501A.901 - MEMBERSHIP INTERESTS.

        501A.901  MEMBERSHIP INTERESTS.         1.  Patron membership interests.  Patron membership interests      shall be the only membership interests of a cooperative unless      nonpatron memberships are authorized under subsection 2.  If      nonpatron interests are authorized, the patron membership interests      collectively shall have not less than fifty percent of the      cooperative's financial rights to profit allocations and      distributions.  However, the cooperative's articles or bylaws may be      amended by the affirmative vote of patron members to allow the      cooperative's financial rights to profit allocations and      distributions to patron members collectively to be a lesser amount      but in no case less than fifteen percent.         2.  Nonpatron membership interests.         a.  In order for a cooperative to have nonpatron membership      interests, the patron members must approve articles or bylaw      provisions authorizing the terms and conditions of the nonpatron      membership interests, which may include authorizing the board to      determine the terms and conditions of the nonpatron membership      interests.         b.  If nonpatron membership interests are authorized, the      cooperative may solicit and issue nonpatron membership interests on      terms and conditions determined by the board and disclosed in the      articles, bylaws, or by separate disclosure to the members.  Each      member acquiring nonpatron membership interests shall sign a member      control agreement or otherwise agree to the conditions of the bylaws.      The control agreement or the bylaws shall describe the rights and      obligations of the member as it relates to the nonpatron membership      interests, the financial and governance rights, the transferability      of the nonpatron membership interests, the division and allocation of      profits and losses among the membership interests and membership      classes, and financial rights upon liquidation.  If the articles or      bylaws do not otherwise provide for the allocation of the profits and      losses between patron membership interests and nonpatron membership      interests, then the allocation of profits and losses among nonpatron      membership interests individually and patron membership interests      collectively shall be allocated on the basis of the value of      contributions to capital made according to the patron membership      interests collectively and the nonpatron membership interests      individually to the extent the contributions have been accepted by      the cooperative.  Distributions of cash or other assets of the      cooperative shall be allocated among the membership interests as      provided in the articles or bylaws, subject to the provisions of this      chapter.  If not otherwise provided in the articles or bylaws,      distributions shall be made on the basis of value of the capital      contributions of the patron membership interests collectively and the      nonpatron membership interests to the extent the contributions have      been accepted by the cooperative.         3.  Amounts and divisions of membership interests.  The      authorized amount and divisions of patron membership interests and,      if authorized by the patron members, nonpatron membership interests,      may be increased, decreased, established, or altered in accordance      with the restrictions in this chapter by amending the articles or      bylaws at a regular members' meeting or at a special members' meeting      called for the purpose of the amendment.         4.  Issuance of membership interests.  Authorized membership      interests may be issued on terms and conditions prescribed in the      articles, bylaws, or if authorized in the articles or bylaws as      determined by the board.  The cooperative shall disclose to any      person acquiring membership interests to be issued by the      cooperative, the organization, capital structure, and known business      prospects and risks of the cooperative, the nature of the governance      and financial rights of the membership interest being acquired and of      other classes of membership and membership interests.  The      cooperative shall notify all members of the membership interests      being issued by the cooperative.  A membership interest shall not be      issued until subscription price of the membership interest has been      paid for in money or property with the value of the property to be      contributed approved by the board.         5.  Transferring or selling membership interests.  After      issuance by the cooperative, membership interests in a cooperative      may only be sold or transferred with the approval of the board.  The      board may adopt resolutions prescribing procedures to prospectively      approve transfers.         6.  Cooperative first right to purchase membership interests.      The articles or bylaws may provide that the cooperative or the patron      members, individually or collectively, have the first privilege of      purchasing the membership interests of any class of membership      interests offered for sale.  The first privilege to purchase      membership interests may be satisfied by notice to other members that      the membership interests are for sale and a procedure by which      members may proceed to attempt to purchase and acquire the membership      interests.         7.  Payment for dissenting membership interests.         a.  Subject to the provisions in the articles and bylaws, a      member may dissent from and obtain payment for the fair value of the      member's membership interests in the cooperative if all of the      following apply:         (1)  The majority of the cooperative's member voting power is held      by different classes of interests.         (2)  The articles or bylaws are amended or the cooperative is      merged or otherwise combined with another entity in a manner that      materially and adversely affects the rights and preferences of the      membership interests of the dissenting member.         b.  The dissenting member shall file a notice of intent to      demand fair value of the membership interest with the records officer      of the cooperative within thirty days after the amendment of the      bylaws and notice of the amendment to members; otherwise, the right      of the dissenting member to demand payment of fair value for the      membership interest is waived.  If a proposed amendment of the      articles or bylaws must be approved by the members, a member who is      entitled to dissent and who wishes to exercise dissenter's rights      shall file a notice to demand fair value of the membership interest      with the records officer of the cooperative; otherwise, the right to      demand fair value for the membership interest by the dissenting      member is waived.  After receipt of the dissenting member's demand      notice and approval of the amendment, the cooperative has sixty days      to rescind the amendment, or otherwise the cooperative shall remit      the fair value for the member's interest to the dissenting member by      one hundred eighty days after receipt of the notice.  Upon receipt of      the fair value for the membership interest, the member has no further      member rights in the cooperative.  
         Section History: Recent Form
         2005 Acts, ch 135, §67         Referred to in § 501A.1007