Download Zipped Enrolled WordPerfect SB0069.ZIP
[Introduced][Amended][Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 69 Enrolled

             1     

UNIFORM LIMITED COOPERATIVE

             2     
ASSOCIATION ACT

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Lyle W. Hillyard

             6     
House Sponsor: Ben C. Ferry

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill enacts the Uniform Limited Cooperative Association Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines terms;
             14          .    addresses the nature, purpose, and duration of a limited cooperative association;
             15          .    outlines the relationship of the act to other law;
             16          .    provides for the adoption of various provisions governing a limited cooperative
             17      association;
             18          .    addresses voting within a limited cooperative association;
             19          .    details the nature of membership in a limited cooperative association;
             20          .    provides for meetings of a limited cooperative association;
             21          .     addresses marketing contracts between the limited cooperative association and
             22      another person;
             23          .    outlines the qualifications, election, service, and removal of a director;
             24          .    addresses liability and indemnification of a director;
             25          .    establishes requirements concerning contributions, allocations, and distributions to
             26      and by a limited cooperative association;
             27          .    provides for the dissociation of a member of a limited cooperative association;
             28          .    addresses dissolution of a limited cooperative association;
             29          .    allows a derivative action by a member of a limited cooperative association;


             30          .    provides for a foreign cooperative to do business in Utah;
             31          .    addresses the disposition of assets by a limited cooperative association;
             32          .    provides for the conversion to and from a limited cooperative association;
             33          .    addresses the merger of a limited cooperative association and another entity; and
             34          .    makes technical changes.
             35      Monies Appropriated in this Bill:
             36          None
             37      Other Special Clauses:
             38          None
             39      Utah Code Sections Affected:
             40      AMENDS:
             41          16-6a-207, as enacted by Laws of Utah 2000, Chapter 300
             42      ENACTS:
             43          3-1-46, Utah Code Annotated 1953
             44          16-16-101, Utah Code Annotated 1953
             45          16-16-102, Utah Code Annotated 1953
             46          16-16-103, Utah Code Annotated 1953
             47          16-16-104, Utah Code Annotated 1953
             48          16-16-105, Utah Code Annotated 1953
             49          16-16-106, Utah Code Annotated 1953
             50          16-16-107, Utah Code Annotated 1953
             51          16-16-108, Utah Code Annotated 1953
             52          16-16-109, Utah Code Annotated 1953
             53          16-16-110, Utah Code Annotated 1953
             54          16-16-111, Utah Code Annotated 1953
             55          16-16-112, Utah Code Annotated 1953
             56          16-16-113, Utah Code Annotated 1953
             57          16-16-114, Utah Code Annotated 1953


             58          16-16-115, Utah Code Annotated 1953
             59          16-16-116, Utah Code Annotated 1953
             60          16-16-117, Utah Code Annotated 1953
             61          16-16-118, Utah Code Annotated 1953
             62          16-16-119, Utah Code Annotated 1953
             63          16-16-120, Utah Code Annotated 1953
             64          16-16-201, Utah Code Annotated 1953
             65          16-16-202, Utah Code Annotated 1953
             66          16-16-203, Utah Code Annotated 1953
             67          16-16-204, Utah Code Annotated 1953
             68          16-16-205, Utah Code Annotated 1953
             69          16-16-206, Utah Code Annotated 1953
             70          16-16-207, Utah Code Annotated 1953
             71          16-16-208, Utah Code Annotated 1953
             72          16-16-301, Utah Code Annotated 1953
             73          16-16-302, Utah Code Annotated 1953
             74          16-16-303, Utah Code Annotated 1953
             75          16-16-304, Utah Code Annotated 1953
             76          16-16-401, Utah Code Annotated 1953
             77          16-16-402, Utah Code Annotated 1953
             78          16-16-403, Utah Code Annotated 1953
             79          16-16-404, Utah Code Annotated 1953
             80          16-16-405, Utah Code Annotated 1953
             81          16-16-406, Utah Code Annotated 1953
             82          16-16-407, Utah Code Annotated 1953
             83          16-16-501, Utah Code Annotated 1953
             84          16-16-502, Utah Code Annotated 1953
             85          16-16-503, Utah Code Annotated 1953


             86          16-16-504, Utah Code Annotated 1953
             87          16-16-505, Utah Code Annotated 1953
             88          16-16-506, Utah Code Annotated 1953
             89          16-16-507, Utah Code Annotated 1953
             90          16-16-508, Utah Code Annotated 1953
             91          16-16-509, Utah Code Annotated 1953
             92          16-16-510, Utah Code Annotated 1953
             93          16-16-511, Utah Code Annotated 1953
             94          16-16-512, Utah Code Annotated 1953
             95          16-16-513, Utah Code Annotated 1953
             96          16-16-514, Utah Code Annotated 1953
             97          16-16-515, Utah Code Annotated 1953
             98          16-16-516, Utah Code Annotated 1953
             99          16-16-517, Utah Code Annotated 1953
             100          16-16-601, Utah Code Annotated 1953
             101          16-16-602, Utah Code Annotated 1953
             102          16-16-603, Utah Code Annotated 1953
             103          16-16-604, Utah Code Annotated 1953
             104          16-16-605, Utah Code Annotated 1953
             105          16-16-701, Utah Code Annotated 1953
             106          16-16-702, Utah Code Annotated 1953
             107          16-16-703, Utah Code Annotated 1953
             108          16-16-704, Utah Code Annotated 1953
             109          16-16-801, Utah Code Annotated 1953
             110          16-16-802, Utah Code Annotated 1953
             111          16-16-803, Utah Code Annotated 1953
             112          16-16-804, Utah Code Annotated 1953
             113          16-16-805, Utah Code Annotated 1953


             114          16-16-806, Utah Code Annotated 1953
             115          16-16-807, Utah Code Annotated 1953
             116          16-16-808, Utah Code Annotated 1953
             117          16-16-809, Utah Code Annotated 1953
             118          16-16-810, Utah Code Annotated 1953
             119          16-16-811, Utah Code Annotated 1953
             120          16-16-812, Utah Code Annotated 1953
             121          16-16-813, Utah Code Annotated 1953
             122          16-16-814, Utah Code Annotated 1953
             123          16-16-815, Utah Code Annotated 1953
             124          16-16-816, Utah Code Annotated 1953
             125          16-16-817, Utah Code Annotated 1953
             126          16-16-818, Utah Code Annotated 1953
             127          16-16-819, Utah Code Annotated 1953
             128          16-16-820, Utah Code Annotated 1953
             129          16-16-821, Utah Code Annotated 1953
             130          16-16-822, Utah Code Annotated 1953
             131          16-16-823, Utah Code Annotated 1953
             132          16-16-901, Utah Code Annotated 1953
             133          16-16-1001, Utah Code Annotated 1953
             134          16-16-1002, Utah Code Annotated 1953
             135          16-16-1003, Utah Code Annotated 1953
             136          16-16-1004, Utah Code Annotated 1953
             137          16-16-1005, Utah Code Annotated 1953
             138          16-16-1006, Utah Code Annotated 1953
             139          16-16-1007, Utah Code Annotated 1953
             140          16-16-1008, Utah Code Annotated 1953
             141          16-16-1009, Utah Code Annotated 1953


             142          16-16-1101, Utah Code Annotated 1953
             143          16-16-1102, Utah Code Annotated 1953
             144          16-16-1103, Utah Code Annotated 1953
             145          16-16-1201, Utah Code Annotated 1953
             146          16-16-1202, Utah Code Annotated 1953
             147          16-16-1203, Utah Code Annotated 1953
             148          16-16-1204, Utah Code Annotated 1953
             149          16-16-1205, Utah Code Annotated 1953
             150          16-16-1206, Utah Code Annotated 1953
             151          16-16-1207, Utah Code Annotated 1953
             152          16-16-1208, Utah Code Annotated 1953
             153          16-16-1209, Utah Code Annotated 1953
             154          16-16-1210, Utah Code Annotated 1953
             155          16-16-1211, Utah Code Annotated 1953
             156          16-16-1212, Utah Code Annotated 1953
             157          16-16-1213, Utah Code Annotated 1953
             158          16-16-1214, Utah Code Annotated 1953
             159          16-16-1215, Utah Code Annotated 1953
             160          16-16-1301, Utah Code Annotated 1953
             161          16-16-1302, Utah Code Annotated 1953
             162          16-16-1303, Utah Code Annotated 1953
             163          16-16-1304, Utah Code Annotated 1953
             164          16-16-1305, Utah Code Annotated 1953
             165          16-16-1401, Utah Code Annotated 1953
             166          16-16-1402, Utah Code Annotated 1953
             167          16-16-1403, Utah Code Annotated 1953
             168          16-16-1404, Utah Code Annotated 1953
             169          16-16-1405, Utah Code Annotated 1953


             170          16-16-1406, Utah Code Annotated 1953
             171          16-16-1407, Utah Code Annotated 1953
             172          16-16-1408, Utah Code Annotated 1953
             173          16-16-1501, Utah Code Annotated 1953
             174          16-16-1502, Utah Code Annotated 1953
             175          16-16-1503, Utah Code Annotated 1953
             176          16-16-1504, Utah Code Annotated 1953
             177          16-16-1601, Utah Code Annotated 1953
             178          16-16-1602, Utah Code Annotated 1953
             179          16-16-1603, Utah Code Annotated 1953
             180          16-16-1604, Utah Code Annotated 1953
             181          16-16-1605, Utah Code Annotated 1953
             182          16-16-1606, Utah Code Annotated 1953
             183          16-16-1607, Utah Code Annotated 1953
             184          16-16-1608, Utah Code Annotated 1953
             185          16-16-1609, Utah Code Annotated 1953
             186          16-16-1610, Utah Code Annotated 1953
             187          16-16-1611, Utah Code Annotated 1953
             188          16-16-1612, Utah Code Annotated 1953
             189          16-16-1701, Utah Code Annotated 1953
             190          16-16-1702, Utah Code Annotated 1953
             191          16-16-1703, Utah Code Annotated 1953
             192     
             193      Be it enacted by the Legislature of the state of Utah:
             194          Section 1. Section 3-1-46 is enacted to read:
             195          3-1-46. Conversion to a limited cooperative association.
             196          An association under this title may convert to a limited cooperative association under
             197      Title 16, Chapter 16, Uniform Limited Cooperative Association Act, by complying with that


             198      chapter.
             199          Section 2. Section 16-6a-207 is amended to read:
             200           16-6a-207. Incorporation of cooperative association.
             201          (1) (a) If a cooperative association meets the requirements of Subsection (1)(b), it may:
             202          (i) be incorporated under this chapter; and
             203          (ii) use the word "cooperative" as part of its corporate or business name.
             204          (b) A cooperative association described in Subsection (1)(a):
             205          (i) may not be:
             206          (A) an association subject to the insurance or credit union laws of this state;
             207          (B) a health insurance purchasing association as defined in Section 31A-34-103 ; or
             208          (C) a health insurance purchasing alliance licensed under Title 31A, Chapter 34,
             209      Voluntary Health Insurance Purchasing Alliance Act; and
             210          (ii) shall state in its articles of incorporation that:
             211          (A) a member may not have more than one vote regardless of the number or amount of
             212      stock or membership capital owned by the member unless voting is based in whole or in part on
             213      the volume of patronage of the member with the cooperative association; and
             214          (B) savings in excess of dividends and additions to reserves and surplus shall be
             215      distributed or allocated to members or patrons on the basis of patronage.
             216          (2) (a) Any cooperative association incorporated in accordance with Subsection (1):
             217          (i) [shall have] has all the rights and [be] is subject to the limitations provided in Section
             218      3-1-11 ; and
             219          (ii) may pay dividends on its stock, if it has stock, subject to the limitations of Section
             220      3-1-11 .
             221          (b) The articles of incorporation or the bylaws of a cooperative association
             222      incorporated in accordance with Subsection (1) may provide for:
             223          (i) the establishment and alteration of voting districts;
             224          (ii) the election of delegates to represent:
             225          (A) the districts described in Subsection (2)(b)(i); and


             226          (B) the members of the districts described in Subsection (2)(b)(i);
             227          (iii) the establishment and alteration of director districts; and
             228          (iv) the election of directors to represent the districts described in Subsection (2)(b)(ii)
             229      by:
             230          (A) the members of the districts; or
             231          (B) delegates elected by the members.
             232          (3) (a) A corporation organized under Title 3, [Chapter 1,] Uniform Agricultural
             233      Cooperative Association Act, or Title 16, Chapter 16, Uniform Limited Cooperative
             234      Association Act, may convert itself into a cooperative association subject to this chapter by
             235      adopting appropriate amendments to its articles of incorporation by which:
             236          (i) it elects to become subject to this chapter; and
             237          (ii) makes changes in its articles of incorporation that are:
             238          (A) required by this chapter; and
             239          (B) any other changes permitted by this chapter.
             240          (b) The amendments described in Subsection (3)(a) shall be adopted and filed in the
             241      manner provided by the law then applicable to the cooperative nonprofit corporation.
             242          (4) Notwithstanding Subsection (1), a health insurance purchasing association may not
             243      use the word "cooperative" or "alliance" but may use the word "association."
             244          (5) Except as otherwise provided in this section [ 16-6a-207 ], a cooperative nonprofit
             245      corporation [shall be] is subject to this chapter.
             246          (6) A corporation that is a cooperative under this chapter may convert to a limited
             247      cooperative association under Title 16, Chapter 16, Uniform Limited Cooperative Association
             248      Act, by complying with that chapter.
             249          Section 3. Section 16-16-101 is enacted to read:
             250     
CHAPTER 16. UNIFORM LIMITED COOPERATIVE ASSOCIATION ACT

             251     
Part 1. General Provisions

             252          16-16-101. Title.
             253          This chapter is known as the "Uniform Limited Cooperative Association Act."


             254          Section 4. Section 16-16-102 is enacted to read:
             255          16-16-102. Definitions.
             256          In this chapter:
             257          (1) "Articles of organization" means the articles of organization of a limited cooperative
             258      association required by Section 16-16-302 . The term includes the articles as amended or
             259      restated.
             260          (2) "Board of directors" means the board of directors of a limited cooperative
             261      association.
             262          (3) "Bylaws" means the bylaws of a limited cooperative association. The term includes
             263      the bylaws as amended or restated.
             264          (4) "Certificate of authority" means a certificate issued by the division for a foreign
             265      cooperative to transact business in this state.
             266          (5) "Contribution," except as used in Subsection 16-16-1008 (3), means a benefit that a
             267      person provides to a limited cooperative association to become or remain a member or in the
             268      person's capacity as a member.
             269          (6) "Cooperative" means a limited cooperative association or an entity organized under
             270      any cooperative law of any jurisdiction.
             271          (7) "Designated office" means the office that a limited cooperative association or a
             272      foreign cooperative is required to designate and maintain under Subsection 16-16-117 (1)(a).
             273          (8) "Director" means a director of a limited cooperative association.
             274          (9) "Distribution," except as used in Subsection 16-16-1007 (5), means a transfer of
             275      money or other property from a limited cooperative association to a member because of the
             276      member's financial rights or to a transferee of a member's financial rights.
             277          (10) "Division" means the Division of Corporations and Commercial Code.
             278          (11) "Entity" means a person other than an individual.
             279          (12) "Financial rights" means the right to participate in allocations and distributions as
             280      provided in Part 10, Contributions, Allocations, and Distributions, and Part 12, Dissolution, but
             281      does not include rights or obligations under a marketing contract governed by Part 7, Marketing


             282      Contracts.
             283          (13) "Foreign cooperative" means an entity organized in a jurisdiction other than this
             284      state under a law similar to this chapter.
             285          (14) "Governance rights" means the right to participate in governance of a limited
             286      cooperative association.
             287          (15) "Investor member" means a member that has made a contribution to a limited
             288      cooperative association and:
             289          (a) is not required by the organic rules to conduct patronage with the association in the
             290      member's capacity as an investor member in order to receive the member's interest; or
             291          (b) is not permitted by the organic rules to conduct patronage with the association in
             292      the member's capacity as an investor member in order to receive the member's interest.
             293          (16) "Limited cooperative association" means an association organized under this
             294      chapter.
             295          (17) "Member" means a person that is admitted as a patron member or investor
             296      member, or both, in a limited cooperative association. The term does not include a person that
             297      has dissociated as a member.
             298          (18) "Member's interest" means the interest of a patron member or investor member
             299      under Section 16-16-601 .
             300          (19) "Members meeting" means an annual members meeting or special meeting of
             301      members.
             302          (20) "Organic law" means the statute providing for the creation of an entity or
             303      principally governing its internal affairs.
             304          (21) "Organic rules" means the articles of organization and bylaws of a limited
             305      cooperative association.
             306          (22) "Organizer" means an individual who signs the initial articles of organization.
             307          (23) "Patron member" means a member that has made a contribution to a limited
             308      cooperative association and:
             309          (a) is required by the organic rules to conduct patronage with the association in the


             310      member's capacity as a patron member in order to receive the member's interest; or
             311          (b) is permitted by the organic rules to conduct patronage with the association in the
             312      member's capacity as a patron member in order to receive the member's interest.
             313          (24) "Patronage" means business transactions between a limited cooperative association
             314      and a person which entitle the person to receive financial rights based on the value or quantity
             315      of business done between the association and the person.
             316          (25) "Person" means an individual, corporation, business trust, cooperative, estate,
             317      trust, partnership, limited partnership, limited liability company, limited cooperative association,
             318      joint venture, association, public corporation, government or governmental subdivision, agency,
             319      or instrumentality, or any other legal or commercial entity.
             320          (26) "Principal office" means the principal executive office of a limited cooperative
             321      association or foreign cooperative, whether or not in this state.
             322          (27) "Record," used as a noun, means information that is inscribed on a tangible
             323      medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
             324          (28) "Required information" means the information a limited cooperative association is
             325      required to maintain under Section 16-16-114 .
             326          (29) "Sign" means, with present intent to authenticate or adopt a record:
             327          (a) to execute or adopt a tangible symbol; or
             328          (b) to attach to or logically associate with the record an electronic symbol, sound, or
             329      process.
             330          (30) "State" means a state of the United States, the District of Columbia, Puerto Rico,
             331      the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction
             332      of the United States.
             333          (31) "Transfer" includes an assignment, conveyance, deed, bill of sale, lease, mortgage,
             334      security interest, encumbrance, gift, and transfer by operation of law.
             335          (32) "Voting group" means any combination of one or more voting members in one or
             336      more districts or classes that under the organic rules or this chapter are entitled to vote and can
             337      be counted together collectively on a matter at a members meeting.


             338          (33) "Voting member" means a member that, under the organic law or organic rules,
             339      has a right to vote on matters subject to vote by members under the organic law or organic
             340      rules.
             341          (34) "Voting power" means the total current power of members to vote on a particular
             342      matter for which a vote may or is to be taken.
             343          Section 5. Section 16-16-103 is enacted to read:
             344          16-16-103. Limited cooperative association subject to amendment or repeal of
             345      chapter.
             346          A limited cooperative association governed by this chapter is subject to any amendment
             347      or repeal of this chapter.
             348          Section 6. Section 16-16-104 is enacted to read:
             349          16-16-104. Nature of limited cooperative association.
             350          (1) A limited cooperative association organized under this chapter is an autonomous,
             351      unincorporated association of persons united to meet their mutual interests through a jointly
             352      owned enterprise primarily controlled by those persons, which permits combining:
             353          (a) ownership, financing, and receipt of benefits by the members for whose interests the
             354      association is formed; and
             355          (b) separate investments in the association by members who may receive returns on
             356      their investments and a share of control.
             357          (2) The fact that a limited cooperative association does not have one or more of the
             358      characteristics described in Subsection (1) does not alone prevent the association from being
             359      formed under and governed by this chapter nor does it alone provide a basis for an action
             360      against the association.
             361          Section 7. Section 16-16-105 is enacted to read:
             362          16-16-105. Purpose and duration of limited cooperative association.
             363          (1) A limited cooperative association is an entity distinct from its members.
             364          (2) A limited cooperative association may be organized for any lawful purpose, whether
             365      or not for profit, except for the operation of a financial institution as defined in Section 7-1-103 .


