Iowa Code 501A.901 – Membership interests
Patron membership interests shall be the only membership interests of a cooperative unless nonpatron memberships are authorized under subsection 2. If nonpatron interests are authorized, the patron membership interests collectively shall have not less than fifty percent of the cooperative’s financial rights to profit allocations and distributions. However, the cooperative’s articles or bylaws may be amended by the affirmative vote of patron members to allow the cooperative’s financial rights to profit allocations and distributions to patron members collectively to be a lesser amount but in no case less than fifteen percent.
Terms Used In Iowa Code 501A.901
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Articles: means the articles of organization of a cooperative as originally filed or subsequently amended as provided in this chapter. See Iowa Code 501A.102
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Board: means the board of directors of a cooperative. See Iowa Code 501A.102
- Cooperative: means a business association organized under this chapter. See Iowa Code 501A.102
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Member: means a person or entity reflected on the books of a cooperative as the owner of governance rights of a membership interest of the cooperative and includes patron and nonpatron members. See Iowa Code 501A.102
- Member control agreement: means an instrument which controls the investment or governance of nonpatron members, which may be executed by the board and one or more nonpatron members and which may provide for their individual or collective rights to elect directors or to participate in the distribution or allocation of profits or losses. See Iowa Code 501A.102
- Membership interest: includes patron membership interests and nonpatron membership interests. See Iowa Code 501A.102
- Patron: means a person or entity who conducts patronage with the cooperative, regardless of whether the person is a member. See Iowa Code 501A.102
- person: means individual, corporation, limited liability company, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity. See Iowa Code 4.1
- property: includes personal and real property. See Iowa Code 4.1
The authorized amount and divisions of patron membership interests and, if authorized by the patron members, nonpatron membership interests, may be increased, decreased, established, or altered in accordance with the restrictions in this chapter by amending the articles or bylaws at a regular members’ meeting or at a special members’ meeting called for the purpose of the amendment.
Authorized membership interests may be issued on terms and conditions prescribed in the articles, bylaws, or if authorized in the articles or bylaws as determined by the board. The cooperative shall disclose to any person acquiring membership interests to be issued by the cooperative, the organization, capital structure, and known business prospects and risks of the cooperative, the nature of the governance and financial rights of the membership interest being acquired and of other classes of membership and membership interests. The cooperative shall notify all members of the membership interests being issued by the cooperative. A membership interest shall not be issued until subscription price of the membership interest has been paid for in money or property with the value of the property to be contributed approved by the board.
After issuance by the cooperative, membership interests in a cooperative may only be sold or transferred with the approval of the board. The board may adopt resolutions prescribing procedures to prospectively approve transfers.
The articles or bylaws may provide that the cooperative or the patron members, individually or collectively, have the first privilege of purchasing the membership interests of any class of membership interests offered for sale. The first privilege to purchase membership interests may be satisfied by notice to other members that the membership interests are for sale and a procedure by which members may proceed to attempt to purchase and acquire the membership interests.