C.R.S. § 7-56-101 Short title
7-56-101. Short title. This article shall be known and may be cited as the "Colorado Cooperative Act".
Cooperatives
C.R.S. tit. 7, art. 56
in effectC.R.S. § 7-56-102 Legislative declaration
7-56-102. Legislative declaration. (1) The general assembly finds and declares that:
(a) The cooperative form of doing business provides an efficient and effective method for persons to market their goods and services and to obtain services and supplies and it is in the best interests of the people of the state of Colorado to promote, foster, and encourage the utilization of cooperatives in appropriate instances;
(b) The cooperative marketing law of the state of Colorado has provided for the promotion, fostering, and encouragement of the intelligent and orderly marketing of agricultural products through cooperation; has eliminated speculation and waste; has made distribution of agricultural products between producer and consumer more efficient; has stabilized the marketing of agricultural products; and has provided for the organization and incorporation of cooperative marketing associations for the marketing of such products, all as contemplated at the time of the original adoption of the cooperative marketing law;
(c) It is in the best interests of the people of the state of Colorado to preserve the provisions of the cooperative marketing law as it has been in force and interpreted in the state and to continue the provisions thereof for agriculture, but also to expand the provisions of the law to provide greater direction and flexibility in its provisions and to enable all types of industries and enterprises to avail themselves of the benefits of the cooperative form of doing business in accordance with the provisions of this article;
(d) It is in the best interests of the people of the state of Colorado to allow those cooperatives that have been formed under or are subject to other articles of this title, such as article 55, to remain under said article or to elect to come under this article.
C.R.S. § 7-56-103 Definitions
7-56-103. Definitions. As used in this article, unless the context otherwise requires:
(1) "Agricultural cooperative" means a cooperative in which the members, including landlords and tenants, are all producers of agricultural products.
(2) "Agricultural products" means agronomic, horticultural, viticultural, aquacultural, forestry, dairy, livestock, poultry, bee, and any other farm or ranch products.
(3) "Articles" means the articles of incorporation of a cooperative and includes amended articles of incorporation, restated articles of incorporation, and other organizational documents of other entities.
(4) "Board" or "board of directors" means the board of directors or other governing body of a cooperative or other entity.
(5) "Bylaws" means the bylaws adopted by a cooperative and includes amended bylaws and restated bylaws.
(6) "Cooperative" means any entity formed under or subject to this article by election or otherwise, including a cooperative formed under comparable law of another jurisdiction doing business in this state, and having the following characteristics:
(a) The business of the cooperative is operated at cost by adjusting the prices charged for goods or services or by returning any net margins at the end of a fiscal year on a patronage basis to members and other persons qualified to share in the net margins pursuant to the articles or bylaws;
(b) Dividends on stock or interest on equity capital is limited, as prescribed in the articles pursuant to section 7-56-201 or bylaws pursuant to section 7-56-208 of the cooperative;
(c) Voting rights are limited to members of the cooperative as prescribed in the articles or bylaws of the cooperative;
(d) The cooperative's business is carried on for the mutual benefit of its members; and
(e) Members are not liable for any debt, obligation, or liability of the cooperative.
(7) (Deleted by amendment, L. 2003, p. 2219, § 67, effective July 1, 2004.)
(8) "Domestic", when referring to a cooperative or other entity, means an entity formed under the law of this state.
(9) "Equity capital" means all investments in the cooperative except loans or other types of indebtedness, whether made by direct investment, such as investment in stock or memberships, or by retention of amounts of net savings, net margins, or net profits allocated to members and other patrons of the cooperative, or charged to them as part of the transactions between them and the cooperative.
(10) "Foreign", when referring to a cooperative or other entity, means an entity formed under law other than the law of this state.
(11) "Member" means a person who has been received into the membership of a cooperative without common stock or a person who has acquired common stock in a cooperative formed with common stock and, in either case, is authorized to vote. This subsection (11) shall not preclude a cooperative from designating persons as both members and stockholders.
(12) "Net margins" means the receipts from operations less the expenses thereof.
(13) "Patron" means a person who may, but need not, be a member of a cooperative who utilizes the services of the cooperative through the purchase or sale of property or services to or from the cooperative.
(14) "Patronage" means the volume or dollar value of business transacted with the cooperative.
(15) "Patronage refund" means a portion of a cooperative's net margins paid or allocated to a patron based on the patron's patronage.
