Illinois Cooperative Act

Transcription

1 Illinois Cooperative Act This research has been provided by Bill Covey, Daniel Hall, and Courtney Kahle of Grpowmark, Inc., 1701 Towanda Avenue, P.O. Box 2500, Bloomington, IL 61702, , This research is intended to provide detailed information on specific provisions of the Illinois Cooperative Act. The table of contents provides a list of provision topics addressed. The descriptions of the statute provisions include legal citations to the specific part of the statute where the topic is addressed so users can easily look at the statute language. A URL for the statute is also provided. This research has been provided by private individuals and does not represent official policy of the U.S. Department of Agriculture or any other government agency. The research is presented only to provide summary information to persons interested in the state statutory treatment of Illinois cooperatives. Individuals considering organizing a cooperative are advised to seek professional advice from an expert on cooperative law who is familiar with the specifics of the individual s situation.

2 Table of Contents Illinois Cooperative Act Cooperative Statute: Policy, Purposes, Powers State and Statute Title Statute Nickname, Legal Citation, and URL Application of General Law Conflict of Laws Construction of Law Declaration of Statutory Policy Statutory Qualification as a Cooperative Cooperative Operational Description "Nonprofit" Nature of Cooperative Cooperative Purpose Perpetual Duration and Succession General Powers Specific Powers Inter-Association Agreements Prohibited Powers Prohibited Lines of Business Emergency Powers Ultra Vires Quo Warranto Proceeding Miscellaneous Cooperative Association Formation Specific Cooperative Forms Number of Organizers Requirements for Organizers Promoter Activities, Expenses

3 2.5. State Filing Requirements State Fees Start of Legal Existence Cooperative Name Additional Name Requirements Permitted Businesses Nonstock Cooperatives Stock Cooperatives Prerequisites to Formation Annual Renewal Annual Report Annual Report Content Failure to File State Assistance Foreign Cooperatives Domestic Cooperatives Miscellaneous Cooperative Articles of Association Signatures and Acknowledgment Cooperative Name Cooperative Purpose Place of Business Term of Existence Incorporators, Subscribers Please Number of Directors Director Term Registered Agent Limitations of Power Limitations of Liability Membership Definition Member Classes... 16

4 3.14. Member Property Rights Member Voting Rights Membership Certificates Capital Stock Amount of Capital Stock Par Value Authorized Classes of Stock Par Value of Authorized Classes of Stock Acquire or Recall Stock Voting Rules Distributions or Apportionments Capital Accounts Asset Distribution on Liquidation Miscellaneous Provisions Amendment Initiation Notice of Amendment When Amendments Occur Quorum Requirements Margin Required for Approval Voting Members Board Authority Filing of Amendment Restrictions on Amendment Miscellaneous Rules Cooperative Definitions Cooperatives Defined in Statute Agricultural Cooperative Definition Worker Cooperative Definition Other Cooperative Definitions Agricultural Products Definitions Other Definitions... 20

5 5. Cooperative Bylaws Bylaw Requirement Adoption Time Requirements Adoption Approval Who May Adopt Bylaws Filing Bylaws Bylaw Purposes Bylaw Contents Member Admission Membership Rights Fees, Service Charges Membership Suspension or Cessation Membership Termination Interests Meeting Requirements Annual Meetings Special Meetings Meeting Location Quorum Mailing and Proxies Videoconferences District Elections Director Qualifications Special Interest Directors Director Duties Term of Office Director's Quorum Board Committees Officer Qualifications, Duties Service Charges Marketing Contracts Net Margin Distributions

6 5.31. Reserves Stock Ownership Limits Stock or Membership Restrictions Stock Dividends Membership Suspension Interests at Termination Bylaw Amendments Bylaw Violations Other Bylaw Terms Cooperative Members Member Identified Farmer Membership Tenant Member Worker Member Non-Patron Members Nonmember Interests Other Membership Definitions Fostering Membership Membership Fee New Members Membership Limitations Membership Transfers Membership Contribution Member Distribution Rights Stock or Membership Certificates Certificate Information Member Property or Equity Rights Non-Patron Equity Voting Patronage Voting Director Elections

