DIRECTORS

Iowa Code tit. XII, ch. 501A, subch. VII, pt. 1

in effect

Iowa Code § 501A.701 Board governs cooperative.

501A.701. Board governs cooperative. A cooperative shall be governed by its board of directors, which shall take all action for and on behalf of the cooperative, except those actions reserved or granted to members. Board action shall be by the affirmative vote of a majority of the directors voting at a duly called meeting unless a greater majority is required by the articles or bylaws. A director individually or collectively with other directors does not have authority to act for or on behalf of the cooperative unless authorized by the board. A director may advocate interests of members or member groups to the board, but the fiduciary duty of each director is to represent the best interests of the cooperative and all members collectively. 2005 Acts, ch 135, §35

Iowa Code § 501A.702 Number of directors.

501A.702. Number of directors. The board shall not have less than five directors, except that a cooperative with fifty or fewer members may have three or more directors as prescribed in the cooperative’s articles or bylaws. 2005 Acts, ch 135, §36

Iowa Code § 501A.703 Election of directors.

501A.703. Election of directors. 1. First board. The organizers shall elect and obtain the acknowledgment of the first board to serve until directors are elected by members. Until election by members, the first board shall appoint directors to fill any vacancies. 2. Generally. a. Directors shall be elected for the term, at the time, and in the manner provided in this section and the bylaws. b. A majority of the directors shall be members and a majority of the directors shall be elected exclusively by the members holding patron membership interests unless otherwise provided in the articles or bylaws. c. The voting power of the directors may be allocated according to equity classifications or allocation units of the cooperative. If the cooperative authorizes nonpatron membership interests, one of the following must apply: (1) At least one-half of the voting power on matters of the cooperative that are not specific to equity classifications or allocation units shall be allocated to the directors elected by members holding patron membership interests. (2) The directors elected by the members holding patron membership interests shall have at least an equal voting power or shall not have a minority voting power on general matters of the cooperative that are not specific to equity classifications or allocation units. d. A director holds office for the term the director was elected and until a successor is elected and has qualified, or until the earlier death, resignation, removal, or disqualification of the director. e. The expiration of a director’s term with or without election of a qualified successor does not make the prior or subsequent acts of the director or the board void or voidable. f. Subject to any limitation in the articles or bylaws, the board may set the compensation of directors. g. Directors may be divided into or designated and elected by class or other distinction as provided in the articles or bylaws. h. A director may resign by giving written notice to the chairperson of the board or the board. The resignation is effective without acceptance when the notice is given to the chairperson of the board or the board unless a later effective time is specified in the notice. 3. Election at regular meeting. Directors shall be elected at the regular members’ meeting for the terms of office prescribed in the bylaws. Except for directors elected at district meetings or special meetings to fill a vacancy, all directors shall be elected at the regular members’ meeting. There shall be no cumulative voting for directors except as provided in this chapter and the articles or bylaws. 4. District or local unit election of directors. For a cooperative with districts or other units, members may elect directors on a district or unit basis if provided in the bylaws. The directors may be nominated or elected at district meetings if provided in the bylaws. Directors who are nominated at district meetings shall be elected at the annual regular members’ meeting by vote of the entire membership, unless the bylaws provide that directors who are nominated at district meetings are to be elected by vote of the members of the district, at the district meeting or the annual regular members’ meeting. 5. Vote by ballot or alternative voting method. The following shall apply to voting by ballot or alternative voting method: a. A member shall not vote for a director other than by being present at a meeting, by mail ballot, or by alternative voting method, as authorized by the board. b. The ballot shall be in a form prescribed by the board. c. The member shall mark the ballot for the candidate chosen and mail the ballot to the cooperative in a sealed plain envelope inside another envelope bearing the member’s name, or the member shall vote by designating the candidate chosen by an alternative voting method in the manner prescribed by the board. d. If the ballot of the member is received by the cooperative on or before the date of the regular members’ meeting or as otherwise prescribed for an alternative voting method, the ballot or alternative voting method shall be accepted and counted as the vote of the absent member. 6. Business entity members may nominate persons for director. If a member of a cooperative is not a natural person, and the bylaws do not provide otherwise, the member may appoint or elect one or more natural persons to be eligible for election as a director. 7. Term. A director holds office for the term the director was elected and until a successor is elected and has qualified, or the earlier death, resignation, removal, or disqualification of the director. 8. Acts not void or voidable. The expiration of a director’s term with or without the election of a qualified successor does not make prior or subsequent acts of the director void or voidable. 9. Compensation. Subject to any limitation in the articles or bylaws, the board may fix the compensation of the directors. 10. Classification. Directors may be divided into classes as provided in the articles or bylaws. 2005 Acts, ch 135, §37; 2006 Acts, ch 1030, §55; 2011 Acts, ch 23, §19; 2011 Acts, ch 131, §69, 158