(16) "Per unit retain" means a deduction authorized by a patron to be made by the cooperative from proceeds of sale of a product or service by the patron to the cooperative or by the cooperative on behalf of the patron where the deduction is based on the value or quantity of the product or service sold to the cooperative or on behalf of the patron and is deducted as a contribution or investment by the patron in the capital of the cooperative.
(17) (Deleted by amendment, L. 2003, p. 2219, § 67, effective July 1, 2004.)
C.R.S. § 7-56-104 Filings by the secretary of state
7-56-104. Filings by the secretary of state. (1) Part 3 of article 90 of this title, providing for the filing of documents, applies to any document filed or to be filed by the secretary of state pursuant to this article.
(2) Repealed.
(3) to (6) (Deleted by amendment, L. 2002, p. 1815, § 17, effective July 1, 2002; p. 1679, § 15, October 1, 2002.)
C.R.S. § 7-56-105 Effective time and date of documents
7-56-105. Effective time and date of documents. (Repealed)
C.R.S. § 7-56-106 Periodic and other reports
7-56-106. Periodic and other reports. (1) Part 5 of article 90 of this title, providing for periodic reports from reporting entities, applies to cooperatives formed under or subject to this article.
(2) The commissioner of agriculture may, by regulation, require reports from any cooperative formed pursuant to this article that limits its membership to agricultural producers.
(3) Upon the dissolution of an agricultural cooperative formed under this article, the cooperative shall provide a copy of the articles of dissolution of the cooperative to the commissioner of agriculture.
C.R.S. § 7-56-107 Cooperative records
7-56-107. Cooperative records. (1) A cooperative shall keep as permanent records minutes of all meetings of its members and of the board, a record of all actions taken by the members or the board without a meeting by a written unanimous consent in lieu of a meeting, and a record of all waivers of notices of meetings of the members and of the board.
(2) A cooperative shall maintain appropriate accounting records.
(3) A cooperative shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.
(4) A cooperative shall keep a copy of each of the following records at its principal office:
(a) Its articles of incorporation or other governing instrument;
(b) Its bylaws or other similar instrument;
(c) A record of the names and addresses of its members, in a form that permits preparation of a list of members that is alphabetical and that shows each member's address and the investment qualifying a member to vote held by each member;
(d) The minutes of members' meetings, and records of all actions taken by members without a meeting by unanimous written consent in lieu of a meeting, for the past three years;
(e) All written communications within the past three years to members as a group or to any class of members as a group;
(f) A list of the names and business addresses of its current board of directors and officers;
(g) A copy of its most recent periodic report delivered to the secretary of state pursuant to part 5 of article 90 of this title; and
(h) All financial statements prepared for periods ending during the last fiscal year.
(5) Except as otherwise limited by this article, the board of directors of a cooperative shall have discretion to determine what records are appropriate for the purposes of the cooperative, the length of time records are to be retained, and policies relating to the confidentiality, disclosure, inspection and copying of the records of the cooperative.
C.R.S. § 7-56-201 Articles of incorporation
7-56-201. Articles of incorporation. (1) A cooperative may be formed pursuant to this article for the transaction of any lawful business. One or more persons may act as the incorporator or incorporators of a cooperative by delivering articles for the cooperative to the secretary of state for filing pursuant to part 3 of article 90 of this title. An incorporator who is an individual shall be eighteen years of age or older.
(2) The articles shall state:
(a) The domestic entity name of the cooperative, which domestic entity name shall comply with part 6 of article 90 of this title;
(b) The principal office address of the cooperative's principal office;
(c) The registered agent name and registered agent address of the cooperative's initial registered agent;
(d) Repealed.
(e) If formed without common voting stock, whether the property rights and interests of each member are equal or unequal and, if unequal, the general rule or rules applicable to all members by which the property rights and interests of each member are determined and fixed; provisions for the admission of new members who are entitled to share in the property of the cooperative with the old members in accordance with such general rules; and whether the cooperative is authorized to issue one or more classes of preferred stock or other equity interests and, if so authorized, a statement as to the number of shares of stock of each class or other equity interests and the nature and extent of the preferences, limitations, relative rights, and privileges granted to each;
(f) If formed with stock, the classes of shares and the number of shares of each class the cooperative is authorized to issue. The stock may be divided into preferred and common stock, voting and nonvoting stock, or into any other class of stock. If so divided, the articles must contain a statement as to the number of shares of stock in each class and the nature and extent of the preferences, limitations, relative rights, and privileges granted to each.
(g) The true name and mailing address of each incorporator.