7 6.22. Investor Members Patronage Dividends Retained Allocations Nonmember Rights Nonmember Limitations Allocations Derivative Suit Liability Limitation Records Inspection Membership Suspension Membership Termination Termination Procedure Member Termination Rights Membership Valuation Miscellaneous

8 1. Cooperative Statute: Policy, Purposes, Powers 1.1. State and Statute Title. Please name the state and the title of the cooperative organization law. Provide a nickname for the cooperative law using the state abbreviation hyphenated with a brief statute descriptor. Illinois CO-Operative Act; Il-Gen 1.2. Statute Nickname, Legal Citation, and URL. Please provide a full legal citation to the statute and, if available, a uniform resource locator (URL) address where the statute may be accessed for free. 805 Ill. Comp. Stat. 310/1-310/27; Application of General Law. Briefly describe whether general corporate law or general limited liability company law applies to cooperatives organized under the statute Conflict of Laws. Briefly describe any provisions addressing any conflict between the cooperative statute and general corporate or general limited liability company law Construction of Law. Briefly describe any reference to how the statute should be construed Declaration of Statutory Policy. Briefly state any broad declaration of statutory policy (i.e., description of conditions in agriculture or in the economy prompting the enactment of the cooperative statute).

9 1.7. Statutory Qualification as a Cooperative. Briefly describe any statement indicating that a cooperative is an entity that qualifies under this particular statute. Il-Gen 805 ILCS 310/1: Cooperative associations may be organized for a number of purposes Cooperative Operational Description. Briefly describe any provision that gives a general, operational description of a cooperative "Nonprofit" Nature of Cooperative. Briefly describe any reference to the "nonprofit" nature of the cooperative inasmuch as it is organized to pass margins to users rather than to make profit for itself Cooperative Purpose. List any specific purpose(s) of the cooperative. Il-Gen 805 ILCS 310/1: Selling or manufacturing merchandise, or cultivating and raising vegetables, fruits, other products or animals for food Perpetual Duration and Succession. Does a cooperative have perpetual duration and succession? Il-Gen 805 ILCS 310/1: Cooperative may have perpetual duration and succession General Powers. State briefly any general power mentioned (e.g., the power to do all things necessary or convenient to carry out the cooperative's business) Specific Powers. Please list any specific powers mentioned (e.g. buy, sell, or produce, process products, handle byproducts, make purchases for members, manufacture, enter contracts, act as agent, own property, sue and be sued, develop and own patents, trademarks, and copyrights, borrow and lend money, invest, etc.).

10 Il-Gen 805 ILCS 310/3, 310/6 and 310/7: May sue and be sued, may have a common seal, may own, possess, enjoy and sell real and personal property, elect directors and officers, borrow money, and obtain right of first refusal to acquire its stock Inter-Association Agreements. Briefly describe any provision that permits activities between or among two or more cooperatives. Il-Gen805 ILCS 310/10, 310/11 and 310/20: May own stock in other cooperatives and acquire other associations with the cooperative's stock Prohibited Powers. State briefly (list) powers denied to the cooperative Prohibited Lines of Business. State briefly (list) prohibited lines of business Emergency Powers. State briefly any emergency powers Ultra Vires. Briefly describe any provision addressing when a cooperative exceeds its legal purpose Quo Warranto Proceeding. Describe briefly any provision addressing any inquiry into the legitimacy of an association's operation as a cooperative Miscellaneous. Describe any other provision(s) that address cooperative powers or their limits.

11 2. Cooperative Association Formation 2.1. Specific Cooperative Forms. Name any specific cooperative forms mentioned by the statute (e.g., worker cooperative, agricultural cooperative, value-added producer cooperative, etc.). Il-Gen 805 ILCS 310/1: Marketing cooperative in general terms Number of Organizers. Is a minimum number of organizers required? Il-Gen 805 ILCS 310/1: 5 or more subscribers Requirements for Organizers. Are there any other requirements for organizers (e.g. an organizer must be a "person," a "natural person," an "association," must be a state resident, must be a certain age, must produce agricultural products, etc.)? 2.4. Promoter Activities, Expenses. Briefly describe any provisions that address the activities and or expenses of individuals ("promoters") engaged in assisting in the organization of the cooperative. Il-Gen 805 ILCS 310/2: Cannot charge a commission for selling stock in the cooperative State Filing Requirements. Briefly state where and how to file the articles of incorporation or organization. Il-Gen 805 ILCS 310/4 File duplicate articles of incorporation with the Secretary of State State Fees. State the fee amount for starting a cooperative. Il-Gen: Amount not stated in statute, but currently, the amount is $175.