             366          (3) Unless the articles of organization state a term for a limited cooperative
             367      association's existence, the association has perpetual duration.
             368          Section 8. Section 16-16-106 is enacted to read:
             369          16-16-106. Powers.
             370          A limited cooperative association may sue and be sued in its own name and do all things
             371      necessary or convenient to carry on its activities. An association may maintain an action against
             372      a member for harm caused to the association by the member's violation of a duty to the
             373      association or of the organic law or organic rules.
             374          Section 9. Section 16-16-107 is enacted to read:
             375          16-16-107. Governing law.
             376          The law of this state governs:
             377          (1) the internal affairs of a limited cooperative association; and
             378          (2) the liability of a member as member and a director as director for the debts,
             379      obligations, or other liabilities of a limited cooperative association.
             380          Section 10. Section 16-16-108 is enacted to read:
             381          16-16-108. Supplemental principles of law.
             382          Unless displaced by particular provisions of this chapter, the principles of law and equity
             383      supplement this chapter.
             384          Section 11. Section 16-16-109 is enacted to read:
             385          16-16-109. Requirements of other laws.
             386          (1) This chapter does not alter or amend any law that governs the licensing and
             387      regulation of an individual or entity in carrying on a specific business or profession even if that
             388      law permits the business or profession to be conducted by a limited cooperative association, a
             389      foreign cooperative, or its members.
             390          (2) A limited cooperative association may not conduct an activity that, under law of this
             391      state other than this chapter, may be conducted only by an entity that meets specific
             392      requirements for the internal affairs of that entity unless the organic rules of the association
             393      conform to those requirements.


             394          Section 12. Section 16-16-110 is enacted to read:
             395          16-16-110. Relation to restraint of trade and antitrust laws.
             396          To the extent a limited cooperative association or activities conducted by the association
             397      in this state meet the material requirements for other cooperatives entitled to an exemption from
             398      or immunity under any provision of the restraint of trade or antitrust laws of this state, the
             399      association and its activities are entitled to the exemption or immunity. This section does not
             400      create any new exemption or immunity for an association or affect any exemption or immunity
             401      provided to a cooperative organized under any other law.
             402          Section 13. Section 16-16-111 is enacted to read:
             403          16-16-111. Name.
             404          (1) Use of the term "cooperative" or its abbreviation under this chapter is not a
             405      violation of the provisions restricting the use of the term under any other law of this state.
             406          (2) Notwithstanding Section 48-2a-102 , the name of a limited cooperative association
             407      must contain the words "limited cooperative association" or "limited cooperative" or the
             408      abbreviation "L.C.A." or "LCA". "Limited" may be abbreviated as "Ltd.". "Cooperative" may
             409      be abbreviated as "Co-op" or "Coop". "Association" may be abbreviated as "Assoc." or
             410      "Assn.". Use of the term "cooperative" or its abbreviation as permitted by this chapter is not a
             411      violation of the provisions restricting the use of the term under any other law of this state. A
             412      limited cooperative association or a member may enforce the restrictions on the use of the term
             413      "cooperative" under this chapter and any other law of this state. A limited cooperative
             414      association or a member may enforce the restrictions on the use of the term "cooperative" under
             415      any other law of this state.
             416          (3) Except as otherwise provided in Subsection (4), a limited cooperative association
             417      may use only a name that is available. A name is available if it is distinguishable in the records
             418      of the division from:
             419          (a) the name of any entity organized or authorized to transact business in this state;
             420          (b) a name reserved under Section 16-16-112 ; and
             421          (c) an alternative name approved for a foreign cooperative authorized to transact


             422      business in this state.
             423          (4) A limited cooperative association may apply to the division for authorization to use
             424      a name that is not available. The division shall authorize use of the name if:
             425          (a) the person with ownership rights to use the name consents in a record to the use and
             426      applies in a form satisfactory to the division to change the name used or reserved to a name that
             427      is distinguishable upon the records of the division from the name applied for; or
             428          (b) the applicant delivers to the division a certified copy of the final judgment of a court
             429      establishing the applicant's right to use the name in this state.
             430          Section 14. Section 16-16-112 is enacted to read:
             431          16-16-112. Reservation of name.
             432          (1) A person may reserve the exclusive use of the name of a limited cooperative
             433      association, including a fictitious name for a foreign cooperative whose name is not available
             434      under Section 16-16-111 , by delivering an application to the division for filing. The application
             435      must set forth the name and address of the applicant and the name proposed to be reserved. If
             436      the division finds that the name applied for is available under Section 16-16-111 , the division
             437      shall reserve the name for the applicant's exclusive use for a nonrenewable period of 120 days.
             438          (2) A person that has reserved a name for a limited cooperative association may transfer
             439      the reservation to another person by delivering to the division a signed notice of the transfer
             440      which states the name, street address, and, if different, the mailing address of the transferee. If
             441      the person is an organizer of the association and the name of the association is the same as the
             442      reserved name, the delivery of articles of organization for filing by the division is a transfer by
             443      the person to the association.
             444          Section 15. Section 16-16-113 is enacted to read:
             445          16-16-113. Effect of organic rules.
             446          (1) The relations between a limited cooperative association and its members are
             447      consensual. Unless required, limited, or prohibited by this chapter, the organic rules may
             448      provide for any matter concerning the relations among the members of the association and
             449      between the members and the association, the activities of the association, and the conduct of its


             450      activities.
             451          (2) The matters referred to in Subsections (2)(a) through (i) may be varied only in the
             452      articles of organization. The articles may:
             453          (a) state a term of existence for the association under Subsection 16-16-105 (3);
             454          (b) limit or eliminate the acceptance of new or additional members by the initial board
             455      of directors under Subsection 16-16-303 (2);
             456          (c) vary the limitations on the obligations and liability of members for association
             457      obligations under Section 16-16-504 ;
             458          (d) require a notice of an annual members meeting to state a purpose of the meeting
             459      under Subsection 16-16-508 (2);
             460          (e) vary the board of directors meeting quorum under Subsection 16-16-815 (1);
             461          (f) vary the matters the board of directors may consider in making a decision under
             462      Section 16-16-820 ;
             463          (g) specify causes of dissolution under Subsection 16-16-1202 (1);
             464          (h) delegate amendment of the bylaws to the board of directors pursuant to Subsection
             465      16-16-405 (6);
             466          (i) provide for member approval of asset dispositions under Subsection 16-16-1501 ;
             467      and
             468          (j) provide for any matters that may be contained in the organic rules, including those
             469      under Subsection (3).
             470          (3) The matters referred to in Subsections (3)(a) through (y) may be varied only in the
             471      organic rules. The organic rules may:
             472          (a) require more information to be maintained under Section 16-16-114 or provided to
             473      members under Subsection 16-16-505 (11);
             474          (b) provide restrictions on transactions between a member and an association under
             475      Section 16-16-115 ;
             476          (c) provide for the percentage and manner of voting on amendments to the organic
             477      rules by district, class, or voting group under Subsection 16-16-404 (1);


             478          (d) provide for the percentage vote required to amend the bylaws concerning the
             479      admission of new members under Subsection 16-16-405 (5)(e);
             480          (e) provide for terms and conditions to become a member under Section 16-16-502 ;
             481          (f) restrict the manner of conducting members meetings under Subsections
             482      16-16-506 (3) and 16-16-507 (5);
             483          (g) designate the presiding officer of members meetings under Subsections
             484      16-16-506 (5) and 16-16-507 (7);
             485          (h) require a statement of purposes in the annual meeting notice under Subsection
             486      16-16-508 (2);
             487          (i) increase quorum requirements for members meetings under Section 16-16-510 and
             488      board of directors meetings under Section 16-16-815 ;
             489          (j) allocate voting power among members, including patron members and investor
             490      members, and provide for the manner of member voting and action as permitted by Sections
             491      16-16-511 through 16-16-517 ;
             492          (k) authorize investor members and expand or restrict the transferability of members'
             493      interests to the extent provided in Sections 16-16-602 through 16-16-604 ;
             494          (l) provide for enforcement of a marketing contract under Subsection 16-16-704 (1);
             495          (m) provide for qualification, election, terms, removal, filling vacancies, and member
             496      approval for compensation of directors in accordance with Sections 16-16-803 through
             497      16-16-805 , 16-16-807 , 16-16-809 , and 16-16-810 ;
             498          (n) restrict the manner of conducting board meetings and taking action without a
             499      meeting under Sections 16-16-811 and 16-16-812 ;
             500          (o) provide for frequency, location, notice and waivers of notice for board meetings
             501      under Sections 16-16-813 and 16-16-814 ;
             502          (p) increase the percentage of votes necessary for board action under Subsection
             503      16-16-816 (2);
             504          (q) provide for the creation of committees of the board of directors and matters related
             505      to the committees in accordance with Section 16-16-817 ;


             506          (r) provide for officers and their appointment, designation, and authority under Section
             507      16-16-822 ;
             508          (s) provide for forms and values of contributions under Section 16-16-1002 ;
             509          (t) provide for remedies for failure to make a contribution under Subsection
             510      16-16-1003 (2);
             511          (u) provide for the allocation of profits and losses of the association, distributions, and
             512      the redemption or repurchase of distributed property other than money in accordance with
             513      Sections 16-16-1004 through 16-16-1007 ;
             514          (v) specify when a member's dissociation is wrongful and the liability incurred by the
             515      dissociating member for damage to the association under Subsections 16-16-1101 (2) and (3);
             516          (w) provide the personal representative, or other legal representative of, a deceased
             517      member or a member adjudged incompetent with additional rights under Section 16-16-1103 ;
             518          (x) increase the percentage of votes required for board of director approval of:
             519          (i) a resolution to dissolve under Subsection 16-16-1205 (1)(a);
             520          (ii) a proposed amendment to the organic rules under Subsection 16-16-402 (1)(a);
             521          (iii) a plan of conversion under Subsection 16-16-1603 (1);
             522          (iv) a plan of merger under Subsection 16-16-1607 (1); and
             523          (v) a proposed disposition of assets under Subsection 16-16-1503 (1); and
             524          (y) vary the percentage of votes required for members' approval of:
             525          (i) a resolution to dissolve under Section 16-16-1205 ;
             526          (ii) an amendment to the organic rules under Section 16-16-405 ;
             527          (iii) a plan of conversion under Section 16-16-1603 ;
             528          (iv) a plan of merger under Section 16-16-1608 ; and
             529          (v) a disposition of assets under Section 16-16-1504 .
             530          (4) The organic rules must address members' contributions pursuant to Section
             531      16-16-1001 .
             532          Section 16. Section 16-16-114 is enacted to read:
             533          16-16-114. Required information.


             534          (1) Subject to Subsection (2), a limited cooperative association shall maintain in a
             535      record available at its principal office:
             536          (a) a list containing the name, last known street address and, if different, mailing
             537      address, and term of office of each director and officer;
             538          (b) the initial articles of organization and all amendments to and restatements of the
             539      articles, together with a signed copy of any power of attorney under which any article,
             540      amendment, or restatement has been signed;
             541          (c) the initial bylaws and all amendments to and restatements of the bylaws;
             542          (d) all filed articles of merger and statements of conversion;
             543          (e) all financial statements of the association for the six most recent years;
             544          (f) the six most recent annual reports delivered by the association to the division;
             545          (g) the minutes of members meetings for the six most recent years;
             546          (h) evidence of all actions taken by members without a meeting for the six most recent
             547      years;
             548          (i) a list containing:
             549          (i) the name, in alphabetical order, and last known street address and, if different,
             550      mailing address of each patron member and each investor member; and
             551          (ii) if the association has districts or classes of members, information from which each
             552      current member in a district or class may be identified;
             553          (j) the federal income tax returns, any state and local income tax returns, and any tax
             554      reports of the association for the six most recent years;
             555          (k) accounting records maintained by the association in the ordinary course of its
             556      operations for the six most recent years;
             557          (l) the minutes of directors meetings for the six most recent years;
             558          (m) evidence of all actions taken by directors without a meeting for the six most recent
             559      years;
             560          (n) the amount of money contributed and agreed to be contributed by each member;
             561          (o) a description and statement of the agreed value of contributions other than money


             562      made and agreed to be made by each member;
             563          (p) the times at which, or events on the happening of which, any additional contribution
             564      is to be made by each member;
             565          (q) for each member, a description and statement of the member's interest or
             566      information from which the description and statement can be derived; and
             567          (r) all communications concerning the association made in a record to all members, or
             568      to all members in a district or class, for the six most recent years.
             569          (2) If a limited cooperative association has existed for less than the period for which
             570      records must be maintained under Subsection (1), the period records must be kept is the period
             571      of the association's existence.
             572          (3) The organic rules may require that more information be maintained.
             573          Section 17. Section 16-16-115 is enacted to read:
             574          16-16-115. Business transactions of member with limited cooperative association.
             575          Subject to Sections 16-16-818 and 16-16-819 and except as otherwise provided in the
             576      organic rules or a specific contract relating to a transaction, a member may lend money to and
             577      transact other business with a limited cooperative association in the same manner as a person
             578      that is not a member.
             579          Section 18. Section 16-16-116 is enacted to read:
             580          16-16-116. Dual capacity.
             581          A person may have both a patron member's interest and an investor member's interest.
             582      When such person acts as a patron member, the person is subject to this chapter and the organic
             583      rules governing patron members. When such person acts as an investor member, the person is
             584      subject to this chapter and the organic rules governing investor members.
             585          Section 19. Section 16-16-117 is enacted to read:
             586          16-16-117. Designated office and agent for service of process.
             587          (1) A limited cooperative association, or a foreign cooperative that has a certificate of
             588      authority under Section 16-16-1404 , shall designate and continuously maintain in this state:
             589          (a) an office, as its designated office, which need not be a place of the association's or


             590      foreign cooperative's activity in this state; and
             591          (b) an agent for service of process at the designated office.
             592          (2) An agent for service of process of a limited cooperative association or foreign
             593      cooperative must be an individual who is a resident of this state or an entity that is authorized to
             594      do business in this state.
             595          Section 20. Section 16-16-118 is enacted to read:
             596          16-16-118. Change of designated office or agent for service of process.
             597          (1) Except as otherwise provided in Subsection 16-16-207 (5), to change its designated
             598      office, its agent for service of process, or the street address or, if different, mailing address of its
             599      principal office, a limited cooperative association must deliver to the division for filing a
             600      statement of change containing:
             601          (a) the name of the limited cooperative association;
             602          (b) the street address and, if different, mailing address of its designated office;
             603          (c) if the designated office is to be changed, the street address and, if different, mailing
             604      address of the new designated office;
             605          (d) the name of its agent for service of process; and
             606          (e) if the agent for service of process is to be changed, the name of the new agent.
             607          (2) Except as otherwise provided in Subsection 16-16-207 (5), to change its agent for
             608      service of process, the address of its designated office, or the street address or, if different,
             609      mailing address of its principal office, a foreign cooperative shall deliver to the division for filing
             610      a statement of change containing:
             611          (a) the name of the foreign cooperative;
             612          (b) the name, street address and, if different, mailing address of its designated office;
             613          (c) if the current agent for service of process or an address of the designated office is to
             614      be changed, the new information;
             615          (d) the street address and, if different, mailing address of its principal office; and
             616          (e) if the street address or, if different, the mailing address of its principal office is to be
             617      changed, the street address and, if different, the mailing address of the new principal office.


             618          (3) Except as otherwise provided in Section 16-16-204 , a statement of change is
             619      effective when filed by the division.
             620          Section 21. Section 16-16-119 is enacted to read:
             621          16-16-119. Resignation of agent for service of process.
             622          (1) To resign as an agent for service of process of a limited cooperative association or
             623      foreign cooperative, the agent must deliver to the division for filing a statement of resignation
             624      containing the name of the agent and the name of the association or foreign cooperative.
             625          (2) After receiving a statement of resignation under Subsection (1), the division shall
             626      file it and mail or otherwise provide or deliver a copy to the limited cooperative association or
             627      foreign cooperative at its principal office.
             628          (3) An agency for service of process of a limited cooperative association or foreign
             629      cooperative terminates on the earlier of:
             630          (a) the 31st day after the division files a statement of resignation under Subsection (2);
             631      or
             632          (b) when a record designating a new agent for service of process is delivered to the
             633      division for filing on behalf of the association or foreign cooperative and becomes effective.
             634          Section 22. Section 16-16-120 is enacted to read:
             635          16-16-120. Service of process.
             636          (1) An agent for service of process appointed by a limited cooperative association or
             637      foreign cooperative is an agent of the association or foreign cooperative for service of process,
             638      notice, or a demand required or permitted by law to be served upon the association or foreign
             639      cooperative.
             640          (2) If a limited cooperative association or foreign cooperative does not appoint or
             641      maintain an agent for service of process in this state or the agent for service of process cannot
             642      with reasonable diligence be found at the address of the designated office on file with the
             643      division, the division is an agent of the association or foreign cooperative upon which process,
             644      notice, or a demand may be served.
             645          (3) Service of process, notice, or a demand on the division as agent of a limited


             646      cooperative association or foreign cooperative may be made by delivering to the division two
             647      copies of the process, notice, or demand. The division shall forward one copy by registered or
             648      certified mail, return receipt requested, to the association or foreign cooperative at its principal
             649      office.
             650          (4) Service is effected under Subsection (3) on the earliest of:
             651          (a) the date the limited cooperative association or foreign cooperative receives the
             652      process, notice, or demand;
             653          (b) the date shown on the return receipt, if signed on behalf of the association or foreign
             654      cooperative; or
             655          (c) five days after the process, notice, or demand is deposited by the division for
             656      delivery by the United States Postal Service, if mailed postage prepaid to the address of the
             657      principal office on file with the division.
             658          (5) The division shall keep a record of each process, notice, and demand served
             659      pursuant to this section and record the time of, and the action taken regarding, the service.
             660          (6) This section does not affect the right to serve process, notice, or a demand in any
             661      other manner provided by law.
             662          Section 23. Section 16-16-201 is enacted to read:
             663     
Part 2. Filing and Annual Reports

             664          16-16-201. Signing of records delivered for filing to division.
             665          (1) A record delivered to the division for filing pursuant to this chapter must be signed
             666      as follows:
             667          (a) The initial articles of organization must be signed by at least one organizer.
             668          (b) A statement of cancellation under Subsection 16-16-302 (4) must be signed by at
             669      least one organizer.
             670          (c) Except as otherwise provided in Subsection (1)(d), a record signed on behalf of an
             671      existing limited cooperative association must be signed by an officer.
             672          (d) A record filed on behalf of a dissolved association must be signed by a person
             673      winding up activities under Section 16-16-1206 or a person appointed under Section