(3) The articles may state:
(a) A provision eliminating or limiting the personal liability of a director as provided in this article;
(b) A provision permitting proportional voting rights based solely upon the patronage of a member with the cooperative, the amount of equity held by the member in the cooperative, or some combination of these methods, as provided in section 7-56-305 (3);
(c) The number and terms of the board of directors, which number shall be not less than three, together with the names and the street addresses of the initial directors. If the names of the initial directors are not stated in the articles, the initial board of directors shall be designated by the incorporator or incorporators following the delivery of the articles to the secretary of state for filing.
(d) The purpose or purposes for which the cooperative is incorporated which may state any lawful business;
(e) A par value for authorized shares of stock or classes of shares;
(f) Provisions defining, limiting, and regulating the powers of the cooperative, its board, and its members;
(g) Provisions limiting membership to producers of agricultural products;
(h) A limitation on the handling of products or services for its own members only, or for members and nonmembers, and whether nonmembers are entitled to share in allocations of net margins or are subject to per unit retains;
(i) Provisions for the removal for cause of any director by the members at any regular or special members' meeting;
(j) A provision eliminating or limiting the indemnification of directors, officers, employees, or agents of the cooperatives as otherwise provided in this article;
(k) Any provision that under this article is required or permitted to be stated in the bylaws;
t to per unit retains;
(i) Provisions for the removal for cause of any director by the members at any regular or special members' meeting;
(j) A provision eliminating or limiting the indemnification of directors, officers, employees, or agents of the cooperatives as otherwise provided in this article;
(k) Any provision that under this article is required or permitted to be stated in the bylaws;
(l) Any other provision not inconsistent with law.
(4) (Deleted by amendment, L. 2004, p. 1410, § 39, effective July 1, 2004.)
(5) When incorporated, no member or shareholder as such shall be liable directly or indirectly, including by way of indemnification, contribution, or otherwise, under a judgment, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of or chargeable to the cooperative.
(6) A member does not have any vested property right resulting from any provision in the articles that may exist from time to time or at any time, including any provision relating to management, control, capital structure, dividend entitlement, purpose, or duration of the cooperative.
C.R.S. § 7-56-202 Amendment of articles
7-56-202. Amendment of articles. (1) A cooperative may amend its articles at any time to add or change a provision that is required or permitted in the articles or to delete a provision not required in the articles. Whether a provision is required or permitted in the articles is determined as of the effective date of the amendment.
(1.5) If a cooperative has not issued memberships or shares of stock, its board of directors or, if no directors have been designated or elected, its incorporators may adopt one or more amendments to the articles of incorporation.
(2) The articles of a cooperative may be amended at any regular or special meeting of the members of the cooperative. The proposed amendment must be first approved by a two-thirds majority of the directors. The notice of the meeting of members shall state or have attached to it the proposed amendment and shall be mailed to each member of record at least ten days prior to the meeting date. The proposed amendment shall be approved by an affirmative vote of a majority of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1), unless a higher percentage of approval is required in the articles.
(3) Unless otherwise provided in the articles, the board may adopt, without shareholder action, one or more amendments to the articles to:
(a) Delete the statement of names and addresses of the incorporators or of the initial directors;
(b) Delete the statement of the registered agent name and registered agent address of the initial registered agent or registered office, if a statement of change is on file in the records of the secretary of state containing the registered agent name and registered agent address of the cooperative's registered agent;
(b.5) Delete the statement of the names and addresses of any or all of the individuals named in the articles, pursuant to section 7-90-301 (6), as being individuals who caused the articles to be delivered for filing;
(c) Except as otherwise provided in section 9 of article XV of the state constitution, change each issued and unissued share of a class into a greater number of whole shares if the cooperative has only shares of that class outstanding; or
(d) Change the cooperative's domestic entity name by substituting the word "cooperative", "association", "incorporated", "company", or "limited", or any abbreviation thereof for a similar word or abbreviation in the domestic entity name, or by adding, deleting, or changing a geographical designation.
(4) (Deleted by amendment, L. 2004, p. 1411, § 40, effective July 1, 2004.)
(5) A cooperative amending its articles shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment stating:
(a) The domestic entity name of the cooperative; and
(b) The text of each amendment adopted.
(c) to (f) (Deleted by amendment, L. 2004, p. 1411, § 40, effective July 1, 2004.)
(6) Any amendment to the articles may not be invalidated because of the manner of its adoption unless an action to do so is commenced within two years after the date of filing.
C.R.S. § 7-56-203 Restated articles
7-56-203. Restated articles. (1) The board may restate the articles at any time with or without membership action.
(2) The restatement may include one or more amendments to the articles. If the restatement includes an amendment requiring approval by the members, it shall be adopted as provided in section 7-56-202.
