CHAPTER 599a
WORKER COOPERATIVE CORPORATIONS
Table of Contents
Sec. 33-418f. Short title: Worker Cooperative Corporations Act.
Sec. 33-418g. Definitions.
Sec. 33-418h. Election to be governed as a worker cooperative. Revocation of election. Corporate name.
Sec. 33-418i. Membership requirements. Membership shares. Rights of members.
Sec. 33-418j. Voting rights of members and shareholders. Amendments to bylaws.
Sec. 33-418k. Board of directors’ membership requirements.
Sec. 33-418l. Apportionment of earnings and losses.
Sec. 33-418m. System of internal capital accounts. Redemption of shares. Interest. Collective reserve account.
Sec. 33-418n. Internal capital account cooperatives.
Sec. 33-418o. Conversion of shares upon revocation of election. Consolidation or merger restricted.
Sec. 33-418f. Short title: Worker Cooperative Corporations Act. This chapter shall be known and may be cited as the “Worker Cooperative Corporations Act”.
(P.A. 84-430, S. 1, 14.)
Sec. 33-418g. Definitions. As used in this chapter, unless the context otherwise requires:
(a) “Worker cooperative” means a corporation which has elected to be governed by the provisions of this chapter.
(b) “Member” means a natural person who has been accepted for membership in, and owns a membership share issued by a worker cooperative.
(c) “Patronage” means the amount of work performed as a member of a worker cooperative, measured in accordance with the articles of organization and bylaws of that cooperative.
(d) “Written notice of allocation” means a written instrument which discloses to a member the stated dollar amount of such member’s patronage allocation and the terms for payment of that amount by the worker cooperative.
(P.A. 84-430, S. 2, 14.)
Sec. 33-418h. Election to be governed as a worker cooperative. Revocation of election. Corporate name. (a) Any corporation formed under the provisions of chapter 601 or any predecessor statutes thereto, may elect to be governed as a worker cooperative under the provisions of this chapter by so stating in its certificate of incorporation or certificate of amendment filed in accordance with chapter 601. A corporation so electing shall be governed by all provisions of chapter 601 other than sections 33-815 to 33-831, inclusive, and 33-855 to 33-872, inclusive, except as otherwise provided in this chapter.
(b) A worker cooperative may revoke its election under subsection (a) of this section by a vote of two-thirds of the members and through a certificate of amendment filed in accordance with section 33-800.
(c) A worker cooperative may include the word “cooperative” or “co-op” in its corporate name.
(P.A. 84-430, S. 3−5, 14; P.A. 96-271, S. 170, 254.)
History: P.A. 96-271 amended Subsec. (a) to replace references to “chapter 599” with “chapter 601” or “chapter 601 or any predecessor statutes thereto” as appropriate, and replace reference to “sections 33-364 to 33-374, inclusive,” with “sections 33-815 to 33-831, inclusive, and 33-855 to 33-872, inclusive,” and amended Subsec. (b) to replace reference to “section 33-360” with “section 33-800”, effective January 1, 1997.
Sec. 33-418i. Membership requirements. Membership shares. Rights of members. (a) The certificate of incorporation or bylaws of a worker cooperative shall establish qualifications and the method of acceptance and termination of members. No person may be accepted as a member unless employed by the worker cooperative on a full- time or part-time basis, provided no less than fifty per cent of all employees shall be members.
(b) A worker cooperative shall issue a class of voting stock designated as “membership shares”. Each member shall own only one such membership share, and only members may own such shares.
(c) Membership shares shall be issued for a fee as shall be determined from time to time by the board of directors. Section 33-671 and subdivision (6) of subsection (b) of section 33-683 shall not apply to such membership shares. Sections 33-855 to 33-872, inclusive, shall not apply to membership shares whose redemption price is determined by reference to internal capital accounts, as defined in section 33-418m.
(d) Members of a worker cooperative shall have all the rights and responsibilities of stockholders of a corporation formed under chapter 601, except as otherwise provided in this chapter.
(P.A. 84-430, S. 6, 14; P.A. 96-271, S. 171, 172, 254.)
History: P.A. 96-271 amended Subsec. (c) to replace reference to “Sections 33-342, 33-346 and 33-347” with “Section 33-671 and subdivision (6) of subsection (b) of section 33-683” and replace reference to “Sections 33-373 and 33-374” with “Sections 33-855 to 33-872, inclusive,” and amended Subsec. (d) to replace reference to “chapter 599” with “chapter 601”, effective January 1, 1997.
Sec. 33-418j. Voting rights of members and shareholders. Amendments to bylaws. (a) No corporate shares other than membership shares shall be given voting power in a worker cooperative, except as otherwise provided in this chapter.
(b) The power to amend or repeal the bylaws of a worker cooperative shall be in the members only, except that the board of directors may amend or repeal such bylaws in accordance with the provisions of sections 33-806, 33-807 and 33-808.