             674      16-16-1206 to wind up those activities.
             675          (e) Any other record must be signed by the person on whose behalf the record is
             676      delivered to the division.
             677          (2) Any record to be signed under this chapter may be signed by an authorized agent.
             678          Section 24. Section 16-16-202 is enacted to read:
             679          16-16-202. Signing and filing of records pursuant to judicial order.
             680          (1) If a person required by this chapter to sign or deliver a record to the division for
             681      filing does not do so, the district court, upon petition of an aggrieved person, may order:
             682          (a) the person to sign the record and deliver it to the division for filing; or
             683          (b) delivery of the unsigned record to the division for filing.
             684          (2) An aggrieved person under Subsection (1), other than the limited cooperative
             685      association or foreign cooperative to which the record pertains, shall make the association or
             686      foreign cooperative a party to the action brought to obtain the order.
             687          (3) An unsigned record filed pursuant to this section is effective.
             688          Section 25. Section 16-16-203 is enacted to read:
             689          16-16-203. Delivery to and filing of records by division -- Effective time and date.
             690          (1) A record authorized or required by this chapter to be delivered to the division for
             691      filing must be captioned to describe the record's purpose, be in a medium and format permitted
             692      by the division, and be delivered to the division. If the filing fees have been paid, and unless the
             693      division determines that the record does not comply with the filing requirements of this chapter,
             694      the division shall file the record.
             695          (2) The division, upon request and payment of the required fee, shall furnish a certified
             696      copy of any record filed by the division under this chapter to the person making the request.
             697          (3) Except as otherwise provided in Sections 16-16-118 and 16-16-204 , a record
             698      delivered to the division for filing under this chapter may specify an effective time and a delayed
             699      effective date that may include an effective time on that date. Except as otherwise provided in
             700      Sections 16-16-118 and 16-16-204 , a record filed by the division under this chapter is effective:
             701          (a) if the record does not specify an effective time and does not specify a delayed


             702      effective date, on the date and at the time the record is filed as evidenced by the division's
             703      endorsement of the date and time on the record;
             704          (b) if the record specifies an effective time but not a delayed effective date, on the date
             705      the record is filed at the time specified in the record;
             706          (c) if the record specifies a delayed effective date but not an effective time, at 12:01
             707      a.m. on the earlier of:
             708          (i) the specified date; or
             709          (ii) the 90th day after the record is filed; or
             710          (d) if the record specifies an effective time and a delayed effective date, at the specified
             711      time on the earlier of:
             712          (i) the specified date; or
             713          (ii) the 90th day after the record is filed.
             714          Section 26. Section 16-16-204 is enacted to read:
             715          16-16-204. Correcting filed record.
             716          (1) A limited cooperative association or foreign cooperative may deliver to the division
             717      for filing a statement of correction to correct a record previously delivered by the association or
             718      foreign cooperative to the division and filed by the division if, at the time of filing, the record
             719      contained inaccurate information or was defectively signed.
             720          (2) A statement of correction may not state a delayed effective date and must:
             721          (a) describe the record to be corrected, including its filing date, or have attached a copy
             722      of the record as filed;
             723          (b) specify the inaccurate information and the reason it is inaccurate or the manner in
             724      which the signing was defective; and
             725          (c) correct the inaccurate information or defective signature.
             726          (3) When filed by the division, a statement of correction is effective:
             727          (a) when filed as to persons relying on the inaccurate information or defective signature
             728      before its correction and adversely affected by the correction; and
             729          (b) as to all other persons, retroactively as of the effective date and time of the record


             730      the statement corrects.
             731          Section 27. Section 16-16-205 is enacted to read:
             732          16-16-205. Liability for inaccurate information in filed record.
             733          If a record delivered to the division for filing under this chapter and filed by the division
             734      contains inaccurate information, a person that suffers a loss by reliance on the information may
             735      recover damages for the loss from a person that signed the record or caused another to sign it
             736      on the person's behalf and knew at the time the record was signed that the information was
             737      inaccurate.
             738          Section 28. Section 16-16-206 is enacted to read:
             739          16-16-206. Certificate of good standing or authorization.
             740          (1) The division, upon request and payment of the required fee, shall furnish any person
             741      that requests it a certificate of good standing for a limited cooperative association if the records
             742      filed in the office of the division show that the division has filed the association's articles of
             743      organization, that the association is in good standing, and that the division has not filed a
             744      statement of termination.
             745          (2) The division, upon request and payment of the required fee, shall furnish to any
             746      person that requests it a certificate of authority for a foreign cooperative if the records filed in
             747      the office of the division show that the division has filed the foreign cooperative's certificate of
             748      authority, has not revoked nor has reason to revoke the certificate of authority, and has not filed
             749      a notice of cancellation.
             750          (3) Subject to any exceptions stated in the certificate, a certificate of good standing or
             751      authority issued by the division establishes conclusively that the limited cooperative association
             752      or foreign cooperative is in good standing or is authorized to transact business in this state.
             753          Section 29. Section 16-16-207 is enacted to read:
             754          16-16-207. Annual report for division.
             755          (1) A limited cooperative association or foreign cooperative authorized to transact
             756      business in this state shall deliver to the division for filing an annual report that states:
             757          (a) the name of the association or foreign cooperative;


             758          (b) the street address and, if different, mailing address of the association's or foreign
             759      cooperative's designated office and the name of its agent for service of process at the designated
             760      office;
             761          (c) the street address and, if different, mailing address of the association's or foreign
             762      cooperative's principal office; and
             763          (d) in the case of a foreign cooperative, the state or other jurisdiction under whose law
             764      the foreign cooperative is formed and any alternative name adopted under Section 16-16-1405 .
             765          (2) Information in an annual report must be current as of the date the report is delivered
             766      to the division.
             767          (3) The first annual report must be delivered to the division between January 1 and
             768      April 1 of the year following the calendar year in which the limited cooperative association is
             769      formed or the foreign cooperative is authorized to transact business in this state. For
             770      subsequent years, an annual report must be delivered to the division during the month in which
             771      falls the anniversary of the limited cooperative association's organization or the foreign
             772      cooperative's authorization to transact business.
             773          (4) If an annual report does not contain the information required by Subsection (1), the
             774      division shall promptly notify the reporting limited cooperative association or foreign
             775      cooperative and return the report for correction. If the report is corrected to contain the
             776      information required by Subsection (1) and delivered to the division not later than 30 days after
             777      the date of the notice from the division, it is timely delivered.
             778          (5) If a filed annual report contains an address of the designated office, name of the
             779      agent for service of process, or address of the principal office which differs from the information
             780      shown in the records of the division immediately before the filing, the differing information in
             781      the annual report is considered a statement of change.
             782          (6) If a limited cooperative association fails to deliver an annual report under this
             783      section, the division may proceed under Section 16-16-1211 to dissolve the association
             784      administratively.
             785          (7) If a foreign cooperative fails to deliver an annual report under this section, the


             786      division may revoke the certificate of authority of the cooperative.
             787          Section 30. Section 16-16-208 is enacted to read:
             788          16-16-208. Filing fees.
             789          The filing fee for records filed under this part by the division shall be established by the
             790      division in accordance with Section 63-38-3.2 .
             791          Section 31. Section 16-16-301 is enacted to read:
             792     
Part 3. Formation and Initial Articles of Organization of Limited Cooperative

             793     
Association

             794          16-16-301. Organizers.
             795          A limited cooperative association must be organized by one or more organizers.
             796          Section 32. Section 16-16-302 is enacted to read:
             797          16-16-302. Formation of limited cooperative association -- Articles of
             798      organization.
             799          (1) To form a limited cooperative association, an organizer of the association must
             800      deliver articles of organization to the division for filing. The articles must state:
             801          (a) the name of the association;
             802          (b) the purposes for which the association is formed;
             803          (c) the street address and, if different, mailing address of the association's initial
             804      designated office and the name of the association's initial agent for service of process at the
             805      designated office;
             806          (d) the street address and, if different, mailing address of the initial principal office;
             807          (e) the name and street address and, if different, mailing address of each organizer; and
             808          (f) the term for which the association is to exist if other than perpetual.
             809          (2) Subject to Subsection 16-16-113 (1), articles of organization may contain any other
             810      provisions in addition to those required by Subsection (1).
             811          (3) A limited cooperative association is formed after articles of organization that
             812      substantially comply with Subsection (1) are delivered to the division, are filed, and become
             813      effective under Subsection 16-16-203 (3).


             814          (4) If articles of organization filed by the division state a delayed effective date, a
             815      limited cooperative association is not formed if, before the articles take effect, an organizer
             816      signs and delivers to the division for filing a statement of cancellation.
             817          Section 33. Section 16-16-303 is enacted to read:
             818          16-16-303. Organization of limited cooperative association.
             819          (1) After a limited cooperative association is formed:
             820          (a) if initial directors are named in the articles of organization, the initial directors shall
             821      hold an organizational meeting to adopt initial bylaws and carry on any other business necessary
             822      or proper to complete the organization of the association; or
             823          (b) if initial directors are not named in the articles of organization, the organizers shall
             824      designate the initial directors and call a meeting of the initial directors to adopt initial bylaws
             825      and carry on any other business necessary or proper to complete the organization of the
             826      association.
             827          (2) Unless the articles of organization otherwise provide, the initial directors may cause
             828      the limited cooperative association to accept members, including those necessary for the
             829      association to begin business.
             830          (3) Initial directors need not be members.
             831          (4) An initial director serves until a successor is elected and qualified at a members
             832      meeting or the director is removed, resigns, is adjudged incompetent, or dies.
             833          Section 34. Section 16-16-304 is enacted to read:
             834          16-16-304. Bylaws.
             835          (1) Bylaws must be in a record and, if not stated in the articles of organization, must
             836      include:
             837          (a) a statement of the capital structure of the limited cooperative association, including:
             838          (i) the classes or other types of members' interests and relative rights, preferences, and
             839      restrictions granted to or imposed upon each class or other type of member's interest; and
             840          (ii) the rights to share in profits or distributions of the association;
             841          (b) a statement of the method for admission of members;


             842          (c) a statement designating voting and other governance rights, including which
             843      members have voting power and any restriction on voting power;
             844          (d) a statement that a member's interest is transferable if it is to be transferable and a
             845      statement of the conditions upon which it may be transferred;
             846          (e) a statement concerning the manner in which profits and losses are allocated and
             847      distributions are made among patron members and, if investor members are authorized, the
             848      manner in which profits and losses are allocated and how distributions are made among investor
             849      members and between patron members and investor members;
             850          (f) a statement concerning:
             851          (i) whether persons that are not members but conduct business with the association may
             852      be permitted to share in allocations of profits and losses and receive distributions; and
             853          (ii) the manner in which profits and losses are allocated and distributions are made with
             854      respect to those persons; and
             855          (g) a statement of the number and terms of directors or the method by which the
             856      number and terms are determined.
             857          (2) Subject to Subsection 16-16-113 (3) and the articles of organization, bylaws may
             858      contain any other provision for managing and regulating the affairs of the association.
             859          (3) In addition to amendments permitted under Part 4, Amendment of Organic Rules of
             860      Limited Cooperative Association, the initial board of directors may amend the bylaws by a
             861      majority vote of the directors at any time before the admission of members.
             862          Section 35. Section 16-16-401 is enacted to read:
             863     
Part 4. Amendment of Organic Rules of Limited Cooperative Association

             864          16-16-401. Authority to amend organic rules.
             865          (1) A limited cooperative association may amend its organic rules under this part for
             866      any lawful purpose. In addition, the initial board of directors may amend the bylaws of an
             867      association under Section 16-16-304 .
             868          (2) Unless the organic rules otherwise provide, a member does not have a vested
             869      property right resulting from any provision in the organic rules, including a provision relating to


             870      the management, control, capital structure, distribution, entitlement, purpose, or duration of the
             871      limited cooperative association.
             872          Section 36. Section 16-16-402 is enacted to read:
             873          16-16-402. Notice and action on amendment of organic rules.
             874          (1) Except as provided in Subsections 16-16-401 (1) and 16-16-405 (6), the organic
             875      rules of a limited cooperative association may be amended only at a members meeting. An
             876      amendment may be proposed by either:
             877          (a) a majority of the board of directors, or a greater percentage if required by the
             878      organic rules; or
             879          (b) one or more petitions signed by at least 10% of the patron members or at least 10%
             880      of the investor members.
             881          (2) The board of directors shall call a members meeting to consider an amendment
             882      proposed pursuant to Subsection (1). The meeting must be held not later than 90 days
             883      following the proposal of the amendment by the board or receipt of a petition. The board must
             884      mail or otherwise transmit or deliver in a record to each member:
             885          (a) the proposed amendment, or a summary of the proposed amendment and a
             886      statement of the manner in which a copy of the amendment in a record may be reasonably
             887      obtained by a member;
             888          (b) a recommendation that the members approve the amendment, or if the board
             889      determines that because of conflict of interest or other special circumstances it should not make
             890      a favorable recommendation, the basis for that determination;
             891          (c) a statement of any condition of the board's submission of the amendment to the
             892      members; and
             893          (d) notice of the meeting at which the proposed amendment will be considered, which
             894      must be given in the same manner as notice for a special meeting of members.
             895          Section 37. Section 16-16-403 is enacted to read:
             896          16-16-403. Change to amendment of organic rules at meeting.
             897          (1) A substantive change to a proposed amendment of the organic rules may not be


             898      made at the members meeting at which a vote on the amendment occurs.
             899          (2) A nonsubstantive change to a proposed amendment of the organic rules may be
             900      made at the members meeting at which the vote on the amendment occurs and need not be
             901      separately voted upon by the board of directors.
             902          (3) A vote to adopt a nonsubstantive change to a proposed amendment to the organic
             903      rules must be by the same percentage of votes required to pass a proposed amendment.
             904          Section 38. Section 16-16-404 is enacted to read:
             905          16-16-404. Voting by district, class, or voting group.
             906          (1) This section applies if the organic rules provide for voting by district or class, or if
             907      there is one or more identifiable voting groups that a proposed amendment to the organic rules
             908      would affect differently from other members with respect to matters identified in Subsections
             909      16-16-405 (5)(a) through (e). Approval of the amendment requires the same percentage of
             910      votes of the members of that district, class, or voting group required in Sections 16-16-405 and
             911      16-16-514 .
             912          (2) If a proposed amendment to the organic rules would affect members in two or more
             913      districts or classes entitled to vote separately under Subsection (1) in the same or a substantially
             914      similar way, the districts or classes affected must vote as a single voting group unless the
             915      organic rules otherwise provide for separate voting.
             916          Section 39. Section 16-16-405 is enacted to read:
             917          16-16-405. Approval of amendment.
             918          (1) Subject to Section 16-16-404 and Subsections (3) and (4), an amendment to the
             919      articles of organization must be approved by:
             920          (a) at least two-thirds of the voting power of members present at a members meeting
             921      called under Section 16-16-402 ; and
             922          (b) if the limited cooperative association has investor members, at least a majority of the
             923      votes cast by patron members, unless the organic rules require a greater percentage vote by
             924      patron members.
             925          (2) Subject to Section 16-16-404 and Subsections (3), (4), (5), and (6), an amendment


             926      to the bylaws must be approved by:
             927          (a) at least a majority vote of the voting power of all members present at a members
             928      meeting called under Section 16-16-402 , unless the organic rules require a greater percentage;
             929      and
             930          (b) if a limited cooperative association has investor members, a majority of the votes
             931      cast by patron members, unless the organic rules require a larger affirmative vote by patron
             932      members.
             933          (3) The organic rules may require that the percentage of votes under Subsection (1)(a)
             934      or (2)(a) be:
             935          (a) a different percentage that is not less than a majority of members voting at the
             936      meeting;
             937          (b) measured against the voting power of all members; or
             938          (c) a combination of Subsections (3)(a) and (b).
             939          (4) Consent in a record by a member must be delivered to a limited cooperative
             940      association before delivery of an amendment to the articles of organization or restated articles
             941      of organization for filing pursuant to Section 16-16-407 , if as a result of the amendment the
             942      member will have:
             943          (a) personal liability for an obligation of the association; or
             944          (b) an obligation or liability for an additional contribution.
             945          (5) The vote required to amend bylaws must satisfy the requirements of Subsection (1)
             946      if the proposed amendment modifies:
             947          (a) the equity capital structure of the limited cooperative association, including the
             948      rights of the association's members to share in profits or distributions, or the relative rights,
             949      preferences, and restrictions granted to or imposed upon one or more districts, classes, or
             950      voting groups of similarly situated members;
             951          (b) the transferability of a member's interest;
             952          (c) the manner or method of allocation of profits or losses among members;
             953          (d) the quorum for a meeting and the rights of voting and governance; or


             954          (e) unless otherwise provided in the organic rules, the terms for admission of new
             955      members.
             956          (6) Except for the matters described in Subsection (5), the articles of organization may
             957      delegate amendment of all or a part of the bylaws to the board of directors without requiring
             958      member approval.
             959          (7) If the articles of organization delegate amendment of bylaws to the board of
             960      directors, the board shall provide a description of any amendment of the bylaws made by the
             961      board to the members in a record not later than 30 days after the amendment, but the
             962      description may be provided at the next annual members meeting if the meeting is held within
             963      the 30-day period.
             964          Section 40. Section 16-16-406 is enacted to read:
             965          16-16-406. Restated articles of organization.
             966          A limited cooperative association, by the affirmative vote of a majority of the board of
             967      directors taken at a meeting for which the purpose is stated in the notice of the meeting, may
             968      adopt restated articles of organization that contain the original articles as previously amended.
             969      Restated articles may contain amendments if the restated articles are adopted in the same
             970      manner and with the same vote as required for amendments to the articles under Subsection
             971      16-16-405 (1). Upon filing, restated articles supersede the existing articles and all amendments.
             972          Section 41. Section 16-16-407 is enacted to read:
             973          16-16-407. Amendment or restatement of articles of organization--Filing.
             974          (1) To amend its articles of organization, a limited cooperative association must deliver
             975      to the division for filing an amendment of the articles, or restated articles of organization or
             976      articles of conversion or merger pursuant to Part 16, Conversion and Merger, which contain
             977      one or more amendments of the articles of organization, stating:
             978          (a) the name of the association;
             979          (b) the date of filing of the association's initial articles; and
             980          (c) the changes the amendment makes to the articles as most recently amended or
             981      restated.


             982          (2) Before the beginning of the initial meeting of the board of directors, an organizer
             983      who knows that information in the filed articles of organization was inaccurate when the articles
             984      were filed or has become inaccurate due to changed circumstances shall promptly:
             985          (a) cause the articles to be amended; or
             986          (b) if appropriate, deliver an amendment to the division for filing pursuant to Section
             987      16-16-203 .
             988          (3) If restated articles of organization are adopted, the restated articles may be delivered
             989      to the division for filing in the same manner as an amendment.
             990          (4) Upon filing, an amendment of the articles of organization or other record containing
             991      an amendment of the articles which has been properly adopted by the members is effective as
             992      provided in Subsection 16-16-203 (3).
             993          Section 42. Section 16-16-501 is enacted to read:
             994     
Part 5. Members

             995          16-16-501. Members.
             996          To begin business, a limited cooperative association must have at least two patron
             997      members unless the sole member is a cooperative.
             998          Section 43. Section 16-16-502 is enacted to read:
             999          16-16-502. Becoming a member.
             1000          A person becomes a member:
             1001          (1) as provided in the organic rules;
             1002          (2) as the result of a merger or conversion under Part 16, Conversion and Merger; or
             1003          (3) with the consent of all the members.
             1004          Section 44. Section 16-16-503 is enacted to read:
             1005          16-16-503. No power as member to bind association.
             1006          A member, solely by reason of being a member, may not act for or bind the limited
             1007      cooperative association.
             1008          Section 45. Section 16-16-504 is enacted to read:
             1009          16-16-504. No liability as member for association's obligations.