(3) If the board submits a restatement for action by the members, the cooperative shall give notice, in accordance with section 7-56-202, to each member entitled to vote on the restatement at the members' meeting at which the restatement will be voted upon. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the restatement, and the notice shall contain or be accompanied by a copy of the restatement that identifies any amendment or other change it would make in the articles.
(4) A cooperative restating its articles shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of restatement stating:
(a) The domestic entity name of the cooperative; and
(b) The text of the restated articles of incorporation.
(c) and (d) (Deleted by amendment, L. 2004, p. 1412, § 41, effective July 1, 2004.)
(e) (Deleted by amendment, L. 2002, p. 1817, § 20, effective July 1, 2002; p. 1681, § 18, effective October 1, 2002.)
C.R.S. § 7-56-204 Cooperatives desiring to relinquish provisions of this article
7-56-204. Cooperatives desiring to relinquish provisions of this article. (1) Any cooperative formed under or that has elected to be subject to this article may relinquish being bound by the provisions of this article by amending its articles in the manner provided in section 7-56-202 (2); except that the amendment shall be approved by a two-thirds majority of all the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) unless a greater vote is required by the articles or bylaws.
(2) The board shall present to the members for approval, as described in subsection (1) of this section, a plan to relinquish the provisions of this article, including:
(a) A statement as to what type of business entity the cooperative is to become after the plan has been adopted;
(b) A statement as to what will be the effect on equities of the cooperative after the plan has been adopted; and
(c) A statement as to the procedures and mechanisms for changing the cooperative to another type of entity.
(3) Amendments to the articles shall be delivered to the secretary of state for filing pursuant to part 3 of article 90 of this title.
C.R.S. § 7-56-205 Entities formed under other law but subject to this article
7-56-205. Entities formed under other law but subject to this article. Any domestic entity or foreign entity authorized to transact business or conduct activities in this state and engaged in any of the activities enumerated in this article but formed under any other law may be considered for all purposes as subject to this article by amending its constituent operating document as necessary to conform to this article and delivering to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement that the entity has determined to accept the benefits of and to be bound by the provisions of this article and has amended its constituent operating document as necessary to conform to this article by amendments adopted in accordance with applicable law and its constituent operating document.
C.R.S. § 7-56-206 Cooperative name
7-56-206. Cooperative name. (Repealed)
C.R.S. § 7-56-207 Use of the term "cooperative" - penalty for unlawful use
7-56-207. Use of the term "cooperative" - penalty for unlawful use. (Repealed)
C.R.S. § 7-56-208 Bylaws
7-56-208. Bylaws. (1) The initial board of each cooperative formed under this article shall, within thirty days after the articles become effective, adopt bylaws for the government and management of its affairs that are not inconsistent with law or the articles of the cooperative. Such bylaws may be amended or modified in such manner as the bylaws may provide. If the bylaws do not provide a manner for their amendment, the bylaws may be amended at any time upon a majority vote of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) at a regular or special meeting, the notice of which meeting shall have stated that consideration would be given at the meeting to amending the bylaws and stating the proposed amendment or amendments.
(2) The bylaws of the cooperative shall prohibit the transfer of the voting common stock or membership in the cooperative to persons not eligible to be a member of the cooperative and, if the cooperative issues certificates of common stock or of membership, the restrictions must be printed upon every certificate of stock or certificate of membership subject to the restrictions. At the election of the cooperative, the restrictions may also be included in the articles.
(3) If not stated in the articles, the bylaws of the cooperative shall include:
(a) The qualifications for membership, manner of succession, and conditions for suspension, withdrawal, or expulsion;
(b) The amount of any membership fee or capital subscription required by the cooperative to become a member, conditions of membership, and procedures for acquiring and repayment of membership capital;
(c) Any limitations on dividends on stock or interest on equity capital;
(d) The time, place, and manner of conducting or determining membership meetings of the cooperative which shall be at least annually;
(e) The number, terms, and time of the election of directors, or the manner for determining the same;
(f) The number of directors that shall constitute a quorum for a meeting of the board, which must be at least a majority;
(g) The number, terms, and titles of officers, their authority and duties as well as the manner of election or appointment, the filling of vacancies, or removal of officers; and
(h) A requirement that the cooperative's business shall be conducted on a cooperative basis for the mutual benefit of the cooperative's members.