12 2.7. Start of Legal Existence. When does the cooperative's legal existence begin? Il-Gen 805 ILCS 310/4: Upon filing of the articles of incorporation by the Secretary of State Cooperative Name. Is "cooperative" or another term of art required as part of the association's name? Il-Gen: NA, but pursuant to 805 ILCS 310/22, no association or corporation can use "Cooperative" as part of its name without complying with this statute except a corporation organized under the Business Corporation Act of 1983 for the purpose of owing residential property on a cooperative basis, or a cooperative corporation organized under the General Not For Profit Corporation Act of Additional Name Requirements. Is the cooperative's name required to be unique? Permitted Businesses. Are there restrictions on types of business entities that can be called a cooperative? Il-Gen 805 ILCS 310/22: No association or corporation can use "Co-operative" as part of its name without complying with this statute except a corporation organized under the Business Corporation Act of 1983 for the purpose of owing residential property on a cooperative basis, or a cooperative corporation organized under the General Not For Profit Corporation Act of Nonstock Cooperatives. Are nonstock cooperatives permitted? Il-Gen: There is no reference to nonstock cooperatives and several references to stock and shares Stock Cooperatives. Are stock cooperatives permitted? Il-Gen 805 ILCS 310/1, 310/2: Yes, these provisions reference shares of stock. Several other sections refer to stock.

13 2.13. Prerequisites to Formation. State briefly any special prerequisites to forming a cooperative (e.g. requirement of certain percentage of capital paid prior to organization or incorporation or requirement that a permit be obtained) Annual Renewal. Is an annual renewal of the organization or incorporation required? Il-Gen 805 ILCS 310/5, 805 ILCS 310/16: Yes, file an annual report and file same fees as Business Corporation Annual Report. Is an annual report required? Il-Gen 805 ILCS 310/16: Yes Annual Report Content. Briefly describe any provisions stating the required content in the annual report. Il-Gen 805 ILCS 310/16: Name of the company, its principal place of business, generally a statement as to its business, showing the total amount of business transacted, amount of capital stock subscribed for and paid in, number of shareholders, total expenses of operation, amount of indebtedness or liabilities, and its profits and losses Failure to File. Briefly describe any provision that addresses consequences for failure to file an annual report State Assistance. Briefly describe any provision that allows for state assistance to individuals contemplating forming a cooperative Foreign Cooperatives. Briefly describe any provisions on permission for an out-ofstate cooperative to do business in the state.

14 2.20. Domestic Cooperatives. Briefly describe any provision allowing a domestic cooperative to do business in another state Miscellaneous. Briefly describe any other provision addressing the start of a cooperative that was not addressed by the previous questions. Il-Gen 805 ILCS 310/1: Total consideration for shares to be issued cannot be less than $1,000. Il-Gen 805 ILCS 310/2 and 805 ILCS 310/9: No person can own or control more than ten shares of capital stock. The shares of stock shall not be less than $5 per share or more than $1,000 per share. 3. Cooperative Articles of Association 3.1. Signatures and Acknowledgment. Briefly describe any provision that requires that the articles be signed, subscribed, acknowledged, or notarized. Il-Gen 805 ILCS 310/1: Become incorporated by making a statement under the subscribers' signatures and duly acknowledged before an officer authorized to take acknowledgements Cooperative Name. Do the organizing documents or articles of incorporation require the cooperative's name? Il-Gen 805 ILCS 310/1: Yes Cooperative Purpose. Are the organizing documents or articles required to state a purpose for the cooperative? Il-Gen 805 ILCS 310/1: Yes.