             1010          Unless the articles of organization otherwise provide, a debt, obligation, or other liability
             1011      of a limited cooperative association is solely that of the association and is not the debt,
             1012      obligation, or liability of a member solely by reason of being a member.
             1013          Section 46. Section 16-16-505 is enacted to read:
             1014          16-16-505. Right of member and former member to information.
             1015          (1) Not later than ten business days after receipt of a demand made in a record, a
             1016      limited cooperative association shall permit a member to obtain, inspect, and copy in the
             1017      association's principal office required information listed in Subsections 16-16-114 (1)(a) through
             1018      (h) during regular business hours. A member need not have any particular purpose for seeking
             1019      the information. The association is not required to provide the same information listed in
             1020      Subsections 16-16-114 (1)(b) through (h) to the same member more than once during a
             1021      six-month period.
             1022          (2) On demand made in a record received by the limited cooperative association, a
             1023      member may obtain, inspect, and copy in the association's principal office required information
             1024      listed in Subsections 16-16-114 (1)(i), (j), (l), (m), (p), and (r) during regular business hours, if:
             1025          (a) the member seeks the information in good faith and for a proper purpose reasonably
             1026      related to the member's interest;
             1027          (b) the demand includes a description with reasonable particularity of the information
             1028      sought and the purpose for seeking the information;
             1029          (c) the information sought is directly connected to the member's purpose; and
             1030          (d) the demand is reasonable.
             1031          (3) Not later than ten business days after receipt of a demand pursuant to Subsection
             1032      (2), a limited cooperative association shall provide, in a record, the following information to the
             1033      member that made the demand:
             1034          (a) if the association agrees to provide the demanded information:
             1035          (i) what information the association will provide in response to the demand; and
             1036          (ii) a reasonable time and place at which the association will provide the information; or
             1037          (b) if the association declines to provide some or all of the demanded information, the


             1038      association's reasons for declining.
             1039          (4) A person dissociated as a member may obtain, inspect, and copy information
             1040      available to a member under Subsection (1) or (2) by delivering a demand in a record to the
             1041      limited cooperative association in the same manner and subject to the same conditions
             1042      applicable to a member under Subsection (2) if:
             1043          (a) the information pertains to the period during which the person was a member in the
             1044      association; and
             1045          (b) the person seeks the information in good faith.
             1046          (5) A limited cooperative association shall respond to a demand made pursuant to
             1047      Subsection (4) in the manner provided in Subsection (3).
             1048          (6) Not later than ten business days after receipt by a limited cooperative association of
             1049      a demand made by a member in a record, but not more often than once in a six-month period,
             1050      the association shall deliver to the member a record stating the information with respect to the
             1051      member required by Subsection 16-16-114 (1)(q).
             1052          (7) A limited cooperative association may impose reasonable restrictions, including
             1053      nondisclosure restrictions, on the use of information obtained under this section. In a dispute
             1054      concerning the reasonableness of a restriction under this Subsection (7), the association has the
             1055      burden of proving reasonableness.
             1056          (8) A limited cooperative association may charge a person that makes a demand under
             1057      this section reasonable costs of copying, limited to the costs of labor and material.
             1058          (9) A person that may obtain information under this section may obtain the information
             1059      through an attorney or other agent. A restriction imposed on the person under Subsection (7)
             1060      or by the organic rules applies to the attorney or other agent.
             1061          (10) The rights stated in this section do not extend to a person as transferee.
             1062          (11) The organic rules may require a limited cooperative association to provide more
             1063      information than required by this section and may establish conditions and procedures for
             1064      providing the information.
             1065          Section 47. Section 16-16-506 is enacted to read:


             1066          16-16-506. Annual meeting of members.
             1067          (1) Members shall meet annually at a time provided in the organic rules or set by the
             1068      board of directors not inconsistent with the organic rules.
             1069          (2) An annual members meeting may be held inside or outside this state at the place
             1070      stated in the organic rules or selected by the board of directors not inconsistent with the organic
             1071      rules.
             1072          (3) Unless the organic rules otherwise provide, members may attend or conduct an
             1073      annual members meeting through any means of communication if all members attending the
             1074      meeting can communicate with each other during the meeting.
             1075          (4) The board of directors shall report, or cause to be reported, at the association's
             1076      annual members meeting the association's business and financial condition as of the close of the
             1077      most recent fiscal year.
             1078          (5) Unless the organic rules otherwise provide, the board of directors shall designate the
             1079      presiding officer of the association's annual members meeting.
             1080          (6) Failure to hold an annual members meeting does not affect the validity of any action
             1081      by the limited cooperative association.
             1082          Section 48. Section 16-16-507 is enacted to read:
             1083          16-16-507. Special meeting of members.
             1084          (1) A special meeting of members may be called only:
             1085          (a) as provided in the organic rules;
             1086          (b) by a majority vote of the board of directors on a proposal stating the purpose of the
             1087      meeting;
             1088          (c) by demand in a record signed by members holding at least 20% of the voting power
             1089      of the persons in any district or class entitled to vote on the matter that is the purpose of the
             1090      meeting stated in the demand; or
             1091          (d) by demand in a record signed by members holding at least 10% of the total voting
             1092      power of all the persons entitled to vote on the matter that is the purpose of the meeting stated
             1093      in the demand.


             1094          (2) A demand under Subsection (1)(c) or (d) must be submitted to the officer of the
             1095      limited cooperative association charged with keeping its records.
             1096          (3) Any voting member may withdraw its demand under Subsection (1)(c) or (d) before
             1097      receipt by the limited cooperative association of demands sufficient to require a special meeting
             1098      of members.
             1099          (4) A special meeting of members may be held inside or outside this state at the place
             1100      stated in the organic rules or selected by the board of directors not inconsistent with the organic
             1101      rules.
             1102          (5) Unless the organic rules otherwise provide, members may attend or conduct a
             1103      special meeting of members through the use of any means of communication if all members
             1104      attending the meeting can communicate with each other during the meeting.
             1105          (6) Only business within the purpose or purposes stated in the notice of a special
             1106      meeting of members may be conducted at the meeting.
             1107          (7) Unless the organic rules otherwise provide, the presiding officer of a special meeting
             1108      of members shall be designated by the board of directors.
             1109          Section 49. Section 16-16-508 is enacted to read:
             1110          16-16-508. Notice of members meeting.
             1111          (1) A limited cooperative association shall notify each member of the time, date, and
             1112      place of a members meeting at least 15 and not more than 60 days before the meeting.
             1113          (2) Unless the articles of organization otherwise provide, notice of an annual members
             1114      meeting need not include any purpose of the meeting.
             1115          (3) Notice of a special meeting of members must include each purpose of the meeting as
             1116      contained in the demand under Subsection 16-16-507 (1)(c) or (d) or as voted upon by the
             1117      board of directors under Subsection 16-16-507 (1)(b).
             1118          (4) Notice of a members meeting must be given in a record unless oral notice is
             1119      reasonable under the circumstances.
             1120          Section 50. Section 16-16-509 is enacted to read:
             1121          16-16-509. Waiver of members meeting notice.


             1122          (1) A member may waive notice of a members meeting before, during, or after the
             1123      meeting.
             1124          (2) A member's participation in a members meeting is a waiver of notice of that meeting
             1125      unless the member objects to the meeting at the beginning of the meeting or promptly upon the
             1126      member's arrival at the meeting and does not thereafter vote for or assent to action taken at the
             1127      meeting.
             1128          Section 51. Section 16-16-510 is enacted to read:
             1129          16-16-510. Quorum of members.
             1130          Unless the organic rules otherwise require a greater number of members or percentage
             1131      of the voting power, the voting member or members present at a members meeting constitute a
             1132      quorum.
             1133          Section 52. Section 16-16-511 is enacted to read:
             1134          16-16-511. Voting by patron members.
             1135          Except as provided by Subsection 16-16-512 (1), each patron member has one vote.
             1136      The organic rules may allocate voting power among patron members as provided in Subsection
             1137      16-16-512 (1).
             1138          Section 53. Section 16-16-512 is enacted to read:
             1139          16-16-512. Determination of voting power of patron member.
             1140          (1) The organic rules may allocate voting power among patron members on the basis of
             1141      one or a combination of the following:
             1142          (a) one member, one vote;
             1143          (b) use or patronage;
             1144          (c) equity; or
             1145          (d) if a patron member is a cooperative, the number of its patron members.
             1146          (2) The organic rules may provide for the allocation of patron member voting power by
             1147      districts or class, or any combination thereof.
             1148          Section 54. Section 16-16-513 is enacted to read:
             1149          16-16-513. Voting by investor members.


             1150          If the organic rules provide for investor members, each investor member has one vote,
             1151      unless the organic rules otherwise provide. The organic rules may provide for the allocation of
             1152      investor member voting power by class, classes, or any combination of classes.
             1153          Section 55. Section 16-16-514 is enacted to read:
             1154          16-16-514. Voting requirements for members.
             1155          (1) If a limited cooperative association has both patron and investor members, the
             1156      following rules apply:
             1157          (a) the total voting power of all patron members may not be less than a majority of the
             1158      entire voting power entitled to vote; and
             1159          (b) action on any matter is approved only upon the affirmative vote of at least a
             1160      majority of:
             1161          (i) all members voting at the meeting unless more than a majority is required by this
             1162      chapter or the organic rules; and
             1163          (ii) votes cast by patron members unless the organic rules require a larger affirmative
             1164      vote by patron members.
             1165          (2) The organic rules may provide for the percentage of the affirmative votes that must
             1166      be cast by investor members to approve the matter.
             1167          Section 56. Section 16-16-515 is enacted to read:
             1168          16-16-515. Manner of voting.
             1169          (1) Unless the organic rules otherwise provide, voting by a proxy at a members meeting
             1170      is prohibited. This Subsection (1) does not prohibit delegate voting based on district or class.
             1171          (2) If voting by a proxy is permitted, a patron member may appoint only another patron
             1172      member as a proxy and, if investor members are permitted, an investor member may appoint
             1173      only another investor member as a proxy.
             1174          (3) The organic rules may provide for the manner of and provisions governing the
             1175      appointment of a proxy.
             1176          (4) The organic rules may provide for voting on any question by ballot delivered by mail
             1177      or voting by other means on questions that are subject to vote by members.


             1178          Section 57. Section 16-16-516 is enacted to read:
             1179          16-16-516. Action without a meeting.
             1180          (1) Unless the organic rules require that action be taken only at a members meeting, any
             1181      action that may be taken by the members may be taken without a meeting if each member
             1182      entitled to vote on the action consents in a record to the action.
             1183          (2) Consent under Subsection (1) may be withdrawn by a member in a record at any
             1184      time before the limited cooperative association receives a consent from each member entitled to
             1185      vote.
             1186          (3) Consent to any action may specify the effective date or time of the action.
             1187          Section 58. Section 16-16-517 is enacted to read:
             1188          16-16-517. Districts and delegates -- Classes of members.
             1189          (1) The organic rules may provide for the formation of geographic districts of patron
             1190      members and:
             1191          (a) for the conduct of patron member meetings by districts and the election of directors
             1192      at the meetings; or
             1193          (b) that districts may elect district delegates to represent and vote for the district at
             1194      members meetings.
             1195          (2) A delegate elected under Subsection (1)(b) has one vote unless voting power is
             1196      otherwise allocated by the organic rules.
             1197          (3) The organic rules may provide for the establishment of classes of members, for the
             1198      preferences, rights, and limitations of the classes, and:
             1199          (a) for the conduct of members meetings by classes and the election of directors at the
             1200      meetings; or
             1201          (b) that classes may elect class delegates to represent and vote for the class in members
             1202      meetings.
             1203          (4) A delegate elected under Subsection (3)(b) has one vote unless voting power is
             1204      otherwise allocated by the organic rules.
             1205          Section 59. Section 16-16-601 is enacted to read:


             1206     
Part 6. Member's Interest in Limited Cooperative Association

             1207          16-16-601. Member's interest.
             1208          A member's interest:
             1209          (1) is personal property;
             1210          (2) consists of:
             1211          (a) governance rights;
             1212          (b) financial rights; and
             1213          (c) the right or obligation, if any, to do business with the limited cooperative
             1214      association; and
             1215          (3) may be in certificated or uncertificated form.
             1216          Section 60. Section 16-16-602 is enacted to read:
             1217          16-16-602. Patron and investor members' interests.
             1218          (1) Unless the organic rules establish investor members' interests, a member's interest is
             1219      a patron member's interest.
             1220          (2) Unless the organic rules otherwise provide, if a limited cooperative association has
             1221      investor members, while a person is a member of the association, the person:
             1222          (a) if admitted as a patron member, remains a patron member;
             1223          (b) if admitted as an investor member, remains an investor member; and
             1224          (c) if admitted as a patron member and investor member, remains a patron and investor
             1225      member if not dissociated in one of the capacities.
             1226          Section 61. Section 16-16-603 is enacted to read:
             1227          16-16-603. Transferability of member's interest.
             1228          (1) The provisions of this chapter relating to the transferability of a member's interest
             1229      are subject to Title 70A, Uniform Commercial Code.
             1230          (2) Unless the organic rules otherwise provide, a member's interest other than financial
             1231      rights is not transferable.
             1232          (3) Unless a transfer is restricted or prohibited by the organic rules, a member may
             1233      transfer the member's financial rights in the limited cooperative association.


             1234          (4) The terms of any restriction on transferability of financial rights must be:
             1235          (a) set forth in the organic rules and the member records of the association; and
             1236          (b) conspicuously noted on any certificates evidencing a member's interest.
             1237          (5) A transferee of a member's financial rights, to the extent the rights are transferred,
             1238      has the right to share in the allocation of profits or losses and to receive the distributions to the
             1239      member transferring the interest to the same extent as the transferring member.
             1240          (6) A transferee of a member's financial rights does not become a member upon transfer
             1241      of the rights unless the transferee is admitted as a member by the limited cooperative
             1242      association.
             1243          (7) A limited cooperative association need not give effect to a transfer under this
             1244      section until the association has notice of the transfer.
             1245          (8) A transfer of a member's financial rights in violation of a restriction on transfer
             1246      contained in the organic rules is ineffective as to a person having notice of the restriction at the
             1247      time of transfer.
             1248          Section 62. Section 16-16-604 is enacted to read:
             1249          16-16-604. Security interest and set-off.
             1250          (1) A member or transferee may create an enforceable security interest in its financial
             1251      rights in a limited cooperative association.
             1252          (2) Unless the organic rules otherwise provide, a member may not create an enforceable
             1253      security interest in the member's governance rights in a limited cooperative association.
             1254          (3) The organic rules may provide that a limited cooperative association has a security
             1255      interest in the financial rights of a member to secure payment of any indebtedness or other
             1256      obligation of the member to the association. A security interest provided for in the organic rules
             1257      is enforceable under, and governed by, Title 70A, Chapter 9a, Uniform Commercial Code -
             1258      Secured Transactions.
             1259          (4) Unless the organic rules otherwise provide, a member may not compel the limited
             1260      cooperative association to offset financial rights against any indebtedness or obligation owed to
             1261      the association.


             1262          Section 63. Section 16-16-605 is enacted to read:
             1263          16-16-605. Charging orders for judgment creditor of member or transferee.
             1264          (1) On application by a judgment creditor of a member or transferee, a court may enter
             1265      a charging order against the financial rights of the judgment debtor for the unsatisfied amount of
             1266      the judgment. A charging order issued under this Subsection (1) constitutes a lien on the
             1267      judgment debtor's financial rights and requires the limited cooperative association to pay over to
             1268      the creditor or receiver, to the extent necessary to satisfy the judgment, any distribution that
             1269      would otherwise be paid to the judgment debtor.
             1270          (2) To the extent necessary to effectuate the collection of distributions pursuant to a
             1271      charging order under Subsection (1), the court may:
             1272          (a) appoint a receiver of the share of the distributions due or to become due to the
             1273      judgment debtor under the judgment debtor's financial rights, with the power to make all
             1274      inquiries the judgment debtor might have made; and
             1275          (b) make all other orders that the circumstances of the case may require to give effect to
             1276      the charging order.
             1277          (3) Upon a showing that distributions under a charging order will not pay the judgment
             1278      debt within a reasonable time, the court may foreclose the lien and order the sale of the financial
             1279      rights. The purchaser at the foreclosure sale obtains only the financial rights that are subject to
             1280      the charging order, does not thereby become a member, and is subject to Section 16-16-603 .
             1281          (4) At any time before a sale pursuant to a foreclosure, a member or transferee whose
             1282      financial rights are subject to a charging order under Subsection (1) may extinguish the charging
             1283      order by satisfying the judgment and filing a certified copy of the satisfaction with the court that
             1284      issued the charging order.
             1285          (5) At any time before sale pursuant to a foreclosure, the limited cooperative
             1286      association or one or more members whose financial rights are not subject to the charging order
             1287      may pay to the judgment creditor the full amount due under the judgment and succeed to the
             1288      rights of the judgment creditor, including the charging order. Unless the organic rules
             1289      otherwise provide, the association may act under this Subsection (5) only with the consent of all


             1290      members whose financial rights are not subject to the charging order.
             1291          (6) This chapter does not deprive any member or transferee of the benefit of any
             1292      exemption laws applicable to the member's or transferee's financial rights.
             1293          (7) This section provides the exclusive remedy by which a judgment creditor of a
             1294      member or transferee may satisfy the judgment from the member's or transferee's financial
             1295      rights.
             1296          Section 64. Section 16-16-701 is enacted to read:
             1297     
Part 7. Marketing Contracts

             1298          16-16-701. Authority.
             1299          In this part, "marketing contract" means a contract between a limited cooperative
             1300      association and another person, that need not be a patron member:
             1301          (1) requiring the other person to sell, or deliver for sale or marketing on the person's
             1302      behalf, a specified part of the person's products, commodities, or goods exclusively to or
             1303      through the association or any facilities furnished by the association; or
             1304          (2) authorizing the association to act for the person in any manner with respect to the
             1305      products, commodities, or goods.
             1306          Section 65. Section 16-16-702 is enacted to read:
             1307          16-16-702. Marketing contracts.
             1308          (1) If a marketing contract provides for the sale of products, commodities, or goods to
             1309      a limited cooperative association, the sale transfers title to the association upon delivery or at
             1310      any other specific time expressly provided by the contract.
             1311          (2) A marketing contract may:
             1312          (a) authorize a limited cooperative association to create an enforceable security interest
             1313      in the products, commodities, or goods delivered; and
             1314          (b) allow the association to sell the products, commodities, or goods delivered and pay
             1315      the sales price on a pooled or other basis after deducting selling costs, processing costs,
             1316      overhead, expenses, and other charges.
             1317          (3) Some or all of the provisions of a marketing contract between a patron member and


             1318      a limited cooperative association may be contained in the organic rules.
             1319          Section 66. Section 16-16-703 is enacted to read:
             1320          16-16-703. Duration of marketing contract.
             1321          The initial duration of a marketing contract may not exceed ten years, but the contract
             1322      may be self-renewing for additional periods not exceeding five years each. Unless the contract
             1323      provides for another manner or time for termination, either party may terminate the contract by
             1324      giving notice in a record at least 90 days before the end of the current term.
             1325          Section 67. Section 16-16-704 is enacted to read:
             1326          16-16-704. Remedies for breach of contract.
             1327          (1) Damages to be paid to a limited cooperative association for breach or anticipatory
             1328      repudiation of a marketing contract may be liquidated, but only at an amount or under a formula
             1329      that is reasonable in light of the actual or anticipated harm caused by the breach or repudiation.
             1330      A provision that so provides is not a penalty.
             1331          (2) Upon a breach of a marketing contract, whether by anticipatory repudiation or
             1332      otherwise, a limited cooperative association may seek:
             1333          (a) an injunction to prevent further breach; and
             1334          (b) specific performance.
             1335          (3) The remedies in this section are in addition to any other remedies available to an
             1336      association under law other than this chapter.
             1337          Section 68. Section 16-16-801 is enacted to read:
             1338     
Part 8. Directors and Officers

             1339          16-16-801. Board of directors.
             1340          (1) A limited cooperative association must have a board of directors of at least three
             1341      individuals, unless the association has fewer than three members. If the association has fewer
             1342      than three members, the number of directors may not be fewer than the number of members.
             1343          (2) The affairs of a limited cooperative association must be managed by, or under the
             1344      direction of, the board of directors. The board may adopt policies and procedures that do not
             1345      conflict with the organic rules or this chapter.