(4) In addition to the provisions set forth in subsection (3) of this section, the bylaws may include:
(a) The time, place, and manner of conducting its meetings;
(b) The mode and manner of removal of directors and the mode and manner of filling vacancies on the board caused by death, resignation, or removal;
(c) The compensation of directors and officers or the manner for determining compensation;
(d) The mode and manner of conducting business;
(e) The mode and manner of conducting elections and provisions for voting by ballots forwarded by mail or otherwise;
(f) The manner of assignment and transfer of interests in the cooperative;
(g) The manner of collection and enforcement for member nonpayment or nonperformance, including forfeiture of property rights and interests;
(h) The method of determination of property rights and interests in the cooperative and the value thereof;
(i) Methods and procedures for acquiring and returning equity capital to members and other patrons of the cooperative;
(j) Procedures pursuant to section 7-56-501 (1)(q) for the handling of unclaimed equity capital and other funds declared payable by the cooperative and unclaimed by the holder; and
(k) Such other things as may be proper to carry out the purpose for which the cooperative was formed or the governance of the cooperative.
C.R.S. § 7-56-209 Agricultural marketing cooperatives
7-56-209. Agricultural marketing cooperatives. (1) It is hereby recognized that agriculture is characterized by individual production in contrast to the group or factory system that characterizes other forms of industrial production; that the ordinary form of corporate organization permits industrial groups to combine for the purpose of group production and the ensuing group marketing and that the public has an interest in permitting producers of agricultural products to bring to their industry the high degree of efficiency and merchandising skill evidenced in the manufacturing industries; that the public interest urgently needs to prevent the migration from rural to urban communities in order to enhance production of agricultural products and to preserve the agricultural supply of the nation; that the public interest demands that producers of agricultural products be encouraged to attain a more efficient system of marketing their products and procurement of the necessary equipment and supplies through cooperatives.
(2) Upon written request to the commissioner of agriculture by any three persons, the commissioner or a duly authorized representative of the commissioner may supply a written summary of the most current survey prepared by the department of agriculture, if any exists, of the business conditions affecting the proposed purposes of the cooperative, particularly the commodities to be handled. When such a summary is supplied, the commissioner or a representative of the commissioner may separately set forth an opinion, stating the reasons therefor, regarding the viability of the proposed venture.
(3) In addition, the department of agriculture may, at the discretion of the commissioner or a representative of the commissioner, provide other assistance to persons who seek to organize an agricultural cooperative.
C.R.S. § 7-56-210 Renewable energy cooperatives
7-56-210. Renewable energy cooperatives. (1) It is the policy of this state to encourage local ownership of renewable energy generation facilities to improve the financial stability of rural communities.
(2) Subject to the provisions of this article, a renewable energy cooperative may be organized for the purpose of promoting electric energy efficiency technologies to its members, generating electricity from renewable resources and technologies, and transmitting and selling the electricity at wholesale.
(3) For purposes of this section, "renewable resources or technologies" means biomass, geothermal energy, solar energy, small hydroelectricity, and wind energy. Hydrogen derived from biomass, geothermal energy, solar energy, small hydroelectricity, and wind energy is also considered to be renewable energy for the purposes of this article. "Renewable resources or technologies" does not include pumped storage facilities; hydroelectricity other than small hydroelectricity; coal, natural gas, oil, propane, or any other fossil fuel; or nuclear energy. "Renewable resources or technologies" also does not include hydrogen derived from pumped storage facilities; hydroelectricity other than small hydroelectricity; coal, natural gas, oil, propane, or any other fossil fuel; or nuclear energy.
C.R.S. § 7-56-301 Members
7-56-301. Members. (1) Subject to the provisions of this section and under the terms and conditions prescribed in the articles or bylaws adopted by it, a cooperative may limit admission as members or issue common stock only to persons engaged in the particular business or utilizing the goods or services provided by or through the cooperative, including any entity formed under the law of this state or any other jurisdiction, or may admit as members or issue common stock to any person meeting uniform terms and conditions stated in its articles or bylaws.
(2) When any required membership fee or payment for stock as required in the articles, the bylaws, or a resolution of the board has been paid in full or a promissory note executed for the required membership fee or capital subscription, a cooperative may issue a certificate of membership or common stock evidencing the membership or ownership of the stock or may evidence the same on the books or other records of the cooperative as determined by the articles, the bylaws, or the board. Except for a cooperative formed with stock, promissory notes of members may not be accepted by the cooperative as full or partial payment for stock unless permitted by the bylaws and adequately secured. The cooperative shall hold the stock as security for the payment of the note, but such retention as security shall not affect the member's right to vote.
(3) No member shall have a right to vote until the required membership fee or payment for stock has been paid in full.