15 3.4. Place of Business. Is the place of business required? Il-Gen 805 ILCS 310/1: No, only the registered office Term of Existence. Briefly describe any provision requiring that the term of existence of the organization be required in the articles. Il-Gen 805 ILCS 310/1: Yes. Period of duration may be perpetual Incorporators, Subscribers. Briefly describe any provision that requires that the names and addresses of incorporators and or subscribers be identified in the articles. Il-Gen 805 ILCS 310/1: Yes, name and address of each incorporator required Number of Directors. Briefly describe any provision requiring a statement in the articles of the number and of directors. Il-Gen 805 ILCS 310/7: At least 5 directors required. Il-Gen 805 ILCS 310/1: Section requires the number of directors to be elected at the first meeting Director Term. Briefly describe any provision requiring that the term of the directors be specified in the articles Registered Agent. Is the name of a registered agent required? Il-Gen 805 ILCS 310/1: Yes Limitations of Power. Briefly describe any required or permitted provisions in the organizing document limiting the powers of the cooperative, its board, and or its members.

16 3.11. Limitations of Liability. Briefly describe any required or permitted organizing document provision(s) regarding limitation of liability with respect to the organizers or incorporators, officers, members, and or shareholders Membership Definition. Briefly describe any statutory reference to defining membership in the organizing document. The statute does not reference membership Member Classes. Is a description of member classes required or permitted? Member Property Rights. Is a description required or permitted regarding member property rights? Member Voting Rights. Is a description required or permitted regarding member voting rights? Membership Certificates. Is a statement required or permitted on whether the cooperative is organized with membership certificates? Capital Stock. Is a statement required or permitted that the cooperative is organized with capital stock? Il-Gen 805 ILCS 310/1: Yes, section suggests the corporation will be organized with capital stock. The statute only references stock.

17 3.18. Amount of Capital Stock. Is a description of the amount of capital stock required or permitted? Il-Gen 805 ILCS 310/1: Yes Par Value. Is a statement of par value required or permitted? Il-Gen 805 ILCS 310/1: Yes Authorized Classes of Stock. Is a description of other authorized classes of stock required or permitted? Il-Gen 805 ILCS 310/1: Yes Par Value of Authorized Classes of Stock. Is a statement of par value required or permitted for other authorized classes of stock? Il-Gen 805 ILCS 310/1: Yes Acquire or Recall Stock. Is a statement of a reservation of right for the cooperative to acquire or recall stock required or permitted? Voting Rules. State briefly if a description of voting rules is required or permitted Distributions or Apportionments. Is a description of distributional apportionment of dividends, earnings, and losses required/permitted? Il-Gen 805 ILCS 310/15, 805 ILCS 310/19: Bylaws required to address distribution of profits.

18 3.25. Capital Accounts. Is a description of a cooperative's capital account(s) required or permitted? Il-Gen 805 ILCS 310/1: Description only required for classes of listed stock in section Asset Distribution on Liquidation. Is a statement on distribution of assets on liquidation required or permitted? Miscellaneous Provisions. Briefly describe any additional important provisions Amendment Initiation. Briefly describe the initiation of an amendment to the organizing document. Il-Gen 805 ILCS 310/8: Shareholders can amend the articles of incorporation at any regular or special meeting Notice of Amendment. Briefly describe notice requirements regarding an amendment to the organizing document. Il-Gen 805 ILCS 310/8: At any regular shareholders' meeting called for that purpose, or ten days' notice of a special meeting When Amendments Occur. Briefly describe any requirement regarding when the amendments must be made (e.g. during the annual membership meeting). Il-Gen 805 ILCS 310/8: At any regular shareholders' meeting called for that purpose, or ten days' notice of a special meeting Quorum Requirements. Briefly describe any quorum requirements for an amendment.

19 3.32. Margin Required for Approval. State briefly whether a majority or supermajority is required for approval of an amendment and state amount (e.g., 51 percent, 2/3 majority, etc.). Il-Gen 805 ILCS 310/8: Two thirds of all shareholders Voting Members. List types of members who can vote on the amendment. Il-Gen 805 ILCS 310/8: All shareholders Board Authority. Describe briefly any authority of the board of directors to make amendments Filing of Amendment. Describe briefly how an amendment is executed and filed. Il-Gen 805 ILCS 310/8: Within 30 days after the adoption of an amendment to its articles of incorporation the association shall cause a certified copy of such amendment to be recorded in the office of the Secretary of State and of the recorder in the county where the principal place of business is located Restrictions on Amendment. Describe briefly any restrictions on changes to the articles of organization or incorporation other than supermajority requirements. Il-Gen 805 ILCS 310/8: The power to amend the articles of incorporation shall include the power to increase or diminish the amount of capital stock and the number and par value of shares, the par value, however, not to be reduced below that provided for in this act; provided, however, that the amount of the capital stock shall not be diminished below the amount of paid up capital at the time the amendment is adopted, unless there be, at that time, in the treasury sufficient undivided profits over and above all legal debts or other like obligations to off-set the capital so returned to shareholders Miscellaneous Rules. Describe briefly any miscellaneous rules regarding amendments to the articles of organization.

