Worker Cooperative Corporations Statute – Vermont

Date: 24 Nov 2008 | posted in: equity | 0 Facebooktwitterredditmail

Title 11: Corporations, Partnerships and Associations

Chapter 8: Worker Cooperative Corporations

§ 1081. Short title

This chapter shall be known and may be cited as the Worker Cooperative Corporations Act. (Added 1985, No. 46, § 1.)

§ 1082. Definitions

As used in this chapter, unless the context clearly requires otherwise, the term:

(1) “Worker cooperative” means a corporation which has elected to be governed by this chapter.

(2) “Person” means a natural person.

(3) “Member” means a person who has been accepted for membership in, and owns a membership share issued by a worker cooperative.

(4) “Membership share” means a share of voting stock issued to each member of a worker cooperative as evidence of membership.

(5) “Membership fee” means the consideration paid for a membership share.

(6) “Patronage” means the amount of work performed as a member of a worker cooperative, measured in accordance with the articles of association or bylaws.

(7) “Written notice of allocation” means a written instrument which discloses to a member the stated dollar amount of that member’s patronage allocation and the terms for payment of that amount by the worker cooperative.

(8) “Internal capital accounts” means a system of accounts on the books of a worker cooperative that reflects the book value of the corporation.

(9) “Individual capital accounts” means internal capital accounts that represent the portion of the net book value of the corporation attributable to each member.

(10) “Collective account” means an internal capital account that represents the portion of the net book value of the corporation attributable to the cooperative.

(11) “Internal capital account cooperative” means a worker cooperative governed in accordance with section 1090 of this chapter.(Added 1985, No. 46, § 1.)

§ 1083. Corporations organized under chapter 17; election to be governed as worker cooperative

Any corporation organized under chapter 17 of this title may elect to be governed as a worker cooperative under the provisions of this chapter, by so stating in its articles of association or articles of amendment filed in accordance with chapter 17. (Added 1985, No. 46, §1.)

§ 1084. Revocation of election

A worker cooperative may revoke its election under this chapter by a vote of majority of the members and through articles of amendment filed in accordance with subchapter 7 of chapter 17 of this title. (Added 1985, No. 46, § 1.)

§ 1085. Corporate name

A worker cooperative may include the word “cooperative” or any abbreviation of that word in its corporate title. (Added 1985, No. 46, § 1.)

§ 1086. Members’ membership shares; fees; rights and responsibilities

(a) The articles of association or the bylaws shall establish qualifications and the method of acceptance of members. No person may be accepted as a member unless employed by the worker cooperative on a regular full-time or a part-time basis. The membership of a worker cooperative shall constitute at least fifty and one-tenth percent of the regular, full and part-time work force.

(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 determined from time to time by the directors. A worker cooperative may allow for payment of such fee by payroll deduction, installments, or similar methods. A membership share may be issued to a person upon acceptance for membership regardless of whether the membership fee is fully paid.

(d) 11 V.S.A. §§ 1864, 1866(b), (d), 1869(a), 1870 and 1872 shall not apply to membership shares. 11 V.S.A. §§ 2003 and 2004 shall not apply to membership shares whose redemption price is determined by reference to internal capital accounts.

(e) Members of a worker cooperative shall have all the rights and responsibilities of stockholders as a corporation organized under chapter 17 of this title, except as otherwise provided in this chapter.(Added 1985, No. 46, § 1.)

§ 1087. Voting shares; bylaws; amendment of articles of organization

(a) No capital stock other than membership shares shall be given voting power in a worker cooperative except as otherwise provided in this chapter or in the articles of association.

(b) Notwithstanding the provisions of section 1873 of this title and other provisions of law relating to bylaws, the power to adopt, amend, or repeal bylaws of a worker cooperative shall be in the members only, except to the extent that directors are authorized by 11 V.S.A. § 1873 to adopt, amend, or repeal the bylaws.

(c) Subchapter 7 of chapter 17 relating to amendments to the articles of association shall be construed to limit voting on any amendment of the articles of association of a worker cooperative to the members, except that amendments affecting the rights of a class of stockholders as defined in 11 V.S.A. § 1933 may not be adopted without the vote of such stockholders in accordance with that section. (Added 1985, No. 46, § 1.)

§ 1088. Net earnings or losses; apportionment, distribution and payment

(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 association or bylaws shall specify. Net earnings declared as patronage allocations with respect to a period of time, and paid or credited to members, and net losses allocated to members with respect to a period of time 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 this section may be in cash, credits, written notices of allocation, or capital stock issued by the worker cooperative. (Added 1985, No. 46, § 1.)

§ 1089. Directors; officers

(a) The bylaws of a worker cooperative shall provide for the election, terms, classifications, if any, and removal of directors and officers in accordance with the provisions of this chapter or the provisions of chapter 17 of this title.

(b) Nonmembers may serve as directors or officers of a worker cooperative but at no time shall there be a majority of nonmember directors.

(c) Vacancies in director positions resulting from death, resignation or removal shall be filled by vote of the member directors or by vote of the members. (Added 1985, No. 46, § 1.)

§ 1090. Internal capital accounts; recall or redemption of shares; interest; collective reserve account

(a) A worker cooperative may provide in its bylaws that it shall operate as an internal capital account cooperative. Any worker cooperative may establish through its articles of association or bylaws a system of internal capital accounts, to reflect the book value and to determine the redemption price of membership shares, capital stock, and written notices of allocation.

(b) The articles of association or bylaws of a worker cooperative may permit the periodic redemption of written notices of allocation and capital stock, and must provide for recall and redemption of the membership share upon termination of membership in the cooperative. No redemption shall be made if such redemption would result in the liability of any director or officer of the worker cooperative under 11 V.S.A. § 1891.

(c) The articles of association or bylaws may provide for the worker cooperative to pay or credit interest on the balance in each member’s internal capital account.

(d) The articles of association or bylaws may authorize assignment of a portion of retained net earnings and net losses to a collective account. Earnings assigned to the collective account may be used for any and all corporate purposes as determined by the board of directors.(Added 1985, No. 46, § 1.)

§ 1091. 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 account, and in which no persons other than members own capital stock. In an internal capital account cooperative, each member shall have one and only one vote in any matter requiring voting by stockholders.

(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 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 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. (Added 1985, No. 46, § 1.)

§ 1092. Conversion of membership shares and internal capital accounts upon revocation of election; consolidation or merger

(a) If any worker cooperative revokes its election in accordance with section 1084, the articles of association or articles 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 chapter 17.

(b) A worker cooperative may not consolidate or merge with another corporation unless the corporation which results from such merger or consolidation is a worker cooperative. All such mergers and consolidations shall be in accordance with subchapter 9 of chapter 17.(Added 1985, No. 46, § 1.)