(4) A cooperative, in its articles or bylaws, may limit the amount of common stock that a member may own.
(5) No member shall be liable directly or indirectly, including by way of indemnification, contribution, or otherwise, under a judgment, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of or chargeable to the cooperative while it is incorporated for an amount exceeding the sum remaining unpaid on the member's membership fee or the member's subscription to the stock, including any unpaid balance on any promissory note given in payment thereof; except that this subsection (5) shall not affect the liability of a member who is also a member of the board or an officer for such member's negligence, wrongful act, or misconduct in that capacity.
(6) A cooperative formed with or without capital stock under this article may issue or accept investments in nonvoting stock or equity that may have such rights and preferences, including being subject to per unit retains or allocations of net margins, as may be provided in the articles, the bylaws, or by the board. Such nonvoting stock or equity may be issued and sold by the cooperative to any person, including those persons not otherwise qualified to be members, and may be redeemable or retireable by the cooperative on such terms and conditions as are provided for in the articles, the bylaws, or a resolution of the board providing for the issuance of or the investment in the nonvoting stock or equity. The terms and conditions of redemption shall be printed on any certificate evidencing the stock or equity.
(7) A cooperative shall impose restrictions on the transfer of voting common stock or membership in the cooperative in its bylaws in accordance with section 7-56-208 (2), and may also impose such restrictions in its articles, and may impose restrictions on the transfer of other equity investments in the cooperative in its articles, bylaws, or by resolution of its board. Any such restriction shall be printed upon any certificate or other written evidence of the membership, voting common stock, or other equity investment if one is issued.
e with section 7-56-208 (2), and may also impose such restrictions in its articles, and may impose restrictions on the transfer of other equity investments in the cooperative in its articles, bylaws, or by resolution of its board. Any such restriction shall be printed upon any certificate or other written evidence of the membership, voting common stock, or other equity investment if one is issued.
(8) Subject to the provisions of section 7-56-406 (2)(c), a cooperative may, at any time as stated in its articles, bylaws, or resolution of the board adopted at the time of issuance, acquire, recall, redeem, exchange, or reissue its common stock, memberships, preferred stock, preferred equity, memberships, or other equity capital. Consideration paid for stock, memberships, or other equity capital acquired, recalled, redeemed, exchanged, or reissued by the cooperative shall be the par value, stated value, price originally paid, or book value, whichever is less, as conclusively determined by the board, plus any accrued and unpaid dividends, if any, and, if the price originally paid for the stock, memberships, or other equity capital included an additional amount based upon the right of the holder to engage in business with the cooperative, the consideration shall include the additional amount. If stock, memberships, or other equity capital acquired, recalled, redeemed, or exchanged does not have a par value, then the par value shall not be considered in determining the consideration. The cooperative may set off against the consideration to be paid obligations to it of the holder of stock, membership, or other equity capital and shall have a continuing perfected security interest in the stock, membership, and other equity capital of a member, stockholder, or holder of other equity capital to secure payment of any indebtedness to the cooperative of the stockholder, member, or holder of other equity capital, whenever indebtedness is incurred. Notwithstanding any other provision of law, the security interest shall take priority over all other perfected security interests. No acquisition, recall, or redemption shall be made if the result of it would be to bring the value of the remaining assets of the cooperative below the aggregate of its indebtedness. The articles or bylaws may provide other limitations on the right of a cooperative to acquire, recall, redeem, exchange, or reissue its stock, memberships, or other equity capital.
(9) If a member of a cooperative is other than an individual, such member may be represented by any individual, associate, officer, manager, member, shareholder, or other equity holder thereof duly authorized in writing by the member's board or other governing body having the right to authorize the representation.
(10) If so prescribed in its articles or bylaws, a cooperative may group its members in districts, or other units, or by types of goods or services utilized, for administration or otherwise achieving the purposes of the cooperative.
(11) A cooperative, in its articles or bylaws, may limit the amount of common stock or other equity capital held by members or other persons.
(12) Repealed.
C.R.S. § 7-56-302 Member meetings - how called - notice
7-56-302. Member meetings - how called - notice. (1) In its bylaws, each cooperative shall provide for one or more regular member meetings annually. Either the board or such officers as are designated in the bylaws shall have the right to call a special meeting of the members at any time, and the president, or other officer designated in the bylaws, shall call a special meeting to be held within sixty days upon petition by ten percent of the total number of members stating the specific business to be brought before the meeting. The board or the person calling the special meeting shall determine the date, time, and place of the meeting.