Iowa Code § 501A.704 Filling vacancies.

501A.704. Filling vacancies. 1. Patron directors. If a patron member director’s position becomes vacant or a new director position is created for a director that was or is to be elected by patron members, the board, in consultation with the directors elected by patron members, shall appoint a patron member of the cooperative to fill the director’s position until the next regular or special members’ meeting. If there are no directors elected by patron members on the board at the time of the vacancy, a special patron members’ meeting shall be called to fill the patron member director vacancy. 2. Nonpatron directors. If the vacating director was not elected by the patron members or a new director position is created, unless otherwise provided in the articles or bylaws, the board shall appoint a director to fill the vacant position by majority vote of the remaining or then serving directors even though less than a quorum. At the next regular or special members’ meeting, the members or patron members shall elect a director to fill the unexpired term of the vacant director’s position. 2005 Acts, ch 135, §38

Iowa Code § 501A.705 Removal of directors.

501A.705. Removal of directors. 1. Modification. The provisions of this section apply unless modified by the articles or the bylaws. 2. Removal of directors. A director may be removed at any time, with or without cause, if all of the following apply: a. The director was named by the board to fill a vacancy. b. The members have not elected directors in the interval between the time of the appointment to fill a vacancy and the time of the removal. c. A majority of the remaining directors present affirmatively vote to remove the director. 3. Removal by members. Any one or all of the directors may be removed at any time, with or without cause, by the affirmative vote of the holders of a majority of the voting power of membership interests entitled to vote at an election of directors, provided that if a director has been elected solely by the patron members or the holders of a class or series of membership interests as stated in the articles or bylaws, then that director may be removed only by the affirmative vote of the holders of a majority of the voting power of the patron members for a director elected by the patron members or of all membership interests of that class or series entitled to vote at an election of that director. 4. Election of replacements. New directors may be elected at a meeting at which directors are removed. 2005 Acts, ch 135, §39

Iowa Code § 501A.706 Board of directors’ meetings.

501A.706. Board of directors’ meetings. 1. Time and place. Meetings of the board may be held from time to time as provided in the articles or bylaws at any place within or without the state that the board may select or by any means described in subsection 2. If the board fails to select a place for a meeting, the meeting must be held at the principal executive office, unless the articles or bylaws provide otherwise. 2. Electronic communications. a. A conference among directors by any means of communication through which the directors may simultaneously hear each other during the conference constitutes a board meeting, if the same notice is given of the conference as would be required by subsection 3 for a meeting, and if the number of directors participating in the conference would be sufficient to constitute a quorum at a meeting. Participation in a meeting by that means constitutes presence in person at the meeting. b. A director may participate in a board meeting not described in paragraph “a” by any means of communication through which the director, other directors so participating, and all directors physically present at the meeting may simultaneously hear each other during the meeting. Participation in a meeting by that means constitutes presence in person at the meeting. 3. Calling meetings and notice. Unless the articles or bylaws provide for a different time period, a director may call a board meeting by giving at least ten days’ notice or, in the case of organizational meetings, at least three days’ notice to all directors of the date, time, and place of the meeting. The notice need not state the purpose of the meeting unless this chapter, the articles, or the bylaws require it. 4. Previously scheduled meetings. If the day or date, time, and place of a board meeting have been provided in the articles or bylaws, or announced at a previous meeting of the board, no notice is required. Notice of an adjourned meeting need not be given other than by announcement at the meeting at which adjournment is taken. 5. Waiver of notice. A director may waive notice of a meeting of the board. A waiver of notice by a director entitled to notice is effective whether given before, at, or after the meeting, and whether given in writing, orally, or by attendance. Attendance by a director at a meeting is a waiver of notice of that meeting, except where the director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting after the objection. 6. Absent directors. If the articles or bylaws so provide, a director may give advance written consent or opposition to a proposal to be acted on at a board meeting. If the director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition must be counted as the vote of a director present at the meeting in favor of or against the proposal and must be entered in the minutes or other record of action at the meeting, if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or objected. 2005 Acts, ch 135, §40