20 4. Cooperative Definitions 4.1. Cooperatives Defined in Statute. Please list specific types of cooperatives defined in the statute (e.g., worker cooperative, consumer cooperative, producer cooperative). Il-Gen 805 ILCS 310/1: Marketing cooperative in general terms. No specific types are defined Agricultural Cooperative Definition. Please provide a brief summary of any definition of an agricultural cooperative Worker Cooperative Definition. Please describe briefly any worker cooperative definition Other Cooperative Definitions. Please describe briefly any other definitions of types of cooperatives Agricultural Products Definitions. Please list any agricultural products defined. Il-Gen No products are defined, but vegetables, fruits, other products, animals for food, general or special agricultural or horticultural, orchard, garden, nursery or dairy produce are listed Other Definitions. Please describe briefly any unique or unusual definitions unlikely to be addressed in other parts of the surveys.

21 5. Cooperative Bylaws 5.1. Bylaw Requirement. Briefly describe any provisions addressing whether a cooperative is required to adopt bylaws. Il-Gen 805 IlCS 310/24: Provision says shareholders may adopt bylaws not inconsistent with the statute. Il-Gen 805 ILCS 310/3; 310/7; 310/12; 310/15; and 310/1: Provisions suggests the cooperative will have bylaws Adoption Time Requirements. Describe any time requirements regarding adoption of the bylaws Adoption Approval. Briefly describe any provisions addressing the approval of the bylaws by vote or written assent including the margin of approval required Who May Adopt Bylaws. Briefly describe who may adopt the bylaws (e.g., members, stockholders, organizing members). Il-Gen 805 IlCS 310/24: Shareholders Filing Bylaws. Briefly describe any requirements regarding filing and or where bylaws must be kept Bylaw Purposes. Briefly describe any statutory statements regarding the purpose of the bylaws.

22 5.7. Bylaw Contents. Briefly describe any general statutory statement regarding the contents of the bylaws Member Admission. Briefly describe permitted or mandated bylaw provisions regarding conditions for member admission Membership Rights. Briefly describe permitted or mandated bylaw provisions regarding a description of membership rights Fees, Service Charges. Briefly describe permitted or mandated bylaw provisions regarding fees and service charges by the cooperative Membership Suspension or Cessation. Describe any provisions in the bylaws regarding suspension or cessation of membership Membership Termination Interests. Please describe any bylaw requirements regarding membership interests at termination Meeting Requirements. Briefly describe whether the bylaws are required to state meeting requirements.

23 5.14. Annual Meetings. Briefly describe whether the bylaws are required to provide for annual meetings Special Meetings. Briefly describe whether the bylaws are required to provide for special meetings Meeting Location. Describe briefly whether a meeting location is required to be stated in the bylaws Quorum. Describe briefly bylaw provisions permitted or mandated regarding quorum requirements Mailing and Proxies. Describe briefly bylaw provisions permitted or mandated regarding mailing and proxies, including any rules regarding electronic delivery of proxies. Il-Gen 805 ILCS 310/14: Shareholders may vote by mail if the shareholder has written notice of the motion and the vote is forwarded with the proposed motion or resolution. 805 ILCS 310/21: Shareholders may vote by proxy Videoconferences. Describe briefly bylaw provisions that permit or mandate electronic options for meetings (e.g., videoconferences) District Elections. Describe briefly bylaw provisions permitting or mandating director election by district.