             1346          (3) An individual is not an agent for a limited cooperative association solely by being a
             1347      director.
             1348          Section 69. Section 16-16-802 is enacted to read:
             1349          16-16-802. No liability as director for limited cooperative association's obligations.
             1350          A debt, obligation, or other liability of a limited cooperative association is solely that of
             1351      the association and is not a debt, obligation, or liability of a director solely by reason of being a
             1352      director. An individual is not personally liable, directly or indirectly, for an obligation of an
             1353      association solely by reason of being a director.
             1354          Section 70. Section 16-16-803 is enacted to read:
             1355          16-16-803. Qualifications of directors.
             1356          (1) Unless the organic rules otherwise provide, and subject to Subsection (3), each
             1357      director of a limited cooperative association must be an individual who is a member of the
             1358      association or an individual who is designated by a member that is not an individual for
             1359      purposes of qualifying and serving as a director. Initial directors need not be members.
             1360          (2) Unless the organic rules otherwise provide, a director may be an officer or employee
             1361      of the limited cooperative association.
             1362          (3) If the organic rules provide for nonmember directors, the number of nonmember
             1363      directors may not exceed:
             1364          (a) one, if there are two through four directors;
             1365          (b) two, if there are five through eight directors; or
             1366          (c) 1/3 of the total number of directors if there are at least nine directors.
             1367          (4) The organic rules may provide qualifications for directors in addition to those in this
             1368      section.
             1369          Section 71. Section 16-16-804 is enacted to read:
             1370          16-16-804. Election of directors and composition of board.
             1371          (1) Unless the organic rules require a greater number:
             1372          (a) the number of directors that must be patron members may not be fewer than:
             1373          (i) one, if there are two or three directors;


             1374          (ii) two, if there are four or five directors;
             1375          (iii) three, if there are six through eight directors; or
             1376          (iv) 1/3 of the directors if there are at least nine directors; and
             1377          (b) a majority of the board of directors must be elected exclusively by patron members.
             1378          (2) Unless the organic rules otherwise provide, if a limited cooperative association has
             1379      investor members, the directors who are not elected exclusively by patron members are elected
             1380      by the investor members.
             1381          (3) Subject to Subsection (1), the organic rules may provide for the election of all or a
             1382      specified number of directors by one or more districts or classes of members.
             1383          (4) Subject to Subsection (1), the organic rules may provide for the nomination or
             1384      election of directors by districts or classes, directly or by district delegates.
             1385          (5) If a class of members consists of a single member, the organic rules may provide for
             1386      the member to appoint a director or directors.
             1387          (6) Unless the organic rules otherwise provide, cumulative voting for directors is
             1388      prohibited.
             1389          (7) Except as otherwise provided by the organic rules, Subsection (5), or Sections
             1390      16-16-303 , 16-16-516 , 16-16-517 , and 16-16-809 , member directors must be elected at an
             1391      annual members meeting.
             1392          Section 72. Section 16-16-805 is enacted to read:
             1393          16-16-805. Term of director.
             1394          (1) Unless the organic rules otherwise provide, and subject to Subsections (3) and (4)
             1395      and Subsection 16-16-303 (3), the term of a director expires at the annual members meeting
             1396      following the director's election or appointment. The term of a director may not exceed three
             1397      years.
             1398          (2) Unless the organic rules otherwise provide, a director may be reelected.
             1399          (3) Except as otherwise provided in Subsection (4), a director continues to serve until a
             1400      successor director is elected or appointed and qualifies or the director is removed, resigns, is
             1401      adjudged incompetent, or dies.


             1402          (4) Unless the organic rules otherwise provide, a director does not serve the remainder
             1403      of the director's term if the director ceases to qualify to be a director.
             1404          Section 73. Section 16-16-806 is enacted to read:
             1405          16-16-806. Resignation of director.
             1406          A director may resign at any time by giving notice in a record to the limited cooperative
             1407      association. Unless the notice states a later effective date, a resignation is effective when the
             1408      notice is received by the association.
             1409          Section 74. Section 16-16-807 is enacted to read:
             1410          16-16-807. Removal of director.
             1411          Unless the organic rules otherwise provide, the following rules apply:
             1412          (1) Members may remove a director with or without cause.
             1413          (2) A member or members holding at least 10% of the total voting power entitled to be
             1414      voted in the election of a director may demand removal of the director by one or more signed
             1415      petitions submitted to the officer of the limited cooperative association charged with keeping its
             1416      records.
             1417          (3) Upon receipt of a petition for removal of a director, an officer of the association or
             1418      the board of directors shall:
             1419          (a) call a special meeting of members to be held not later than 90 days after receipt of
             1420      the petition by the association; and
             1421          (b) mail or otherwise transmit or deliver in a record to the members entitled to vote on
             1422      the removal, and to the director to be removed, notice of the meeting which complies with
             1423      Section 16-16-508 .
             1424          (4) A director is removed if the votes in favor of removal are equal to or greater than
             1425      the votes required to elect the director.
             1426          Section 75. Section 16-16-808 is enacted to read:
             1427          16-16-808. Suspension of director by board.
             1428          (1) A board of directors may suspend a director if, considering the director's course of
             1429      conduct and the inadequacy of other available remedies, immediate suspension is necessary for


             1430      the best interests of the association and the director is engaging, or has engaged, in:
             1431          (a) fraudulent conduct with respect to the association or its members;
             1432          (b) gross abuse of the position of director;
             1433          (c) intentional or reckless infliction of harm on the association; or
             1434          (d) any other behavior, act, or omission as provided by the organic rules.
             1435          (2) A suspension under Subsection (1) is effective for 30 days unless the board of
             1436      directors calls and gives notice of a special meeting of members for removal of the director
             1437      before the end of the 30-day period in which case the suspension is effective until adjournment
             1438      of the meeting or the director is removed.
             1439          Section 76. Section 16-16-809 is enacted to read:
             1440          16-16-809. Vacancy on board.
             1441          (1) Unless the organic rules otherwise provide, a vacancy on the board of directors
             1442      must be filled:
             1443          (a) within a reasonable time by majority vote of the remaining directors until the next
             1444      annual members meeting or a special meeting of members called to fill the vacancy; and
             1445          (b) for the unexpired term by members at the next annual members meeting or a special
             1446      meeting of members called to fill the vacancy.
             1447          (2) Unless the organic rules otherwise provide, if a vacating director was elected or
             1448      appointed by a class of members or a district:
             1449          (a) the new director must be of that class or district; and
             1450          (b) the selection of the director for the unexpired term must be conducted in the same
             1451      manner as would the selection for that position without a vacancy.
             1452          (3) If a member appointed a vacating director, the organic rules may provide for that
             1453      member to appoint a director to fill the vacancy.
             1454          Section 77. Section 16-16-810 is enacted to read:
             1455          16-16-810. Remuneration of directors.
             1456          Unless the organic rules otherwise provide, the board of directors may set the
             1457      remuneration of directors and of nondirector committee members appointed under Subsection


             1458      16-16-817 (1).
             1459          Section 78. Section 16-16-811 is enacted to read:
             1460          16-16-811. Meetings.
             1461          (1) A board of directors shall meet at least annually and may hold meetings inside or
             1462      outside this state.
             1463          (2) Unless the organic rules otherwise provide, a board of directors may permit
             1464      directors to attend or conduct board meetings through the use of any means of communication,
             1465      if all directors attending the meeting can communicate with each other during the meeting.
             1466          Section 79. Section 16-16-812 is enacted to read:
             1467          16-16-812. Action without meeting.
             1468          (1) Unless prohibited by the organic rules, any action that may be taken by a board of
             1469      directors may be taken without a meeting if each director consents in a record to the action.
             1470          (2) Consent under Subsection (1) may be withdrawn by a director in a record at any
             1471      time before the limited cooperative association receives consent from all directors.
             1472          (3) A record of consent for any action under Subsection (1) may specify the effective
             1473      date or time of the action.
             1474          Section 80. Section 16-16-813 is enacted to read:
             1475          16-16-813. Meetings and notice.
             1476          (1) Unless the organic rules otherwise provide, a board of directors may establish a
             1477      time, date, and place for regular board meetings, and notice of the time, date, place, or purpose
             1478      of those meetings is not required.
             1479          (2) Unless the organic rules otherwise provide, notice of the time, date, and place of a
             1480      special meeting of a board of directors must be given to all directors at least three days before
             1481      the meeting, the notice must contain a statement of the purpose of the meeting, and the meeting
             1482      is limited to the matters contained in the statement.
             1483          Section 81. Section 16-16-814 is enacted to read:
             1484          16-16-814. Waiver of notice of meeting.
             1485          (1) Unless the organic rules otherwise provide, a director may waive any required


             1486      notice of a meeting of the board of directors in a record before, during, or after the meeting.
             1487          (2) Unless the organic rules otherwise provide, a director's participation in a meeting is
             1488      a waiver of notice of that meeting unless:
             1489          (a) the director objects to the meeting at the beginning of the meeting or promptly upon
             1490      the director's arrival at the meeting and does not thereafter vote in favor of or otherwise assent
             1491      to the action taken at the meeting; or
             1492          (b) the director promptly objects upon the introduction of any matter for which notice
             1493      under Section 16-16-813 has not been given and does not thereafter vote in favor of or
             1494      otherwise assent to the action taken on the matter.
             1495          Section 82. Section 16-16-815 is enacted to read:
             1496          16-16-815. Quorum.
             1497          (1) Unless the articles of organization provide for a greater number, a majority of the
             1498      total number of directors specified by the organic rules constitutes a quorum for a meeting of
             1499      the directors.
             1500          (2) If a quorum of the board of directors is present at the beginning of a meeting, any
             1501      action taken by the directors present is valid even if withdrawal of directors originally present
             1502      results in the number of directors being fewer than the number required for a quorum.
             1503          (3) A director present at a meeting but objecting to notice under Subsection
             1504      16-16-814 (2)(a) or (b) does not count toward a quorum.
             1505          Section 83. Section 16-16-816 is enacted to read:
             1506          16-16-816. Voting.
             1507          (1) Each director shall have one vote for purposes of decisions made by the board of
             1508      directors.
             1509          (2) Unless the organic rules otherwise provide, the affirmative vote of a majority of
             1510      directors present at a meeting is required for action by the board of directors.
             1511          Section 84. Section 16-16-817 is enacted to read:
             1512          16-16-817. Committees.
             1513          (1) Unless the organic rules otherwise provide, a board of directors may create one or


             1514      more committees and appoint one or more individuals to serve on a committee.
             1515          (2) Unless the organic rules otherwise provide, an individual appointed to serve on a
             1516      committee of a limited cooperative association need not be a director or member.
             1517          (3) An individual who is not a director and is serving on a committee has the same
             1518      rights, duties, and obligations as a director serving on the committee.
             1519          (4) Unless the organic rules otherwise provide, each committee of a limited cooperative
             1520      association may exercise the powers delegated to it by the board of directors, but a committee
             1521      may not:
             1522          (a) approve allocations or distributions except according to a formula or method
             1523      prescribed by the board of directors;
             1524          (b) approve or propose to members action requiring approval of members; or
             1525          (c) fill vacancies on the board of directors or any of its committees.
             1526          Section 85. Section 16-16-818 is enacted to read:
             1527          16-16-818. Standards of conduct and liability.
             1528          Except as otherwise provided in Section 16-16-820 :
             1529          (1) the discharge of the duties of a director or member of a committee of the board of
             1530      directors is governed by the law applicable to directors of entities organized under Title 3,
             1531      Uniform Agricultural Cooperative Association Act; and
             1532          (2) the liability of a director or member of a committee of the board of directors is
             1533      governed by the law applicable to directors of entities organized under Title 3, Uniform
             1534      Agricultural Cooperative Association Act.
             1535          Section 86. Section 16-16-819 is enacted to read:
             1536          16-16-819. Conflict of interest.
             1537          (1) The law applicable to conflicts of interest between a director of an entity organized
             1538      under Title 3, Uniform Agricultural Cooperative Association Act, governs conflicts of interest
             1539      between a limited cooperative association and a director or member of a committee of the board
             1540      of directors.
             1541          (2) A director does not have a conflict of interest under this chapter or the organic rules


             1542      solely because the director's conduct relating to the duties of the director may further the
             1543      director's own interest.
             1544          Section 87. Section 16-16-820 is enacted to read:
             1545          16-16-820. Other considerations of directors.
             1546          Unless the articles of organization otherwise provide, in considering the best interests of
             1547      a limited cooperative association, a director of the association in discharging the duties of
             1548      director, in conjunction with considering the long and short term interest of the association and
             1549      its patron members, may consider:
             1550          (1) the interest of employees, customers, and suppliers of the association;
             1551          (2) the interest of the community in which the association operates; and
             1552          (3) other cooperative principles and values that may be applied in the context of the
             1553      decision.
             1554          Section 88. Section 16-16-821 is enacted to read:
             1555          16-16-821. Right of director or committee member to information.
             1556          A director or a member of a committee appointed under Section 16-16-817 may obtain,
             1557      inspect, and copy all information regarding the state of activities and financial condition of the
             1558      limited cooperative association and other information regarding the activities of the association
             1559      if the information is reasonably related to the performance of the director's duties as director or
             1560      the committee member's duties as a member of the committee. Information obtained in
             1561      accordance with this section may not be used in any manner that would violate any duty of or to
             1562      the association.
             1563          Section 89. Section 16-16-822 is enacted to read:
             1564          16-16-822. Appointment and authority of officers.
             1565          (1) A limited cooperative association has the officers:
             1566          (a) provided in the organic rules; or
             1567          (b) established by the board of directors in a manner not inconsistent with the organic
             1568      rules.
             1569          (2) The organic rules may designate or, if the rules do not designate, the board of


             1570      directors shall designate, one of the association's officers for preparing all records required by
             1571      Section 16-16-114 and for the authentication of records.
             1572          (3) Unless the organic rules otherwise provide, the board of directors shall appoint the
             1573      officers of the limited cooperative association.
             1574          (4) Officers of a limited cooperative association shall perform the duties the organic
             1575      rules prescribe or as authorized by the board of directors not in a manner inconsistent with the
             1576      organic rules.
             1577          (5) The election or appointment of an officer of a limited cooperative association does
             1578      not of itself create a contract between the association and the officer.
             1579          (6) Unless the organic rules otherwise provide, an individual may simultaneously hold
             1580      more than one office in a limited cooperative association.
             1581          Section 90. Section 16-16-823 is enacted to read:
             1582          16-16-823. Resignation and removal of officers.
             1583          (1) The board of directors may remove an officer at any time with or without cause.
             1584          (2) An officer of a limited cooperative association may resign at any time by giving
             1585      notice in a record to the association. Unless the notice specifies a later time, the resignation is
             1586      effective when the notice is given.
             1587          Section 91. Section 16-16-901 is enacted to read:
             1588     
Part 9. Indemnification

             1589          16-16-901. Indemnification.
             1590          (1) Indemnification of an individual who has incurred liability or is a party, or is
             1591      threatened to be made a party, to litigation because of the performance of a duty to, or activity
             1592      on behalf of, a limited cooperative association is governed by Title 3, Uniform Agricultural
             1593      Cooperative Association Act.
             1594          (b) A limited cooperative association may purchase and maintain insurance on behalf of
             1595      any individual against liability asserted against or incurred by the individual to the same extent
             1596      and subject to the same conditions as provided by Title 3, Uniform Agricultural Cooperative
             1597      Association Act.


             1598          Section 92. Section 16-16-1001 is enacted to read:
             1599     
Part 10. Contributions, Allocations, and Distributions

             1600          16-16-1001. Members' contributions.
             1601          The organic rules must establish the amount, manner, or method of determining any
             1602      contribution requirements for members or must authorize the board of directors to establish the
             1603      amount, manner, or other method of determining any contribution requirements for members.
             1604          Section 93. Section 16-16-1002 is enacted to read:
             1605          16-16-1002. Contribution and valuation.
             1606          (1) Unless the organic rules otherwise provide, the contributions of a member to a
             1607      limited cooperative association may consist of tangible or intangible property or other benefit to
             1608      the association, including money, labor or other services performed or to be performed,
             1609      promissory notes, other agreements to contribute money or property, and contracts to be
             1610      performed.
             1611          (2) The receipt and acceptance of contributions and the valuation of contributions must
             1612      be reflected in a limited cooperative association's records.
             1613          (3) Unless the organic rules otherwise provide, the board of directors shall determine
             1614      the value of a member's contributions received or to be received and the determination by the
             1615      board of directors of valuation is conclusive for purposes of determining whether the member's
             1616      contribution obligation has been met.
             1617          Section 94. Section 16-16-1003 is enacted to read:
             1618          16-16-1003. Contribution agreements.
             1619          (1) Except as otherwise provided in the agreement, the following rules apply to an
             1620      agreement made by a person before formation of a limited cooperative association to make a
             1621      contribution to the association:
             1622          (a) The agreement is irrevocable for six months after the agreement is signed by the
             1623      person unless all parties to the agreement consent to the revocation.
             1624          (b) If a person does not make a required contribution:
             1625          (i) the person is obligated, at the option of the association, once formed, to contribute


             1626      money equal to the value of that part of the contribution that has not been made, and the
             1627      obligation may be enforced as a debt to the association; or
             1628          (ii) the association, once formed, may rescind the agreement if the debt remains unpaid
             1629      more than 20 days after the association demands payment from the person, and upon rescission
             1630      the person has no further rights or obligations with respect to the association.
             1631          (2) Unless the organic rules or an agreement to make a contribution to a limited
             1632      cooperative association otherwise provide, if a person does not make a required contribution to
             1633      an association, the person or the person's estate is obligated, at the option of the association, to
             1634      contribute money equal to the value of the part of the contribution which has not been made.
             1635          Section 95. Section 16-16-1004 is enacted to read:
             1636          16-16-1004. Allocations of profits and losses.
             1637          (1) The organic rules may provide for allocating profits of a limited cooperative
             1638      association among members, among persons that are not members but conduct business with
             1639      the association, to an unallocated account, or to any combination thereof. Unless the organic
             1640      rules otherwise provide, losses of the association must be allocated in the same proportion as
             1641      profits.
             1642          (2) Unless the organic rules otherwise provide, all profits and losses of a limited
             1643      cooperative association must be allocated to patron members.
             1644          (3) If a limited cooperative association has investor members, the organic rules may not
             1645      reduce the allocation to patron members to less than 50% of profits. For purposes of this
             1646      Subsection (3), the following rules apply:
             1647          (a) Amounts paid or due on contracts for the delivery to the association by patron
             1648      members of products, goods, or services are not considered amounts allocated to patron
             1649      members.
             1650          (b) Amounts paid, due, or allocated to investor members as a stated fixed return on
             1651      equity are not considered amounts allocated to investor members.
             1652          (4) Unless prohibited by the organic rules, in determining the profits for allocation
             1653      under Subsections (1), (2), and (3), the board of directors may first deduct and set aside a part