Iowa Code § 501A.707 Quorum.

501A.707. Quorum. A majority, or a larger or smaller portion or number provided in the articles or bylaws, of the directors currently holding office is a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn a meeting from time to time until a quorum is present. If a quorum is present when a duly called or held meeting is convened, the directors present may continue to transact business until adjournment, even though the withdrawal of a number of directors originally present leaves less than the proportion of number otherwise required for a quorum. 2005 Acts, ch 135, §41

Iowa Code § 501A.708 Action of board of directors.

501A.708. Action of board of directors. 1. Except as provided in subsection 2, the board shall only take action at a duly held meeting by the affirmative vote of any of the following: a. A majority of directors present at the meeting. b. A majority of the directors’ voting power present at the meeting. 2. The articles or bylaws may require the affirmative vote of a larger vote than provided in subsection 1. If the articles or bylaws require a larger vote than is required by this chapter for a particular action, the articles or bylaws control. 2005 Acts, ch 135, §42

Iowa Code § 501A.709 Action without a meeting.

501A.709. Action without a meeting. 1. Method. An action required or permitted to be taken at a board meeting may be taken by written action signed by all of the directors. If the articles or bylaws so provide, any action, other than an action requiring member approval, may be taken by written action signed by the number of directors that would be required to take the same action at a meeting of the board at which all directors were present. 2. Effective time. The written action is effective when signed by the required number of directors, unless a different effective time is provided in the written action. 3. Notice and liability. When written action is permitted to be taken by less than all directors, all directors must be notified immediately of its text and effective date. Failure to provide the notice does not invalidate the written action. A director who does not sign or consent to the written action has no liability for the action or actions taken by the written action. 2005 Acts, ch 135, §43

Iowa Code § 501A.710 Audit committee.

501A.710. Audit committee. The board shall establish an audit committee to review the financial information and accounting report of the cooperative. The cooperative shall have the financial information audited for presentation to the members unless the cooperative’s bylaws allow financial statements that are not audited and the financial statements clearly state that they are not audited and the difference between the financial statements and audited financial statements that are prepared according to generally accepted accounting procedures. The directors shall elect members to the audit committee. The audit committee shall ensure an independent review of the cooperative’s finances and audit. 2005 Acts, ch 135, §44

Iowa Code § 501A.711 Committees.

501A.711. Committees. 1. Generally. A resolution approved by the affirmative vote of a majority of the board may establish committees having the authority of the board in the management of the business of the cooperative only to the extent provided in the resolution. Committees may include a special litigation committee consisting of one or more independent directors or other independent persons to consider legal rights or remedies of the cooperative and whether those rights and remedies should be pursued. Committees other than special litigation committees are subject at all times to the direction and control of the board. 2. Membership. Committee members must be natural persons. Unless the articles or bylaws provide for a different membership or manner of appointment, a committee consists of one or more persons, who need not be directors, appointed by affirmative vote of a majority of the directors present. 3. Procedure. The procedures for meetings of the board apply to committees and members of committees to the same extent as those sections apply to the board and individual directors. 4. Minutes. Minutes, if any, of committee meetings must be made available upon request to members of the committee and to any director. 5. Standard of conduct. The establishment of, delegation of authority to, and action by a committee does not alone constitute compliance by a director with the standard of conduct set forth in section 501A.712. 6. Committee members considered directors. Committee members are considered to be directors for purposes of sections 501A.712, 501A.713, and 501A.715. 2005 Acts, ch 135, §45

Iowa Code § 501A.712 Standard of conduct.