24 5.21. Director Qualifications. Briefly list required or mandated bylaw provisions regarding directors' qualifications. Il-Gen 805 ILCS 310/7: Directors must be a shareholder Special Interest Directors. Briefly describe permitted or mandatory bylaw provisions regarding the appointment of directors that represent special interests or expertise (e.g., the interests of the general public, "investor members," or a specific area of expertise) Director Duties. Briefly list director duties required or permitted to be described in the bylaws Term of Office. Briefly describe permitted or mandated bylaw provisions on a director's term of office. Il-Gen 805 ILCS 310/7: Such term of office as the bylaws may prescribe Director's Quorum. Briefly describe permitted or mandated bylaw provisions on what constitutes a directors' quorum Board Committees. Briefly describe permitted or mandated bylaw provisions regarding board committees Officer Qualifications, Duties. Briefly describe permitted or mandated bylaw provisions related to the qualifications and duties of cooperative officers.

25 5.28. Service Charges. Briefly describe permitted or mandated bylaw provisions regarding service charges Marketing Contracts. Briefly describe permitted or mandated bylaw provisions regarding marketing contracts including provisions allowing liquidated damages for breach Net Margin Distributions. Briefly describe permitted or mandated bylaw provisions regarding net margins distributions. Il-Gen 805 ILCS 310/15: Profits and earnings are distributed to those entitled thereto by the cooperative's bylaws. Il Gen 805 ILCS 310/19: Profits shall be distributed, first-upon stock and to purchasers or sellers (customers) based upon the percentage of purchases, or sales; or, second-to purchasers or sellers exclusively, based upon the percentage of purchasers or sale; and no vested interest shall attach to any of the above methods which shall prevent changing from and substituting another provision provided herein Reserves. Briefly describe permitted or mandated bylaw provisions regarding investment of reserves Stock Ownership Limits. Describe permitted or mandated bylaw provisions regarding stock ownership limits. Il-Gen 805 ILCS 310/2, 810 ILCS 310/9: Cannot own or subscribe for more than ten shares Stock or Membership Restrictions. Describe permitted or mandated bylaw provisions regarding stock or membership restrictions.

26 Il-Gen 805 ILCS 310/3: Cooperative may retain in its bylaws a right of first refusal to buy any shareholder's stock Stock Dividends. Describe permitted or mandated bylaw provisions regarding stock dividends Membership Cessation. Describe permitted or mandated bylaw provisions regarding cessation of membership Membership Suspension. Describe permitted or mandated bylaw provisions regarding suspension of membership Interests at Termination. Describe permitted or mandated bylaw provisions regarding member interests at termination of the cooperative Bylaw Amendments. Describe how the bylaws may be amended Bylaw Violations. Describe mandated or permitted bylaw terms that address penalties for bylaw violations Other Bylaw Terms. Describe any other mandated or permitted bylaw terms. Il-Gen 805 ILCS 310/12: Certificates of stock shall not be issued to any subscriber until fully paid, but the bylaws of the association may allow subscribers to vote as shareholders, provided, part of the stock subscribed has been paid in cash.

27 Il-Gen 805 ILCS 310/15: Any member failing to keep on deposit with such association the amount or amounts from time to time required to be kept on deposit by its bylaws shall share in any such distribution only in the proportion to which he has complied with such bylaws. 6. Cooperative Members 6.1. Member Identified. List who may be a member (e.g., person, corporation, partnership, association, trust, executor, administrator, receiver, political subdivision, producer, tenant, etc.). Il-Gen: 805 ILCS 310/20: NA, generally, but a cooperative can own stock in another cooperative Farmer Membership. Describe briefly any provisions defining members as agricultural producers Tenant Member. Briefly describe any provisions defining a member as a tenant of land used for agricultural production Worker Member. Briefly describe any provision defining a member as a worker Non-Patron Members. Describe briefly any provisions allowing non-patron members (e.g., an "investor member," etc.)?