(c) Sections 33-795 to 33-801, inclusive, shall be construed, for purposes of this chapter, to limit voting on any amendment of the certificate of incorporation of a worker cooperative to the members, except that amendments adversely affecting the rights of the holders of corporate shares other than membership shares may not be adopted without the vote of such shareholders as provided in section 33-798.
(P.A. 84-430, S. 7, 14; P.A. 96-271, S. 173, 174, 254.)
History: P.A. 96-271 amended Subsec. (b) to replace reference to “subsection (d) of section 33-306” with “sections 33-806, 33-807 and 33-808” and amended Subsec. (c) to replace reference to “Sections 33-360, 33-361 and 33-362” with “Sections 33-795 to 33-801, inclusive,” and replace reference to “section 33-361” with “section 33-798”, effective January 1, 1997.
Sec. 33-418k. Board of directors’ membership requirements. No less than fifty- one per cent of the directors on the board of directors of any worker cooperative shall be members of the cooperative.
(P.A. 84-430, S. 8, 14.)
Sec. 33-418l. Apportionment of earnings and losses. (a) The net earnings or losses of a worker cooperative shall be apportioned and distributed at such times and in such manner as the articles of organization or bylaws shall specify. Net earnings declared as patronage allocations with respect to a period of time, and paid or credited to members, shall be apportioned among the members in accordance with the ratio which each member’s patronage during the period involved bears to total patronage by all members during that period.
(b) The apportionment, distribution and payment of net earnings required by subsection (a) of this section may be in cash, credits, written notices of allocation or corporate shares issued by the worker cooperative.
(P.A. 84-430, S. 9, 14.)
Sec. 33-418m. System of internal capital accounts. Redemption of shares. Interest. Collective reserve account. (a) Any worker cooperative may establish through its certificate of incorporation or bylaws a system of internal capital accounts to reflect the book value and to determine the redemption price of membership shares, corporate shares and written notices of allocation.
(b) The certificate of incorporation or bylaws of a worker cooperative may permit the periodic redemption of written notices of allocation and corporate shares, and shall provide for recall and redemption of the membership share upon termination of membership in the cooperative, except that no redemption shall be made if it would result in the liability of any director of the worker cooperative pursuant to subsection (a) of section 33-757.
(c) The certificate of incorporation or bylaws may provide for the worker cooperative to pay or credit interest on the balance of each member’s internal capital account.
(d) The certificate of incorporation or bylaws may authorize assignment of a portion of retained net earnings and net losses to a collective reserve account. Earnings assigned to the collective reserve account may be used for any and all corporate purposes as determined by the board of directors.
(P.A. 84-430, S. 10, 14; P.A. 96-271, S. 175, 254.)
History: P.A. 96-271 amended Subsec. (b) to replace reference to “subsection (b) of section 33-321” with “subsection (a) of section 33-757”, effective January 1, 1997.
Sec. 33-418n. Internal capital account cooperatives. (a) An internal capital account cooperative is a worker cooperative whose entire net book value is reflected in internal capital accounts, one for each member, and a collective reserve account, and in which no persons other than members own corporate shares. In an internal capital account cooperative, each member shall have one and only one vote in any matter requiring voting by shareholders.
(b) An internal capital account cooperative shall credit the paid-in membership fee and additional paid-in capital of a member to the member’s internal capital account, and shall also record the apportionment of retained net earnings or net losses to the members in accordance with patronage by appropriately crediting or debiting the internal capital accounts of members. The collective reserve account in an internal capital account cooperative shall reflect any paid-in capital, net losses, and retained net earnings not allocated to individual members.
(c) In an internal capital account cooperative, the balances in all the individual internal capital accounts and collective reserve account, if any, shall be adjusted at the end of each accounting period so that the sum of the balances is equal to the net book value of the worker cooperative.
(P.A. 84-430, S. 11, 14.)
Sec. 33-418o. Conversion of shares upon revocation of election. Consolidation or merger restricted. (a) When a worker cooperative revokes its election in accordance with subsection (b) of section 33-418h, the certificate of amendment shall provide for conversion of membership shares and internal capital accounts or their conversion to securities or other property in a manner consistent with the provisions of chapter 601.
(b) A worker cooperative which has not revoked its election under this chapter may not consolidate or merge with another corporation other than a worker cooperative. Two or more worker cooperatives may consolidate or merge in accordance with sections 33- 815, 33-817, 33-819 and 33-820 and subdivision (1) of subsection (a) of section 33-856.
(P.A. 84-430, S. 12, 14; P.A. 96-271, S. 176, 254.)
History: P.A. 96-271 amended Subsec. (a) to replace reference to Ch. 599 with Ch. 601 and amended Subsec. (b) to replace reference to “sections 33-364 to 33-369, inclusive, and subsection (c) of section 33-373” with “sections 33-815, 33-817, 33-819, 33-820 and subdivision (1) of subsection (a) of section 33-856”, effective January 1, 1997.