             1654      of the profits to create or accumulate:
             1655          (a) an unallocated capital reserve; and
             1656          (b) reasonable unallocated reserves for specific purposes, including expansion and
             1657      replacement of capital assets; education, training, cooperative development; creation and
             1658      distribution of information concerning principles of cooperation; and community responsibility.
             1659          (5) Subject to Subsections (2) and (6) and the organic rules, the board of directors shall
             1660      allocate the amount remaining after any deduction or setting aside of profits for unallocated
             1661      reserves under Subsection (4):
             1662          (a) to patron members in the ratio of each member's patronage to the total patronage of
             1663      all patron members during the period for which allocations are to be made; and
             1664          (b) to investor members, if any, in the ratio of each investor member's contributions to
             1665      the total contributions of all investor members.
             1666          (6) For purposes of allocation of profits and losses or specific items of profits or losses
             1667      of a limited cooperative association to members, the organic rules may establish allocation units
             1668      or methods based on separate classes of members or, for patron members, on class, function,
             1669      division, district, department, allocation units, pooling arrangements, members' contributions, or
             1670      other equitable methods.
             1671          Section 96. Section 16-16-1005 is enacted to read:
             1672          16-16-1005. Distributions.
             1673          (1) Unless the organic rules otherwise provide and subject to Section 16-16-1007 , the
             1674      board of directors may authorize, and the limited cooperative association may make,
             1675      distributions to members.
             1676          (2) Unless the organic rules otherwise provide, distributions to members may be made
             1677      in any form, including money, capital credits, allocated patronage equities, revolving fund
             1678      certificates, and the limited cooperative association's own or other securities.
             1679          Section 97. Section 16-16-1006 is enacted to read:
             1680          16-16-1006. Redemption or repurchase.
             1681          Property distributed to a member by a limited cooperative association, other than


             1682      money, may be redeemed or repurchased as provided in the organic rules but a redemption or
             1683      repurchase may not be made without authorization by the board of directors. The board may
             1684      withhold authorization for any reason in its sole discretion. A redemption or repurchase is
             1685      treated as a distribution for purposes of Section 16-16-1007 .
             1686          Section 98. Section 16-16-1007 is enacted to read:
             1687          16-16-1007. Limitations on distributions.
             1688          (1) A limited cooperative association may not make a distribution if, after the
             1689      distribution:
             1690          (a) the association would not be able to pay its debts as they become due in the ordinary
             1691      course of the association's activities; or
             1692          (b) the association's assets would be less than the sum of its total liabilities.
             1693          (2) A limited cooperative association may base a determination that a distribution is not
             1694      prohibited under Subsection (1) on financial statements prepared on the basis of accounting
             1695      practices and principles that are reasonable in the circumstances or on a fair valuation or other
             1696      method that is reasonable in the circumstances.
             1697          (3) Except as otherwise provided in Subsection (4), the effect of a distribution allowed
             1698      under Subsection (2) is measured:
             1699          (a) in the case of distribution by purchase, redemption, or other acquisition of financial
             1700      rights in the limited cooperative association, as of the date money or other property is
             1701      transferred or debt is incurred by the association; and
             1702          (b) in all other cases, as of the date:
             1703          (i) the distribution is authorized, if the payment occurs not later than 120 days after that
             1704      date; or
             1705          (ii) the payment is made, if payment occurs more than 120 days after the distribution is
             1706      authorized.
             1707          (4) If indebtedness is issued as a distribution, each payment of principal or interest on
             1708      the indebtedness is treated as a distribution, the effect of which is measured on the date the
             1709      payment is made.


             1710          (5) For purposes of this section, "distribution" does not include reasonable amounts
             1711      paid to a member in the ordinary course of business as payment or compensation for
             1712      commodities, goods, past or present services, or reasonable payments made in the ordinary
             1713      course of business under a bona fide retirement or other benefits program.
             1714          Section 99. Section 16-16-1008 is enacted to read:
             1715          16-16-1008. Liability for improper distributions -- Limitation of action.
             1716          (1) A director who consents to a distribution that violates Section 16-16-1007 is
             1717      personally liable to the limited cooperative association for the amount of the distribution which
             1718      exceeds the amount that could have been distributed without the violation if it is established that
             1719      in consenting to the distribution the director failed to comply with Section 16-16-818 or
             1720      16-16-819 .
             1721          (2) A member or transferee of financial rights which received a distribution knowing
             1722      that the distribution was made in violation of Section 16-16-1007 is personally liable to the
             1723      limited cooperative association to the extent the distribution exceeded the amount that could
             1724      have been properly paid.
             1725          (3) A director against whom an action is commenced under Subsection (1) may:
             1726          (a) implead in the action any other director who is liable under Subsection (1) and
             1727      compel contribution from the person; and
             1728          (b) implead in the action any person that is liable under Subsection (2) and compel
             1729      contribution from the person in the amount the person received as described in Subsection (2).
             1730          (4) An action under this section is barred if it is commenced later than two years after
             1731      the distribution.
             1732          Section 100. Section 16-16-1009 is enacted to read:
             1733          16-16-1009. Alternative distribution of unclaimed property, distributions,
             1734      redemptions, or payments.
             1735          A limited cooperative association may distribute unclaimed property, distributions,
             1736      redemptions, or payments by complying with Section 3-1-11 .
             1737          Section 101. Section 16-16-1101 is enacted to read:


             1738     
Part 11. Dissociation

             1739          16-16-1101. Member's dissociation.
             1740          (1) A person has the power to dissociate as a member at any time, rightfully or
             1741      wrongfully, by express will.
             1742          (2) Unless the organic rules otherwise provide, a member's dissociation from a limited
             1743      cooperative association is wrongful only if the dissociation:
             1744          (a) breaches an express provision of the organic rules; or
             1745          (b) occurs before the termination of the limited cooperative association and:
             1746          (i) the person is expelled as a member under Subsection (4)(c) or (d); or
             1747          (ii) in the case of a person that is not an individual, trust other than a business trust, or
             1748      estate, the person is expelled or otherwise dissociated as a member because it dissolved or
             1749      terminated in bad faith.
             1750          (3) Unless the organic rules otherwise provide, a person that wrongfully dissociates as a
             1751      member is liable to the limited cooperative association for damages caused by the dissociation.
             1752      The liability is in addition to any other debt, obligation, or liability of the person to the
             1753      association.
             1754          (4) A member is dissociated from the limited cooperative association as a member
             1755      when:
             1756          (a) the association receives notice in a record of the member's express will to dissociate
             1757      as a member, or if the member specifies in the notice an effective date later than the date the
             1758      association received notice, on that later date;
             1759          (b) an event stated in the organic rules as causing the member's dissociation as a
             1760      member occurs;
             1761          (c) the member is expelled as a member under the organic rules;
             1762          (d) the member is expelled as a member by the board of directors because:
             1763          (i) it is unlawful to carry on the association's activities with the member as a member;
             1764          (ii) there has been a transfer of all the member's financial rights in the association, other
             1765      than:


             1766          (A) a creation or perfection of a security interest; or
             1767          (B) a charging order in effect under Section 16-16-505 which has not been foreclosed;
             1768          (iii) the member is a limited liability company, association, or partnership, it has been
             1769      dissolved, and its business is being wound up;
             1770          (iv) the member is a corporation or cooperative and:
             1771          (A) the member filed a certificate of dissolution or the equivalent, or the jurisdiction of
             1772      formation revoked the association's charter or right to conduct business;
             1773          (B) the association sends a notice to the member that it will be expelled as a member for
             1774      a reason described in Subsection (4)(d)(iv)(A); and
             1775          (C) not later than 90 days after the notice was sent under Subsection (4)(d)(iv)(B), the
             1776      member did not revoke the member's certificate of dissolution or the equivalent, or the
             1777      jurisdiction of formation did not reinstate the association's charter or right to conduct business;
             1778      or
             1779          (v) the member is an individual and is adjudged incompetent;
             1780          (e) in the case of a member who is an individual, the individual dies;
             1781          (f) in the case of a member that is a trust or is acting as a member by virtue of being a
             1782      trustee of a trust, all the trust's financial rights in the association are distributed;
             1783          (g) in the case of a member that is an estate, the estate's entire financial interest in the
             1784      association is distributed;
             1785          (h) in the case of a member that is not an individual, partnership, limited liability
             1786      company, cooperative, corporation, trust, or estate, the member is terminated; or
             1787          (i) the association's participation in a merger if, under the plan of merger as approved
             1788      under Part 16, Conversion and Merger, the member ceases to be a member.
             1789          Section 102. Section 16-16-1102 is enacted to read:
             1790          16-16-1102. Effect of dissociation as member.
             1791          (1) Upon a member's dissociation:
             1792          (a) subject to Section 16-16-1103 , the person has no further rights as a member; and
             1793          (b) subject to Section 16-16-1103 and Part 16, Conversion and Merger, any financial


             1794      rights owned by the person in the person's capacity as a member immediately before dissociation
             1795      are owned by the person as a transferee.
             1796          (2) A person's dissociation as a member does not of itself discharge the person from any
             1797      debt, obligation, or liability to the limited cooperative association which the person incurred
             1798      under the organic rules, by contract, or by other means while a member.
             1799          Section 103. Section 16-16-1103 is enacted to read:
             1800          16-16-1103. Power of estate of member.
             1801          Unless the organic rules provide for greater rights, if a member is dissociated because of
             1802      death, dies, or is expelled by reason of being adjudged incompetent, the member's personal
             1803      representative or other legal representative may exercise the rights of a transferee of the
             1804      member's financial rights and, for purposes of settling the estate of a deceased member, may
             1805      exercise the informational rights of a current member to obtain information under Section
             1806      16-16-505 .
             1807          Section 104. Section 16-16-1201 is enacted to read:
             1808     
Part 12. Dissolution

             1809          16-16-1201. Dissolution and winding up.
             1810          A limited cooperative association is dissolved only as provided in this part and upon
             1811      dissolution winds up in accordance with this part.
             1812          Section 105. Section 16-16-1202 is enacted to read:
             1813          16-16-1202. Nonjudicial dissolution.
             1814          Except as otherwise provided in Sections 16-16-1203 and 16-16-1211 , a limited
             1815      cooperative association is dissolved and its activities must be wound up:
             1816          (1) upon the occurrence of an event or at a time specified in the articles of organization;
             1817          (2) upon the action of the association's organizers, board of directors, or members
             1818      under Section 16-16-1204 or 16-16-1205 ; or
             1819          (3) 90 days after the dissociation of a member, which results in the association having
             1820      one patron member and no other members, unless the association:
             1821          (a) has a sole member that is a cooperative; or


             1822          (b) not later than the end of the 90-day period, admits at least one member in
             1823      accordance with the organic rules and has at least two members, at least one of which is a
             1824      patron member.
             1825          Section 106. Section 16-16-1203 is enacted to read:
             1826          16-16-1203. Judicial dissolution.
             1827          The district court may dissolve a limited cooperative association or order any action that
             1828      under the circumstances is appropriate and equitable:
             1829          (1) in a proceeding initiated by the attorney general, if:
             1830          (a) the association obtained its articles of organization through fraud; or
             1831          (b) the association has continued to exceed or abuse the authority conferred upon it by
             1832      law; or
             1833          (2) in a proceeding initiated by a member, if:
             1834          (a) the directors are deadlocked in the management of the association's affairs, the
             1835      members are unable to break the deadlock, and irreparable injury to the association is occurring
             1836      or is threatened because of the deadlock;
             1837          (b) the directors or those in control of the association have acted, are acting, or will act
             1838      in a manner that is illegal, oppressive, or fraudulent;
             1839          (c) the members are deadlocked in voting power and have failed to elect successors to
             1840      directors whose terms have expired for two consecutive periods during which annual members
             1841      meetings were held or were to be held; or
             1842          (d) the assets of the association are being misapplied or wasted.
             1843          Section 107. Section 16-16-1204 is enacted to read:
             1844          16-16-1204. Voluntary dissolution before commencement of activity.
             1845          A majority of the organizers or initial directors of a limited cooperative association that
             1846      has not yet begun business activity or the conduct of its affairs may dissolve the association.
             1847          Section 108. Section 16-16-1205 is enacted to read:
             1848          16-16-1205. Voluntary dissolution by the board and members.
             1849          (1) Except as otherwise provided in Section 16-16-1204 , for a limited cooperative


             1850      association to voluntarily dissolve:
             1851          (a) a resolution to dissolve must be approved by a majority vote of the board of
             1852      directors unless a greater percentage is required by the organic rules;
             1853          (b) the board of directors must call a members meeting to consider the resolution, to be
             1854      held not later than 90 days after adoption of the resolution; and
             1855          (c) the board of directors must mail or otherwise transmit or deliver to each member in
             1856      a record that complies with Section 16-16-508 :
             1857          (i) the resolution required by Subsection (1)(a);
             1858          (ii) a recommendation that the members vote in favor of the resolution or, if the board
             1859      determines that because of conflict of interest or other special circumstances it should not make
             1860      a favorable recommendation, the basis of that determination; and
             1861          (iii) notice of the members meeting, which must be given in the same manner as notice
             1862      of a special meeting of members.
             1863          (2) Subject to Subsection (3), a resolution to dissolve must be approved by:
             1864          (a) at least two-thirds of the voting power of members present at a members meeting
             1865      called under Subsection (1)(b); and
             1866          (b) if the limited cooperative association has investor members, at least a majority of the
             1867      votes cast by patron members, unless the organic rules require a greater percentage.
             1868          (3) The organic rules may require that the percentage of votes under Subsection (2)(a)
             1869      is:
             1870          (a) a different percentage that is not less than a majority of members voting at the
             1871      meeting;
             1872          (b) measured against the voting power of all members; or
             1873          (c) a combination of Subsections (3)(a) and (b).
             1874          Section 109. Section 16-16-1206 is enacted to read:
             1875          16-16-1206. Winding up.
             1876          (1) A limited cooperative association continues after dissolution only for purposes of
             1877      winding up its activities.


             1878          (2) In winding up a limited cooperative association's activities, the board of directors
             1879      shall cause the association to:
             1880          (a) discharge its liabilities, settle and close its activities, and marshal and distribute its
             1881      assets;
             1882          (b) preserve the association or its property as a going concern for no more than a
             1883      reasonable time;
             1884          (c) prosecute and defend actions and proceedings;
             1885          (d) transfer association property; and
             1886          (e) perform other necessary acts.
             1887          (3) After dissolution and upon application of a limited cooperative association, a
             1888      member, or a holder of financial rights, the district court may order judicial supervision of the
             1889      winding up of the association, including the appointment of a person to wind up the
             1890      association's activities, if:
             1891          (a) after a reasonable time, the association has not wound up its activities; or
             1892          (b) the applicant establishes other good cause.
             1893          (4) If a person is appointed pursuant to Subsection (3) to wind up the activities of a
             1894      limited cooperative association, the association shall promptly deliver to the division for filing
             1895      an amendment to the articles of organization to reflect the appointment.
             1896          Section 110. Section 16-16-1207 is enacted to read:
             1897          16-16-1207. Distribution of assets in winding up limited cooperative association.
             1898          (1) In winding up a limited cooperative association's business, the association shall
             1899      apply its assets to discharge its obligations to creditors, including members that are creditors.
             1900      The association shall apply any remaining assets to pay in money the net amount distributable to
             1901      members in accordance with their right to distributions under Subsection (2).
             1902          (2) Unless the organic rules otherwise provide, in this Subsection (2) "financial
             1903      interests" means the amounts recorded in the names of members in the records of a limited
             1904      cooperative association at the time a distribution is made, including amounts paid to become a
             1905      member, amounts allocated but not distributed to members, and amounts of distributions


             1906      authorized but not yet paid to members. Unless the organic rules otherwise provide, each
             1907      member is entitled to a distribution from the association of any remaining assets in the
             1908      proportion of the member's financial interests to the total financial interests of the members after
             1909      all other obligations are satisfied.
             1910          Section 111. Section 16-16-1208 is enacted to read:
             1911          16-16-1208. Known claims against dissolved limited cooperative association.
             1912          (1) Subject to Subsection (4), a dissolved limited cooperative association may dispose
             1913      of the known claims against it by following the procedure in Subsections (2) and (3).
             1914          (2) A dissolved limited cooperative association may notify its known claimants of the
             1915      dissolution in a record. The notice must:
             1916          (a) specify that a claim be in a record;
             1917          (b) specify the information required to be included in the claim;
             1918          (c) provide an address to which the claim must be sent;
             1919          (d) state the deadline for receipt of the claim, which may not be less than 120 days after
             1920      the date the notice is received by the claimant; and
             1921          (e) state that the claim will be barred if not received by the deadline.
             1922          (3) A claim against a dissolved limited cooperative association is barred if the
             1923      requirements of Subsection (2) are met, and:
             1924          (a) the association is not notified of the claimant's claim, in a record, by the deadline
             1925      specified in the notice under Subsection (2)(d);
             1926          (b) in the case of a claim that is timely received but rejected by the association, the
             1927      claimant does not commence an action to enforce the claim against the association not later than
             1928      90 days after receipt of the notice of the rejection; or
             1929          (c) if a claim is timely received but is neither accepted nor rejected by the association
             1930      not later than 120 days after the deadline for receipt of claims, the claimant does not commence
             1931      an action to enforce the claim against the association:
             1932          (i) after the 120-day period; and
             1933          (ii) not later than 90 days after the 120-day period.


