to become a member of a generation and transmission cooperative by complying
with the applicable provisions of this article.
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