(2) Written notice of all member meetings shall be mailed to each member at that member's last-known address or transmitted to each member in such other manner as may be provided in the bylaws at least ten days prior to the meeting. Notice of any special meeting shall include a statement of the purpose for the meeting. At all regular meetings of members of the cooperative, any and all lawful business may be brought before the meeting regardless of whether stated in the notice of the meeting; except that amendments to the articles or the bylaws of the cooperative or other action required to be stated in the notice of the meeting by this article shall not be subject to action unless notice thereof is stated in the notice of the meeting. At all special meetings of the members of the cooperative, business brought before the meeting shall be limited to the purpose stated in the notice.
(3) Actions taken or agreed to be taken during a member meeting shall not be invalidated on account of any member's failure to receive notice of a meeting if reasonable effort has been made to give notice in accordance with this section.
(4) Lawful actions or other membership votes may be taken by the cooperative in lieu of or without a member meeting if all members entitled to act or vote with respect to the action agree to that action by unanimous written consent.
C.R.S. § 7-56-303 Members' list for meeting
7-56-303. Members' list for meeting. (1) After fixing a record date for a meeting of the membership, the cooperative shall prepare a list of the names and addresses of all its members who are entitled to be given notice of the meeting. The members' list shall be available for inspection by any member or member's agent or attorney, for a proper corporate purpose, beginning the earlier of ten days before the meeting for which the list was prepared or two business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof. Section 7-56-307 is not applicable to this section.
(2) The cooperative shall make the members' list available at the meeting, and any member or member's agent or attorney is entitled to inspect the list at any time and for a proper corporate purpose during the meeting or any adjournment.
(3) If the cooperative refuses to allow a member or the member's agent or attorney to inspect the members' list before or at the meeting, as permitted by subsection (1) or (2) of this section, the member may apply to the district court for the county in this state in which the street address of the cooperative's principal office is located or, if the cooperative has no principal office in this state, to the district court for the county in which the street address of its registered agent is located or, if the cooperative has no registered agent, to the district court for the city and county of Denver for an order permitting the member or the member's agent or attorney to inspect the members' list.
(4) The court may order inspection of the members' list pursuant to subsection (3) of this section, unless the cooperative proves that it refused inspection or copying of the list in good faith because it had a reasonable basis for doubt about the right of the member or the agent or attorney of the member to inspect or copy the members' list. The court may also postpone or adjourn the meeting for which the list was prepared until the inspection ordered by the court is complete. In any such action:
(a) The court may order the losing party to pay the prevailing party's reasonable costs, including reasonable attorney fees;
(b) The court may order the losing party to pay the prevailing party for any damages the prevailing party shall have incurred by reason of the subject matter of the litigation;
(c) If inspection or copying is ordered pursuant to subsection (3) of this section, the court may order the cooperative to pay the member's inspection and copying expenses; and
(d) The court may grant either party any other remedy provided by law.
(5) If a court orders inspection of the members' list pursuant to subsection (3) of this section, the court may impose reasonable restrictions on the use or distribution of the list by the member.
(6) Failure to prepare or make available the members' list does not affect the validity of action taken at the meeting.
C.R.S. § 7-56-304 Quorum
7-56-304. Quorum. (1) A quorum for conducting business at all meetings of the members shall be five percent of the total number of members or thirty members present in person at the meeting, whichever is less. Members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) shall be counted toward the quorum with respect to that matter. Nothing shall prevent the articles or the bylaws of a cooperative from requiring a greater number of members or percentage thereof as a quorum.
(2) An action by a cooperative is not valid in the absence of a quorum at the meeting at which the action was taken, unless the action taken is subsequently ratified by the required number of members.
C.R.S. § 7-56-305 Member voting
7-56-305. Member voting. (1) (a) Members of a cooperative may vote either in person or, if provided in the articles or the bylaws of the cooperative or a resolution of the board with respect to a particular issue, by any of the following methods:
(I) Mail or electronic transmission if a means is provided to verify that a member so voting has received the exact wording of the matter upon which the vote is to be taken;
(II) Telecommunication; or
(III) Any other means by which all persons in the meeting may communicate with each other during the meeting.
(b) Whenever in this article reference is made to voting by membership, the vote may be taken in any manner established pursuant to this section unless specifically provided otherwise in this article or by the board with respect to a particular matter upon which the vote is to be taken.
(c) With respect to a matter where a vote has been cast by an authorized means other than the person being present and voting in person, the person casting the vote shall be counted as present and voting for purposes of those provisions in this article that refer to persons "present and voting".
