H.B. 155 Enrolled

AGRICULTURAL COOP AMENDMENTS
2005 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Craig W. Buttars
Senate Sponsor: Lyle W. Hillyard

LONG TITLE
General Description:
This bill clarifies the rights of withdrawing members from Agricultural Cooperative
Associations to claim or receive assets.
Highlighted Provisions:
This bill:
. clarifies the rights of withdrawing members from Agricultural Cooperative
Associations.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
3-1-11, as last amended by Chapter 70, Laws of Utah 2003

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 3-1-11 is amended to read:
3-1-11. Certificates of and termination of membership -- Dividends and
distribution of reserves -- Preferred stock -- Certificates of interest -- Unclaimed credits.
(1) No certificate for membership or stock shall be issued until fully paid for, but
bylaws may provide that a member may vote and hold office prior to payment in full for his
membership or stock.

(2) Dividends in excess of eight per centum per annum on the actual cash value of the
consideration received by the association shall not be paid on common stock or membership
capital, but dividends may be cumulative if so provided in the articles or bylaws.
(3) (a) Savings in excess of dividends and additions to reserves and surplus shall be
distributed on the basis of patronage.
(b) The bylaws may provide that any distribution to a nonmember, who is eligible for
membership, may be credited to that nonmember until the amount of the distribution equals the
value of a membership certificate, or a share of the association's common stock.
(c) The distribution credited to the account of the nonmember may be transferred to the
membership fund at the option of the board, if, after two years, the amount is less than the value
of the membership certificate or a share of common stock.
(4) (a) The bylaws shall provide the time and manner of settlement of membership
interests with members who withdraw from the association or whose membership is otherwise
terminated.
(b) Provisions for forfeiture of membership interests may be made in the bylaws.
(c) After the termination of the membership, for whatever cause, the withdrawing
member shall exercise no further control over the facilities, assets, or activities of the association.
The withdrawing member may not claim or receive any assets of the association except as
follows:
(i) undistributed patronage allocated to the withdrawing member may be paid to the
withdrawing member pursuant to the association's bylaws;
(ii) the withdrawing member may be reimbursed for the par value of membership or
stock in the association pursuant to the association's articles, bylaws, and membership agreement;
and
(iii) the withdrawing member shall receive any distributions to which the member is
entitled pursuant to Subsection 3-1-20 (3)(d).
(5) (a) An association may issue preferred stock to members and nonmembers.
(b) Preferred stock may be redeemed or retired by the association on the terms and

conditions as are provided in the articles or bylaws and printed on the stock certificates.
(c) Preferred stockholders shall not be entitled to vote, but no change in their priority or
preference rights shall be effective until the written consent of the holders of a majority of the
preferred stock has been obtained.
(d) Payment for preferred stock may be made in cash, services, or property on the basis
of the fair value of the stock, services, and property, as determined by the board.
(6) (a) The association may issue to each member a certificate of interest evidencing the
member's interest in any fund, capital investment, or other assets of the association.
(b) Those certificates may be transferred only to the association, or to other purchasers,
as approved by the board of directors, under the terms and conditions provided for in the bylaws.
(7) (a) As used in this Subsection (7), "reasonable effort" means:
(i) a letter to a member's or former member's last-known address, a listing of unclaimed
credits in an association publication, and the posting of a list of unclaimed credits at the
association's principal place of business; and
(ii) publishing a list of the unclaimed credits exceeding $25 each, or greater, in a
newspaper of general circulation in the area where the association's principal offices are located.
(b) The association may retain revolving certificates of interest described in this
Subsection (7) as an exception to the provisions of Title 67, Chapter 4a, Unclaimed Property Act,
if:
(i) the board of directors of the association determines to revolve the certificates and the
certificates remain unclaimed by the association's members or former members for five years
after the credit is declared;
(ii) the association is authorized to retain those credits by its bylaws;
(iii) the board of directors of the association approves the retention; and
(iv) before retaining the credits, the association makes a reasonable effort to locate and
communicate the issuance of the credits to the members or former members.
(c) (i) The board of directors may either add the unclaimed credits as a contribution to
the capital fund, or use them to establish an agricultural educational program as described in

Subsection (7)(c)(ii).
(ii) If the board of directors chooses to use the unclaimed credits to establish an
agricultural educational program, it shall establish an agricultural educational program to:
(A) provide scholarships for low income and worthy students to colleges and
universities;
(B) provide funding for director training and education;
(C) provide funds for cooperative education programs in secondary or higher education
institutions; or
(D) provide other educational opportunities.
(iii) The board of directors may not distribute unclaimed credits to current patrons of the
association.
(iv) Upon dissolution of an association, the board of directors shall report and remit
unclaimed credits to the Division of Unclaimed Property.
(d) (i) Each association that applies credits under Subsection (7)(c) during a calendar
year shall file an annual report with the State Treasurer by April 15 of the following year.
(ii) The report shall specify:
(A) the dollar amount of credits applied during the year;
(B) the dollar amount of credit paid to claimants during the year; and
(C) the aggregate dollar amount of credits applied since January 1, 1996.
(e) At any time after the association retains credits under this Subsection (7), the
association shall pay the members, former members, or their successors in interest, the value of
the credit, without interest, if the members, former members, or their successors in interest:
(i) file a written claim for payment with the association; and
(ii) surrender the certificate issued by the association that evidences the credit.