             1934          (4) This section does not apply to a claim based on an event occurring after the date of
             1935      dissolution or a liability that is contingent on that date.
             1936          Section 112. Section 16-16-1209 is enacted to read:
             1937          16-16-1209. Other claims against dissolved limited cooperative association.
             1938          (1) A dissolved limited cooperative association may publish notice of its dissolution and
             1939      request persons having claims against the association to present them in accordance with the
             1940      notice.
             1941          (2) A notice under Subsection (1) must:
             1942          (a) be published at least once in a newspaper of general circulation in the county in
             1943      which the dissolved limited cooperative association's principal office is located or, if the
             1944      association does not have a principal office in this state, in the county in which the association's
             1945      designated office is or was last located;
             1946          (b) describe the information required to be contained in a claim and provide an address
             1947      to which the claim is to be sent; and
             1948          (c) state that a claim against the association is barred unless an action to enforce the
             1949      claim is commenced not later than three years after publication of the notice.
             1950          (3) If a dissolved limited cooperative association publishes a notice in accordance with
             1951      Subsection (2), the claim of each of the following claimants is barred unless the claimant
             1952      commences an action to enforce the claim not later than three years after the first publication
             1953      date of the notice:
             1954          (a) a claimant that is entitled to but did not receive notice in a record under Section
             1955      16-16-1208 ; and
             1956          (b) a claimant whose claim is contingent or based on an event occurring after the
             1957      effective date of dissolution.
             1958          (4) A claim not barred under this section may be enforced:
             1959          (a) against a dissolved limited cooperative association, to the extent of its undistributed
             1960      assets; or
             1961          (b) if the association's assets have been distributed in connection with winding up the


             1962      association's activities against a member or holder of financial rights to the extent of that
             1963      person's proportionate share of the claim or the association's assets distributed to the person in
             1964      connection with the winding up, whichever is less. The person's total liability for all claims
             1965      under this Subsection (4) shall not exceed the total amount of assets distributed to the person as
             1966      part of the winding up of the association.
             1967          Section 113. Section 16-16-1210 is enacted to read:
             1968          16-16-1210. Court proceeding.
             1969          (1) Upon application by a dissolved limited cooperative association that has published a
             1970      notice under Section 16-16-1209 , the district court in the county where the association's
             1971      principal office is located or, if the association does not have a principal office in this state
             1972      where its designated office in this state is located, may determine the amount and form of
             1973      security to be provided for payment of claims against the association that are contingent, have
             1974      not been made known to the association, or are based on an event occurring after the effective
             1975      date of dissolution but that, based on the facts known to the association, are reasonably
             1976      anticipated to arise after the effective date of dissolution.
             1977          (2) Not later than ten days after filing an application under Subsection (1), a dissolved
             1978      limited cooperative association shall give notice of the proceeding to each known claimant
             1979      holding a contingent claim.
             1980          (3) The court may appoint a representative in a proceeding brought under this section
             1981      to represent all claimants whose identities are unknown. The dissolved limited cooperative
             1982      association shall pay reasonable fees and expenses of the representative, including all reasonable
             1983      attorney and expert witness fees.
             1984          (4) Provision by the dissolved limited cooperative association for security in the amount
             1985      and the form ordered by the court satisfies the association's obligations with respect to claims
             1986      that are contingent, have not been made known to the association, or are based on an event
             1987      occurring after the effective date of dissolution, and the claims may not be enforced against a
             1988      member that received a distribution.
             1989          Section 114. Section 16-16-1211 is enacted to read:


             1990          16-16-1211. Administrative dissolution.
             1991          (1) The division may dissolve a limited cooperative association administratively if the
             1992      association does not:
             1993          (a) pay, not later than 60 days after the due date, any fee, tax, or penalty due to the
             1994      division under this chapter or other law; or
             1995          (b) deliver not later than 60 days after the due date its annual report to the division.
             1996          (2) If the division determines that a ground exists for dissolving a limited cooperative
             1997      association administratively, the division shall file a record of the determination and serve the
             1998      association with a copy of the record.
             1999          (3) If, not later than 60 days after service of a copy of the division's determination under
             2000      Subsection (2), the association does not correct each ground for dissolution or demonstrate to
             2001      the satisfaction of the division that each uncorrected ground determined by the division does not
             2002      exist, the division shall dissolve the association administratively by preparing and filing a
             2003      declaration of dissolution which states the grounds for dissolution. The division shall serve the
             2004      association with a copy of the declaration.
             2005          (4) A limited cooperative association that has been dissolved administratively continues
             2006      its existence only for purposes of winding up its activities.
             2007          (5) The administrative dissolution of a limited cooperative association does not
             2008      terminate the authority of its agent for service of process.
             2009          Section 115. Section 16-16-1212 is enacted to read:
             2010          16-16-1212. Reinstatement following administrative dissolution.
             2011          (1) A limited cooperative association that has been dissolved administratively may apply
             2012      to the division for reinstatement not later than two years after the effective date of dissolution.
             2013      The application must be delivered to the division for filing and state:
             2014          (a) the name of the association and the effective date of its administrative dissolution;
             2015          (b) that the grounds for dissolution either did not exist or have been eliminated; and
             2016          (c) that the association's name satisfies the requirements of Section 16-16-111 .
             2017          (2) If the division determines that an application contains the information required by


             2018      Subsection (1) and that the information is correct, the division shall:
             2019          (a) prepare a declaration of reinstatement;
             2020          (b) file the original of the declaration; and
             2021          (c) serve a copy of the declaration on the association.
             2022          (3) When reinstatement under this section becomes effective, it relates back to and
             2023      takes effect as of the effective date of the administrative dissolution, and the limited cooperative
             2024      association may resume or continue its activities as if the administrative dissolution had not
             2025      occurred.
             2026          Section 116. Section 16-16-1213 is enacted to read:
             2027          16-16-1213. Denial of reinstatement -- Appeal.
             2028          (1) If the division denies a limited cooperative association's application for
             2029      reinstatement following administrative dissolution, the division shall prepare and file a notice
             2030      that explains the reason for denial and serve the association with a copy of the notice.
             2031          (2) Not later than 30 days after service of a notice of denial of reinstatement by the
             2032      division, a limited cooperative association may appeal the denial by petitioning the district court
             2033      to set aside the dissolution. The petition must be served on the division and contain a copy of
             2034      the division's declaration of dissolution, the association's application for reinstatement, and the
             2035      division's notice of denial.
             2036          (3) The court may summarily order the division to reinstate the dissolved cooperative
             2037      association or may take other action the court considers appropriate.
             2038          Section 117. Section 16-16-1214 is enacted to read:
             2039          16-16-1214. Statement of dissolution.
             2040          (1) A limited cooperative association that has dissolved or is about to dissolve may
             2041      deliver to the division for filing a statement of dissolution that states:
             2042          (a) the name of the association;
             2043          (b) the date the association dissolved or will dissolve; and
             2044          (c) any other information the association considers relevant.
             2045          (2) A person has notice of a limited cooperative association's dissolution on the later of:


             2046          (a) 90 days after a statement of dissolution is filed; or
             2047          (b) the effective date stated in the statement of dissolution.
             2048          Section 118. Section 16-16-1215 is enacted to read:
             2049          16-16-1215. Statement of termination.
             2050          (1) A dissolved limited cooperative association that has completed winding up may
             2051      deliver to the division for filing a statement of termination that states:
             2052          (a) the name of the association;
             2053          (b) the date of filing of its initial articles of organization; and
             2054          (c) that the association is terminated.
             2055          (2) The filing of a statement of termination does not itself terminate the limited
             2056      cooperative association.
             2057          Section 119. Section 16-16-1301 is enacted to read:
             2058     
Part 13. Action by member

             2059          16-16-1301. Derivative action.
             2060          A member may maintain a derivative action to enforce a right of a limited cooperative
             2061      association if:
             2062          (1) the member demands that the association bring an action to enforce the right; and
             2063          (2) any of the following occur:
             2064          (a) the association does not, not later than 90 days after the member makes the demand,
             2065      agree to bring the action;
             2066          (b) the association notifies the member that it has rejected the demand;
             2067          (c) irreparable harm to the association would result by waiting 90 days after the member
             2068      makes the demand; or
             2069          (d) the association agrees to bring an action demanded and fails to bring the action
             2070      within a reasonable time.
             2071          Section 120. Section 16-16-1302 is enacted to read:
             2072          16-16-1302. Proper plaintiff.
             2073          (1) A derivative action to enforce a right of a limited cooperative association may be


             2074      maintained only by a person that:
             2075          (a) is a member or a dissociated member at the time the action is commenced and:
             2076          (i) was a member when the conduct giving rise to the action occurred; or
             2077          (ii) whose status as a member devolved upon the person by operation of law or the
             2078      organic rules from a person that was a member at the time of the conduct; and
             2079          (b) adequately represents the interests of the association.
             2080          (2) If the sole plaintiff in a derivative action dies while the action is pending, the court
             2081      may permit another member who meets the requirements of Subsection (1) to be substituted as
             2082      plaintiff.
             2083          Section 121. Section 16-16-1303 is enacted to read:
             2084          16-16-1303. Pleading.
             2085          In a derivative action to enforce a right of a limited cooperative association, the
             2086      complaint must state:
             2087          (1) the date and content of the plaintiff's demand under Subsection 16-16-1301 (1) and
             2088      the association's response;
             2089          (2) if 90 days have not expired since the demand, how irreparable harm to the
             2090      association would result by waiting for the expiration of 90 days; and
             2091          (3) if the association agreed to bring an action demanded, that the action has not been
             2092      brought within a reasonable time.
             2093          Section 122. Section 16-16-1304 is enacted to read:
             2094          16-16-1304. Approval for discontinuance or settlement.
             2095          A derivative action to enforce a right of a limited cooperative association may not be
             2096      discontinued or settled without the court's approval.
             2097          Section 123. Section 16-16-1305 is enacted to read:
             2098          16-16-1305. Proceeds and expenses.
             2099          (1) Except as otherwise provided in Subsection (2):
             2100          (a) any proceeds or other benefits of a derivative action to enforce a right of a limited
             2101      cooperative association, whether by judgment, compromise, or settlement, belong to the


             2102      association and not to the plaintiff; and
             2103          (b) if the plaintiff in the derivative action receives any proceeds, the plaintiff shall
             2104      immediately remit them to the association.
             2105          (2) If a derivative action to enforce a right of a limited cooperative association is
             2106      successful in whole or in part, the court may award the plaintiff reasonable expenses, including
             2107      reasonable attorney fees and costs, from the recovery of the association.
             2108          Section 124. Section 16-16-1401 is enacted to read:
             2109     
Part 14. Foreign Cooperatives

             2110          16-16-1401. Governing law.
             2111          (1) The law of the state or other jurisdiction under which a foreign cooperative is
             2112      organized governs relations among the members of the foreign cooperative and between the
             2113      members and the foreign cooperative.
             2114          (2) A foreign cooperative may not be denied a certificate of authority because of any
             2115      difference between the law of the jurisdiction under which the foreign cooperative is organized
             2116      and the law of this state.
             2117          (3) A certificate of authority does not authorize a foreign cooperative to engage in any
             2118      activity or exercise any power that a limited cooperative association may not engage in or
             2119      exercise in this state.
             2120          Section 125. Section 16-16-1402 is enacted to read:
             2121          16-16-1402. Application for certificate of authority.
             2122          (1) A foreign cooperative may apply for a certificate of authority by delivering an
             2123      application to the division for filing. The application must state:
             2124          (a) the name of the foreign cooperative and, if the name does not comply with Section
             2125      16-16-111 , an alternative name adopted pursuant to Section 16-16-1405 ;
             2126          (b) the name of the state or other jurisdiction under whose law the foreign cooperative
             2127      is organized;
             2128          (c) the street address and, if different, mailing address of the principal office and, if the
             2129      law of the jurisdiction under which the foreign cooperative is organized requires the foreign


             2130      cooperative to maintain another office in that jurisdiction, the street address and, if different,
             2131      mailing address of the required office;
             2132          (d) the street address and, if different, mailing address of the foreign cooperative's
             2133      designated office in this state, and the name of the foreign cooperative's agent for service of
             2134      process at the designated office; and
             2135          (e) the name, street address and, if different, mailing address of each of the foreign
             2136      cooperative's current directors and officers.
             2137          (2) A foreign cooperative shall deliver with a completed application under Subsection
             2138      (1) a certificate of good standing or a similar record signed by the division or other official
             2139      having custody of the foreign cooperative's publicly filed records in the state or other
             2140      jurisdiction under whose law the foreign cooperative is organized.
             2141          Section 126. Section 16-16-1403 is enacted to read:
             2142          16-16-1403. Activities not constituting transacting business.
             2143          (1) Activities of a foreign cooperative which do not constitute transacting business in
             2144      this state under this part include:
             2145          (a) maintaining, defending, and settling an action or proceeding;
             2146          (b) holding meetings of the foreign cooperative's members or directors or carrying on
             2147      any other activity concerning the foreign cooperative's internal affairs;
             2148          (c) maintaining accounts in financial institutions;
             2149          (d) maintaining offices or agencies for the transfer, exchange, and registration of the
             2150      foreign cooperative's own securities or maintaining trustees or depositories with respect to
             2151      those securities;
             2152          (e) selling through independent contractors;
             2153          (f) soliciting or obtaining orders, whether by mail or electronic means, through
             2154      employees, agents, or otherwise, if the orders require acceptance outside this state before they
             2155      become contracts;
             2156          (g) creating or acquiring indebtedness, mortgages, or security interests in real or
             2157      personal property;


             2158          (h) securing or collecting debts or enforcing mortgages or other security interests in
             2159      property securing the debts, and holding, protecting, and maintaining property so acquired;
             2160          (i) conducting an isolated transaction that is completed within 30 days and is not one in
             2161      the course of similar transactions; and
             2162          (j) transacting business in interstate commerce.
             2163          (2) For purposes of this part, the ownership in this state of income-producing real
             2164      property or tangible personal property, other than property excluded under Subsection (1),
             2165      constitutes transacting business in this state.
             2166          (3) This section does not apply in determining the contacts or activities that may subject
             2167      a foreign cooperative to service of process, taxation, or regulation under law of this state other
             2168      than this chapter.
             2169          Section 127. Section 16-16-1404 is enacted to read:
             2170          16-16-1404. Issuance of certificate of authority.
             2171          Unless the division determines that an application for a certificate of authority does not
             2172      comply with the filing requirements of this chapter, the division, upon payment by the foreign
             2173      cooperative of all filing fees, shall file the application, issue a certificate of authority, and send a
             2174      copy of the filed certificate, together with a receipt for the fees, to the foreign cooperative or its
             2175      representative.
             2176          Section 128. Section 16-16-1405 is enacted to read:
             2177          16-16-1405. Noncomplying name of foreign cooperative.
             2178          (1) A foreign cooperative whose name does not comply with Section 16-16-111 may
             2179      not obtain a certificate of authority until it adopts, for the purpose of transacting business in this
             2180      state, an alternative name that complies with Section 16-16-111 . A foreign cooperative that
             2181      adopts an alternative name under this Subsection (1) and then obtains a certificate of authority
             2182      with that name need not also comply with Section 42-2-5 . After obtaining a certificate of
             2183      authority with an alternative name, a foreign cooperative's business in this state must be
             2184      transacted under that name unless the foreign cooperative is authorized under Section 42-2-5 to
             2185      transact business in this state under another name.


             2186          (2) If a foreign cooperative authorized to transact business in this state changes its name
             2187      to one that does not comply with Section 16-16-111 , it may not thereafter transact business in
             2188      this state until it complies with Subsection (1) and obtains an amended certificate of authority.
             2189          Section 129. Section 16-16-1406 is enacted to read:
             2190          16-16-1406. Revocation of certificate of authority.
             2191          (1) A certificate of authority may be revoked by the division in the manner provided in
             2192      Subsection (2) if the foreign cooperative does not:
             2193          (a) pay, not later than 60 days after the due date, any fee, tax, or penalty due to the
             2194      division under this chapter or any other law of this state;
             2195          (b) deliver, not later than 60 days after the due date, its annual report;
             2196          (c) appoint and maintain an agent for service of process; or
             2197          (d) deliver for filing a statement of change not later than 30 days after a change has
             2198      occurred in the name of the agent or the address of the foreign cooperative's designated office.
             2199          (2) To revoke a certificate of authority, the division must file a notice of revocation and
             2200      send a copy to the foreign cooperative's registered agent for service of process in this state or, if
             2201      the foreign cooperative does not appoint and maintain an agent for service of process in this
             2202      state, to the foreign cooperative's principal office. The notice must state:
             2203          (a) the revocation's effective date, which must be at least 60 days after the date the
             2204      division sends the copy; and
             2205          (b) the foreign cooperative's noncompliance that is the reason for the revocation.
             2206          (3) The authority of a foreign cooperative to transact business in this state ceases on the
             2207      effective date of the notice of revocation unless before that date the foreign cooperative cures
             2208      each failure to comply stated in the notice. If the foreign cooperative cures the failures, the
             2209      division shall so indicate on the filed notice.
             2210          Section 130. Section 16-16-1407 is enacted to read:
             2211          16-16-1407. Cancellation of certificate of authority -- Effect of failure to have
             2212      certificate.
             2213          (1) To cancel its certificate of authority, a foreign cooperative must deliver to the


             2214      division for filing a notice of cancellation. The certificate is canceled when the notice becomes
             2215      effective under Section 16-16-203 .
             2216          (2) A foreign cooperative transacting business in this state may not maintain an action
             2217      or proceeding in this state unless it has a certificate of authority.
             2218          (3) The failure of a foreign cooperative to have a certificate of authority does not impair
             2219      the validity of a contract or act of the foreign cooperative or prevent the foreign cooperative
             2220      from defending an action or proceeding in this state.
             2221          (4) A member of a foreign cooperative is not liable for the obligations of the foreign
             2222      cooperative solely by reason of the foreign cooperative's having transacted business in this state
             2223      without a certificate of authority.
             2224          (5) If a foreign cooperative transacts business in this state without a certificate of
             2225      authority or cancels its certificate, it appoints the division as its agent for service of process for
             2226      an action arising out of the transaction of business in this state.
             2227          Section 131. Section 16-16-1408 is enacted to read:
             2228          16-16-1408. Action by attorney general.
             2229          The attorney general may maintain an action to restrain a foreign cooperative from
             2230      transacting business in this state in violation of this part.
             2231          Section 132. Section 16-16-1501 is enacted to read:
             2232     
Part 15. Disposition of Assets

             2233          16-16-1501. Disposition of assets not requiring member approval.
             2234          Unless the articles of organization otherwise provide, member approval under Section
             2235      16-16-1502 is not required for a limited cooperative association to:
             2236          (1) sell, lease, exchange, license, or otherwise dispose of all or any part of the assets of
             2237      the association in the usual and regular course of business; or
             2238          (2) mortgage, pledge, dedicate to the repayment of indebtedness, or encumber in any
             2239      way all or any part of the assets of the association whether or not in the usual and regular
             2240      course of business.
             2241          Section 133. Section 16-16-1502 is enacted to read:


             2242          16-16-1502. Member approval of other disposition of assets.
             2243          A sale, lease, exchange, license, or other disposition of assets of a limited cooperative
             2244      association, other than a disposition described in Section 16-16-1501 , requires approval of the
             2245      association's members under Sections 16-16-1503 and 16-16-1504 if the disposition leaves the
             2246      association without significant continuing business activity.
             2247          Section 134. Section 16-16-1503 is enacted to read:
             2248          16-16-1503. Notice and action on disposition of assets.
             2249          For a limited cooperative association to dispose of assets under Section 16-16-1502 :
             2250          (1) a majority of the board of directors, or a greater percentage if required by the
             2251      organic rules, must approve the proposed disposition; and
             2252          (2) the board of directors must call a members meeting to consider the proposed
             2253      disposition, hold the meeting not later than 90 days after approval of the proposed disposition
             2254      by the board, and mail or otherwise transmit or deliver in a record to each member:
             2255          (a) the terms of the proposed disposition;
             2256          (b) a recommendation that the members approve the disposition, or if the board
             2257      determines that because of conflict of interest or other special circumstances it should not make
             2258      a favorable recommendation, the basis for that determination;
             2259          (c) a statement of any condition of the board's submission of the proposed disposition
             2260      to the members; and
             2261          (d) notice of the meeting at which the proposed disposition will be considered, which
             2262      must be given in the same manner as notice of a special meeting of members.
             2263          Section 135. Section 16-16-1504 is enacted to read:
             2264          16-16-1504. Disposition of assets.
             2265          (1) Subject to Subsection (2), a disposition of assets under Section 16-16-1502 must be
             2266      approved by:
             2267          (a) at least two-thirds of the voting power of members present at a members meeting
             2268      called under Subsection 16-16-1503 (2); and
             2269          (b) if the limited cooperative association has investor members, at least a majority of the


             2270      votes cast by patron members, unless the organic rules require a greater percentage vote by
             2271      patron members.
             2272          (2) The organic rules may require that the percentage of votes under Subsection (1)(a)
             2273      is:
             2274          (a) a different percentage that is not less than a majority of members voting at the
             2275      meeting;
             2276          (b) measured against the voting power of all members; or
             2277          (c) a combination of Subsections (2)(a) and (b).
             2278          (3) Subject to any contractual obligations, after a disposition of assets is approved and
             2279      at any time before the consummation of the disposition, a limited cooperative association may
             2280      approve an amendment to the contract for disposition or the resolution authorizing the
             2281      disposition or approve abandonment of the disposition:
             2282          (a) as provided in the contract or the resolution; and
             2283          (b) except as prohibited by the resolution, with the same affirmative vote of the board
             2284      of directors and of the members as was required to approve the disposition.
             2285          (4) The voting requirements for districts, classes, or voting groups under Section
             2286      16-16-404 apply to approval of a disposition of assets under this part.
             2287          Section 136. Section 16-16-1601 is enacted to read:
             2288     
Part 16. Conversion and Merger

             2289          16-16-1601. Definitions.
             2290          In this part:
             2291          (1) "Constituent entity" means an entity that is a party to a merger.
             2292          (2) "Constituent limited cooperative association" means a limited cooperative
             2293      association that is a party to a merger.
             2294          (3) "Converted entity" means the organization into which a converting entity converts
             2295      pursuant to Sections 16-16-1602 through 16-16-1605 .
             2296          (4) "Converting entity" means an entity that converts into another entity pursuant to
             2297      Sections 16-16-1602 through 16-16-1605 .