28 6.6. Nonmember Interests. Briefly describe any definition(s) of (a) nonmember(s) who may hold shares or proprietary interests in the cooperatives Other Membership Definitions. Briefly describe any other membership definitions Fostering Membership. Describe any provision that allows the cooperative to foster membership by advertising, education, or other lawful means Membership Fee. Briefly describe any provision that addresses the membership fees. Il-Gen 805 ILCS 310/15: Statute refers to members keeping funds on deposit with the cooperative New Members. Briefly describe provisions on the admission of new members Membership Limitations. Briefly describe any limitation on the number of members Membership Transfers. Briefly describe any restrictions on membership transfers. Il-Gen 805 ILCS 310/3: Cooperative can retain right of first refusal. Il-Gen 805 ILCS 310/23: No transfer without approval of a majority of directors, but can appeal to members of director denial of transfer Membership Contribution. Describe briefly any provision that addresses ongoing membership contributions.

29 Il-Gen 805 ILCS 310/15: Provision refers to members keeping funds on deposit with the cooperative Member Distribution Rights. Briefly describe any provision addressing a member's distribution rights. Il-Gen 805 ILCS 310/15: Profits and earnings are distributed to those entitled thereto by the cooperative's bylaws. Il-Gen 805 ILCS 310/19: Profits shall be distributed, first-upon stock and to purchasers or sellers (customers) based upon the percentage of purchases, or sales; or, second-to purchasers or sellers exclusively, based upon the percentage of purchasers or sales; and no vested interest shall attach to any of the above methods which shall prevent changing from and substituting another provision provided herein Stock or Membership Certificates. Briefly describe any provisions addressing how membership is evidenced (e.g., by stock or membership certificates). Il-Gen 805 ILCS 310/12: Statute suggests stock certificates will be issued Certificate Information. Describe briefly if any provision that addresses whether any particular information is required to appear on the stock or membership certificates Member Property or Equity Rights. Briefly describe any provisions addressing a member's property or equity rights in the cooperative Non-Patron Equity. Briefly describe any provision addressing equity rights of a nonpatron Voting. Briefly describe any statutory reference to "one member, one vote."

30 Il-Gen 805 ILCS 310/7, 805 ILCS 310/8, 805 ILCS 310/10: No specific reference but each reference to a shareholder vote suggests "one member, one, vote;" directors elected by shareholders and majority of shareholders can remove a director or officer for cause; two-thirds vote of shareholders needed to amend articles of incorporation; majority of members may approve investment in other cooperative Patronage Voting. Briefly describe whether the cooperative statute permits or requires patronage voting Director Elections. Briefly describe any statutory requirements regarding the election of directors by patron members. Il-Gen 805 ILCS 310/7: Directors elected by and from shareholders Investor Members. Briefly describe any limitations on voting by non-patron equity stakeholders or "investor members." Patronage Dividends. Briefly describe member rights to receive patronage dividends. Il-Gen 805 ILCS 310/15, 805 ILCS 310/19: Profits and earnings are distributed to those entitled thereto by the cooperative's bylaws; profits shall be distributed, first-upon stock and to purchasers or sellers (customers) based upon the percentage of purchases, or sales; or, second-to purchasers or sellers exclusively, based upon the percentage of purchasers or sales; and no vested interest shall attach to any of the above methods which shall prevent changing from and substituting another provision provided herein Retained Allocations. Briefly describe member rights to receive per-unit retained allocations.

31 6.25. Nonmember Rights. Briefly describe a nonmember's right to receive patronage dividends and or per-unit retained allocations Nonmember Limitations. Briefly describe any limitations on the cooperative's business with nonmembers (including how the limitations are measured) Allocations. Briefly describe any required rules regarding the allocation of profits and losses among patron and non-patron members Derivative Suit. Briefly describe any provision addressing whether a member has the right to bring a derivative action Liability Limitation. Briefly describe any limitation on a member's liability. Il-Gen 805 ILCS 310/23: Each shareholder shall be liable jointly and severally for the debts of the association only to the extent of the amount that may be unpaid upon the shares held by him Records Inspection. Briefly describe a member's right to inspect cooperative records and or audits Membership Suspension. Briefly describe any provisions regarding membership suspension.

32 6.32. Membership Termination. Briefly describe any provisions regarding when membership terminates (e.g., expulsion, death, withdrawal) Termination Procedure. Briefly describe any procedural requirements regarding membership termination Member Termination Rights. Briefly describe a former member's rights on termination Membership Valuation. Briefly describe any provisions regarding membership valuation Miscellaneous. Please address any issues related to this section that have not been addressed by the previous questions.