501A.712. Standard of conduct. 1. Standard and liability. A director shall discharge the duties of the position of director in good faith, in a manner the director reasonably believes to be in the best interests of the cooperative, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. A person who so performs those duties is not liable by reason of being or having been a director of the cooperative. 2. Reliance. a. A director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by any of the following: (1) One or more officers or employees of the cooperative whom the director reasonably believes to be liable and competent in the matters presented. (2) Counsel, public accountants, or other persons as to matters that the director reasonably believes are within the person’s professional or expert competence. (3) A committee of the board upon which the director does not serve, duly established by the board, as to matters within its designated authority, if the director reasonably believes the committee to merit confidence. b. Paragraph “a” does not apply to a director who has knowledge concerning the matter in question that makes the reliance otherwise permitted by paragraph “a” unwarranted. 3. Presumption of assent and dissent. A director who is present at a meeting of the board when an action is approved by the affirmative vote of a majority of the directors present is presumed to have assented to the action approved, unless any of the following applies: a. The director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting after the objection, in which case the director is not considered to be present at the meeting for any purpose of this chapter. b. The director votes against the action at the meeting. c. The director is prohibited by a conflict of interest from voting on the action. 4. Considerations. In discharging the duties of the position of director, a director may, in considering the best interests of the cooperative, consider the interests of the cooperative’s employees, customers, suppliers, and creditors, the economy of the state, and long-term as well as short-term interests of the cooperative and its patron members, including the possibility that these interests may be best served by the continued independence of the cooperative. 2005 Acts, ch 135, §46

Iowa Code § 501A.713 Director conflicts of interest.

501A.713. Director conflicts of interest. 1. Conflict and procedure when conflict arises. a. A contract or other transaction between a cooperative and one or more of its directors, or between a cooperative and a business entity in or of which one or more of its directors are governors, directors, managers, officers, or legal representatives or have a material financial interest, is not void or voidable because the director or directors or the other business entities are parties or because the director or directors are present at the meeting of the members or the board or a committee at which the contract or transaction is authorized, approved, or ratified, if any of the following applies: (1) The contract or transaction was, and the person asserting the validity of the contract or transaction sustains the burden of establishing that the contract or transaction was, fair and reasonable as to the cooperative at the time it was authorized, approved, or ratified and all of the following apply: (a) The material facts as to the contract or transaction and as to the director’s or directors’ interest are disclosed or known to the members. (b) The material facts as to the contract or transaction and as to the director’s or directors’ interest are fully disclosed or known to the board or a committee, and the board or committee authorizes, approves, or ratifies the contract or transaction in good faith by a majority of the board or committee, but the interested director or directors are not counted in determining the presence of a quorum and must not vote. (2) The contract or transaction is a distribution, contract, or transaction that is made available to all members or patron members as part of the cooperative’s business. b. If a committee is elected or appointed to authorize, ratify, or approve a contract or transaction under this section, the members of the committee must not have a conflict of interest and must be charged with representing the best interests of the cooperative. 2. Material financial interest. For purposes of this section, all of the following apply: a. A resolution fixing the compensation of a director or fixing the compensation of another director as a director, officer, employee, or agent of the cooperative is not void or voidable or considered to be a contract or other transaction between a cooperative and one or more of its directors for purposes of this section even though the director receiving the compensation fixed by the resolution is present and voting at the meeting of the board or a committee at which the resolution is authorized, approved, or ratified or even though other directors voting upon the resolution are also receiving compensation from the cooperative. b. A director has a material financial interest in each organization in which the director or a family member of the director has a material financial interest. A contract or other transaction between a cooperative and a family member of a director is considered to be a transaction between the cooperative and the director. A family member of a director includes the spouse, parents, children and spouses of children, brothers and sisters and spouses of brothers and sisters, and the brothers and sisters of the spouse of the director or any combination of them. 2005 Acts, ch 135, §47

Source: Iowa Legislature (legis.iowa.gov)URL: https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=501A&year=2026Fetched: 10/20/2026