             2298          (5) "Converting limited cooperative association" means a converting entity that is a
             2299      limited cooperative association.
             2300          (6) "Organizational documents" means articles of incorporation, bylaws, articles of
             2301      organization, operating agreements, partnership agreements, or other documents serving a
             2302      similar function in the creation and governance of an entity.
             2303          (7) "Personal liability" means personal liability for a debt, liability, or other obligation of
             2304      an entity imposed, by operation of law or otherwise, on a person that co-owns or has an interest
             2305      in the entity:
             2306          (a) by the entity's organic law solely because of the person co-owning or having an
             2307      interest in the entity; or
             2308          (b) by the entity's organizational documents under a provision of the entity's organic law
             2309      authorizing those documents to make one or more specified persons liable for all or specified
             2310      parts of the entity's debts, liabilities, and other obligations solely because the person co-owns or
             2311      has an interest in the entity.
             2312          (8) "Surviving entity" means an entity into which one or more other entities are merged,
             2313      whether the entity existed before the merger or is created by the merger.
             2314          Section 137. Section 16-16-1602 is enacted to read:
             2315          16-16-1602. Conversion.
             2316          (1) An entity that is not a limited cooperative association may convert to a limited
             2317      cooperative association and a limited cooperative association may convert to an entity that is
             2318      not a limited cooperative association pursuant to this section, Sections 16-16-1603 through
             2319      16-16-1605 , and a plan of conversion, if:
             2320          (a) the other entity's organic law authorizes the conversion;
             2321          (b) the conversion is not prohibited by the law of the jurisdiction that enacted the other
             2322      entity's organic law; and
             2323          (c) the other entity complies with its organic law in effecting the conversion.
             2324          (2) A plan of conversion must be in a record and must include:
             2325          (a) the name and form of the entity before conversion;


             2326          (b) the name and form of the entity after conversion;
             2327          (c) the terms and conditions of the conversion, including the manner and basis for
             2328      converting interests in the converting entity into any combination of money, interests in the
             2329      converted entity, and other consideration; and
             2330          (d) the organizational documents of the proposed converted entity.
             2331          Section 138. Section 16-16-1603 is enacted to read:
             2332          16-16-1603. Action on plan of conversion by converting limited cooperative
             2333      association.
             2334          (1) For a limited cooperative association to convert to another entity, a plan of
             2335      conversion must be approved by a majority of the board of directors, or a greater percentage if
             2336      required by the organic rules, and the board of directors must call a members meeting to
             2337      consider the plan of conversion, hold the meeting not later than 90 days after approval of the
             2338      plan by the board, and mail or otherwise transmit or deliver in a record to each member:
             2339          (a) the plan, or a summary of the plan and a statement of the manner in which a copy of
             2340      the plan in a record may be reasonably obtained by a member;
             2341          (b) a recommendation that the members approve the plan of conversion, or if the board
             2342      determines that because of a conflict of interest or other circumstances it should not make a
             2343      favorable recommendation, the basis for that determination;
             2344          (c) a statement of any condition of the board's submission of the plan of conversion to
             2345      the members; and
             2346          (d) notice of the meeting at which the plan of conversion will be considered, which
             2347      must be given in the same manner as notice of a special meeting of members.
             2348          (2) Subject to Subsections (3) and (4), a plan of conversion must be approved by:
             2349          (a) at least two-thirds of the voting power of members present at a members meeting
             2350      called under Subsection (1); and
             2351          (b) if the limited cooperative association has investor members, at least a majority of the
             2352      votes cast by patron members, unless the organic rules require a greater percentage vote by
             2353      patron members.


             2354          (3) The organic rules may require that the percentage of votes under Subsection (2)(a)
             2355      is:
             2356          (a) a different percentage that is not less than a majority of members voting at the
             2357      meeting;
             2358          (b) measured against the voting power of all members; or
             2359          (c) a combination of Subsections (3)(a) and (b).
             2360          (4) The vote required to approve a plan of conversion may not be less than the vote
             2361      required for the members of the limited cooperative association to amend the articles of
             2362      organization.
             2363          (5) Consent in a record to a plan of conversion by a member must be delivered to the
             2364      limited cooperative association before delivery of articles of conversion for filing if as a result of
             2365      the conversion the member will have:
             2366          (a) personal liability for an obligation of the association; or
             2367          (b) an obligation or liability for an additional contribution.
             2368          (6) Subject to Subsection (5) and any contractual rights, after a conversion is approved
             2369      and at any time before the effective date of the conversion, a converting limited cooperative
             2370      association may amend a plan of conversion or abandon the planned conversion:
             2371          (a) as provided in the plan; and
             2372          (b) except as prohibited by the plan, by the same affirmative vote of the board of
             2373      directors and of the members as was required to approve the plan.
             2374          (7) The voting requirements for districts, classes, or voting groups under Section
             2375      16-16-404 apply to approval of a conversion under this part.
             2376          Section 139. Section 16-16-1604 is enacted to read:
             2377          16-16-1604. Filings required for conversion -- Effective date.
             2378          (1) After a plan of conversion is approved:
             2379          (a) a converting limited cooperative association shall deliver to the division for filing
             2380      articles of conversion, which must include:
             2381          (i) a statement that the limited cooperative association has been converted into another


             2382      entity;
             2383          (ii) the name and form of the converted entity and the jurisdiction of its governing
             2384      statute;
             2385          (iii) the date the conversion is effective under the governing statute of the converted
             2386      entity;
             2387          (iv) a statement that the conversion was approved as required by this chapter;
             2388          (v) a statement that the conversion was approved as required by the governing statute
             2389      of the converted entity; and
             2390          (vi) if the converted entity is an entity organized in a jurisdiction other than this state
             2391      and is not authorized to transact business in this state, the street address and, if different,
             2392      mailing address of an office which the division may use for purposes of Section 16-16-120 ; and
             2393          (b) if the converting entity is not a converting limited cooperative association, the
             2394      converting entity shall deliver to the division for filing articles of organization, which must
             2395      include, in addition to the information required by Section 16-16-302 :
             2396          (i) a statement that the association was converted from another entity;
             2397          (ii) the name and form of the converting entity and the jurisdiction of its governing
             2398      statute; and
             2399          (iii) a statement that the conversion was approved in a manner that complied with the
             2400      converting entity's governing statute.
             2401          (2) A conversion becomes effective:
             2402          (a) if the converted entity is a limited cooperative association, when the articles of
             2403      conversion take effect pursuant to Subsection 16-16-203 (3); or
             2404          (b) if the converted entity is not a limited cooperative association, as provided by the
             2405      governing statute of the converted entity.
             2406          Section 140. Section 16-16-1605 is enacted to read:
             2407          16-16-1605. Effect of conversion.
             2408          (1) An entity that has been converted pursuant to this part is for all purposes the same
             2409      entity that existed before the conversion and is not a new entity but, after conversion, is


             2410      organized under the organic law of the converted entity and is subject to that law and other law
             2411      as it applies to the converted entity.
             2412          (2) When a conversion takes effect under this part:
             2413          (a) all property owned by the converting entity remains vested in the converted entity;
             2414          (b) all debts, liabilities, and other obligations of the converting entity continue as
             2415      obligations of the converted entity;
             2416          (c) an action or proceeding pending by or against the converting entity may be
             2417      continued as if the conversion had not occurred;
             2418          (d) except as prohibited by other law, all the rights, privileges, immunities, powers, and
             2419      purposes of the converting entity remain vested in the converted entity;
             2420          (e) except as otherwise provided in the plan of conversion, the terms and conditions of
             2421      the plan of conversion take effect; and
             2422          (f) except as otherwise provided in the plan of conversion, the conversion does not
             2423      dissolve a converting limited cooperative association for purposes of Part 12, Dissolution.
             2424          (3) A converted entity that is an entity organized under the laws of a jurisdiction other
             2425      than this state consents to the jurisdiction of the courts of this state to enforce any obligation
             2426      owed by the converting limited cooperative association if, before the conversion, the converting
             2427      limited cooperative association was subject to suit in this state on the obligation. A converted
             2428      entity that is an entity organized under the laws of a jurisdiction other than this state and not
             2429      authorized to transact business in this state appoints the division as its agent for service of
             2430      process for purposes of enforcing an obligation under this Subsection (3). Service on the
             2431      division under this Subsection (3) is made in the same manner and with the same consequences
             2432      as under Subsections 16-16-120 (3) and (4).
             2433          Section 141. Section 16-16-1606 is enacted to read:
             2434          16-16-1606. Merger.
             2435          (1) One or more limited cooperative associations may merge with one or more other
             2436      entities pursuant to this part and a plan of merger if:
             2437          (a) the governing statute of each of the other entities authorizes the merger;


             2438          (b) the merger is not prohibited by the law of a jurisdiction that enacted any of those
             2439      governing statutes; and
             2440          (c) each of the other entities complies with its governing statute in effecting the merger.
             2441          (2) A plan of merger must be in a record and must include:
             2442          (a) the name and form of each constituent entity;
             2443          (b) the name and form of the surviving entity and, if the surviving entity is to be created
             2444      by the merger, a statement to that effect;
             2445          (c) the terms and conditions of the merger, including the manner and basis for
             2446      converting the interests in each constituent entity into any combination of money, interests in
             2447      the surviving entity, and other consideration;
             2448          (d) if the surviving entity is to be created by the merger, the surviving entity's
             2449      organizational documents;
             2450          (e) if the surviving entity is not to be created by the merger, any amendments to be
             2451      made by the merger to the surviving entity's organizational documents; and
             2452          (f) if a member of a constituent limited cooperative association will have personal
             2453      liability with respect to a surviving entity, the identity of the member by descriptive class or
             2454      other reasonable manner.
             2455          Section 142. Section 16-16-1607 is enacted to read:
             2456          16-16-1607. Notice and action on plan of merger by constituent limited
             2457      cooperative association.
             2458          (1) For a limited cooperative association to merge with another entity, a plan of merger
             2459      must be approved by a majority vote of the board of directors or a greater percentage if
             2460      required by the association's organic rules.
             2461          (2) The board of directors shall call a members meeting to consider a plan of merger
             2462      approved by the board, hold the meeting not later than 90 days after approval of the plan by the
             2463      board, and mail or otherwise transmit or deliver in a record to each member:
             2464          (a) the plan of merger, or a summary of the plan and a statement of the manner in which
             2465      a copy of the plan in a record may be reasonably obtained by a member;


             2466          (b) a recommendation that the members approve the plan of merger, or if the board
             2467      determines that because of conflict of interest or other special circumstances it should not make
             2468      a favorable recommendation, the basis for that determination;
             2469          (c) a statement of any condition of the board's submission of the plan of merger to the
             2470      members; and
             2471          (d) notice of the meeting at which the plan of merger will be considered, which must be
             2472      given in the same manner as notice of a special meeting of members.
             2473          Section 143. Section 16-16-1608 is enacted to read:
             2474          16-16-1608. Approval or abandonment of merger by members.
             2475          (1) Subject to Subsections (2) and (3), a plan of merger must be approved by:
             2476          (a) at least two-thirds of the voting power of members present at a members meeting
             2477      called under Subsection 16-16-1607 (2); and
             2478          (b) if the limited cooperative association has investor members, at least a majority of the
             2479      votes cast by patron members, unless the organic rules require a greater percentage vote by
             2480      patron members.
             2481          (2) The organic rules may provide that the percentage of votes under Subsection (1)(a)
             2482      is:
             2483          (a) a different percentage that is not less than a majority of members voting at the
             2484      meeting;
             2485          (b) measured against the voting power of all members; or
             2486          (c) a combination of Subsections (2)(a) and (b).
             2487          (3) The vote required to approve a plan of merger may not be less than the vote
             2488      required for the members of the limited cooperative association to amend the articles of
             2489      organization.
             2490          (4) Consent in a record to a plan of merger by a member must be delivered to the
             2491      limited cooperative association before delivery of articles of merger for filing pursuant to
             2492      Section 16-16-1609 if as a result of the merger the member will have:
             2493          (a) personal liability for an obligation of the association; or


             2494          (b) an obligation or liability for an additional contribution.
             2495          (5) Subject to Subsection (4) and any contractual rights, after a merger is approved, and
             2496      at any time before the effective date of the merger, a limited cooperative association that is a
             2497      party to the merger may approve an amendment to the plan of merger or approve abandonment
             2498      of the planned merger:
             2499          (a) as provided in the plan; and
             2500          (b) except as prohibited by the plan, with the same affirmative vote of the board of
             2501      directors and of the members as was required to approve the plan.
             2502          (6) The voting requirements for districts, classes, or voting groups under Section
             2503      16-16-404 apply to approval of a merger under this part.
             2504          Section 144. Section 16-16-1609 is enacted to read:
             2505          16-16-1609. Filings required for merger -- Effective date.
             2506          (1) After each constituent entity has approved a merger, articles of merger must be
             2507      signed on behalf of each constituent entity by an authorized representative.
             2508          (2) The articles of merger must include:
             2509          (a) the name and form of each constituent entity and the jurisdiction of its governing
             2510      statute;
             2511          (b) the name and form of the surviving entity, the jurisdiction of its governing statute,
             2512      and, if the surviving entity is created by the merger, a statement to that effect;
             2513          (c) the date the merger is effective under the governing statute of the surviving entity;
             2514          (d) if the surviving entity is to be created by the merger and:
             2515          (i) will be a limited cooperative association, the limited cooperative association's articles
             2516      of organization; or
             2517          (ii) will be an entity other than a limited cooperative association, the organizational
             2518      document that creates the entity;
             2519          (e) if the surviving entity is not created by the merger, any amendments provided for in
             2520      the plan of merger to the organizational document that created the entity;
             2521          (f) a statement as to each constituent entity that the merger was approved as required


             2522      by the entity's governing statute;
             2523          (g) if the surviving entity is a foreign organization not authorized to transact business in
             2524      this state, the street address and, if different, mailing address of an office which the division may
             2525      use for the purposes of Section 16-16-120 ; and
             2526          (h) any additional information required by the governing statute of any constituent
             2527      entity.
             2528          (3) Each limited cooperative association that is a party to a merger shall deliver the
             2529      articles of merger to the division for filing.
             2530          (4) A merger becomes effective under this part:
             2531          (a) if the surviving entity is a limited cooperative association, upon the later of:
             2532          (i) compliance with Subsection (3); or
             2533          (ii) subject to Subsection 16-16-203 (3), as specified in the articles of merger; or
             2534          (b) if the surviving entity is not a limited cooperative association, as provided by the
             2535      governing statute of the surviving entity.
             2536          Section 145. Section 16-16-1610 is enacted to read:
             2537          16-16-1610. Effect of merger.
             2538          (1) When a merger becomes effective:
             2539          (a) the surviving entity continues or comes into existence;
             2540          (b) each constituent entity that merges into the surviving entity ceases to exist as a
             2541      separate entity;
             2542          (c) all property owned by each constituent entity that ceases to exist vests in the
             2543      surviving entity;
             2544          (d) all debts, liabilities, and other obligations of each constituent entity that ceases to
             2545      exist continue as obligations of the surviving entity;
             2546          (e) an action or proceeding pending by or against any constituent entity that ceases to
             2547      exist may be continued as if the merger had not occurred;
             2548          (f) except as prohibited by law other than this chapter, all rights, privileges, immunities,
             2549      powers, and purposes of each constituent entity that ceases to exist vest in the surviving entity;


             2550          (g) except as otherwise provided in the plan of merger, the terms and conditions of the
             2551      plan take effect;
             2552          (h) except as otherwise provided in the plan of merger, if a merging limited cooperative
             2553      association ceases to exist, the merger does not dissolve the association for purposes of Part 12,
             2554      Dissolution;
             2555          (i) if the surviving entity is created by the merger and:
             2556          (i) is a limited cooperative association, the articles of organization become effective; or
             2557          (ii) is an entity other than a limited cooperative association, the organizational
             2558      document that creates the entity becomes effective; and
             2559          (j) if the surviving entity is not created by the merger, any amendments made by the
             2560      articles of merger for the organizational documents of the surviving entity become effective.
             2561          (2) A surviving entity that is an entity organized under the laws of a jurisdiction other
             2562      than this state consents to the jurisdiction of the courts of this state to enforce any obligation
             2563      owed by the constituent entity if, before the merger, the constituent entity was subject to suit in
             2564      this state on the obligation. A surviving entity that is an entity organized under the laws of a
             2565      jurisdiction other than this state and not authorized to transact business in this state appoints the
             2566      division as its agent for service of process for purposes of enforcing an obligation under this
             2567      Subsection (2). Service on the division under this Subsection (2) is made in the same manner
             2568      and with the same consequences as in Subsections 16-16-120 (3) and (4).
             2569          Section 146. Section 16-16-1611 is enacted to read:
             2570          16-16-1611. Consolidation.
             2571          (1) Constituent entities that are limited cooperative associations or foreign cooperatives
             2572      may agree to call a merger a consolidation under this part.
             2573          (2) All provisions governing mergers or using the term merger in this chapter apply
             2574      equally to mergers that the constituent entities choose to call consolidations under Subsection
             2575      (1).
             2576          Section 147. Section 16-16-1612 is enacted to read:
             2577          16-16-1612. Part not exclusive.


             2578          This part does not prohibit a limited cooperative association from being converted or
             2579      merged under law other than this chapter.
             2580          Section 148. Section 16-16-1701 is enacted to read:
             2581     
Part 17. Miscellaneous Provisions

             2582          16-16-1701. Uniformity of application and construction.
             2583          In applying and construing this uniform act, consideration must be given to the need to
             2584      promote uniformity of the law with respect to its subject matter among states that enact it.
             2585          Section 149. Section 16-16-1702 is enacted to read:
             2586          16-16-1702. Relation to Electronic Signatures in Global and National Commerce
             2587      Act.
             2588          This chapter modifies, limits, or supersedes the federal Electronic Signatures in Global
             2589      and National Commerce Act, 15 U.S.C. Sec. 7001 et seq., but does not modify, limit, or
             2590      supersede Section 101(c) of that act, 15 U.S.C. Sec. 7001(c) or authorize electronic delivery of
             2591      any of the notices described in Section 103(b) of that act, 15 U.S.C. Sec. 7003(b).
             2592          Section 150. Section 16-16-1703 is enacted to read:
             2593          16-16-1703. Savings clause.
             2594          This chapter does not affect an action or proceeding commenced, or right accrued,
             2595      before May 5, 2008.


[Bill Documents][Bills Directory]