(d) Proxy or cumulative voting shall be prohibited except as permitted by the articles or bylaws of organizations incorporated prior to July 6, 1973; except that, where a member is other than an individual, its vote may be cast by a representative authorized pursuant to this article.
(2) Except as otherwise provided in subsection (3) of this section, each member of a cooperative formed under this article shall be entitled to one vote only.
(3) Any cooperative formed under this article may provide in its articles for proportional voting rights allowing members more than one vote based upon the patronage of a member with the cooperative, the amount of patronage equity held in the cooperative, or any combination of these methods. However, no member may be entitled to more than one vote in any case where a law of this state specifically requires otherwise. In no event shall any member have less than one vote and no member may have more than two and one-half percent of the total votes of members of the cooperative. If the number of members in the cooperative is such that, solely by virtue of the number of members, one member may have more than two and one-half percent based on proportional voting, then each member of the cooperative shall be entitled to one vote only.
(4) Unless otherwise provided in this article or in the cooperative's articles, when a cooperative has provided for proportional voting, it shall be deemed to have intended that the references in this article to a vote of a specified proportion of members or similar terminology as necessary for approval of a matter submitted to a membership vote shall mean a determination based on a proportion of the total votes entitled to be cast or actually cast by members as applicable in the particular reference.
C.R.S. § 7-56-306 Reserves, distributions, and patronage refunds
7-56-306. Reserves, distributions, and patronage refunds. (1) A cooperative shall periodically set aside a portion of net margins, per unit retains, or other funds that is reasonable as determined by the board or in accordance with the articles or bylaws, for reserves, distributions, patronage refunds, capital, or other lawful business purposes.
(2) Net margins, after deductions for reasonable reserves and for allowances for income tax, shall be calculated and allocated on a patronage basis at least once every twelve months to members or to members and other qualified persons on an equitable basis as determined by the board or in accordance with the articles or bylaws. This section shall not be construed as prohibiting the retention of net margins, excess per unit retains, or other funds allocated to members as a means of providing capital for the cooperative.
(3) If a cooperative has retained net margins or other funds allocated to members, the board shall have the right in accordance with the articles, bylaws, and policies established by the board to redeem or retire the net margins or other funds so retained. All decisions relating to the redemption or retirement of such funds shall be made solely by the board.
C.R.S. § 7-56-307 Inspection of cooperative records by member
7-56-307. Inspection of cooperative records by member. (1) A member is entitled to inspect and copy, at the member's expense, during regular business hours at a reasonable location stated by the cooperative, any of the records described in section 7-56-107 (4) if the member meets the requirements of subsection (2) of this section and gives the cooperative written demand at least five business days before the date on which the member wishes to inspect and copy such records. Notwithstanding the provisions of this subsection (1) or any provisions of section 7-56-107 (4), no member shall have the right to inspect or copy any records of the cooperative relating to the amount of equity capital in the cooperative held by any person or any accounts receivable or other amounts due the cooperative from any person.
(2) To be entitled to inspect and copy permitted records, the member shall meet the following requirements:
(a) The member has been a member for at least one year immediately preceding the demand to inspect or copy or is a member holding at least five percent of all of the outstanding equity interests in the cooperative as of the date the demand is made;
(b) The demand is made in good faith and for a proper corporate business purpose;
(c) The member describes with reasonable particularity the purpose and the records the member desires to inspect; and
(d) The records are directly connected with the described purpose.
(3) The right of inspection granted by this section may not be abolished or limited by the articles, bylaws, or any actions of the board or the members.
(4) This section does not affect:
(a) The right of a member to inspect records to the same extent as any other litigant if the member is in litigation with the cooperative; or
(b) The power of a court to compel the production of the cooperative's records for examination.
(5) Notwithstanding any other provision in this section, if the records of the cooperative to be inspected or copied are in active use or storage and, therefore, not available at the time otherwise provided for inspection or copying, the cooperative shall notify the member of this fact and shall set a date and hour within three business days of the date otherwise set in this section for the inspection or copying.
(6) This section shall not apply to section 7-56-303.
C.R.S. § 7-56-308 Scope of member's inspection right
7-56-308. Scope of member's inspection right. (1) A member's agent or attorney has the same inspection and copying rights as the member.
(2) The right to copy records under section 7-56-307 includes, if reasonable, the right to receive copies made by photographic, xerographic copying, or other means.
(3) The cooperative may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the member. The charge may not exceed the estimated cost of production and reproduction of the records.
C.R.S. § 7-56-309 Court-ordered inspection
7-56-309. Court-ordered inspection. (1) If a cooperative refuses to allow a member, or the member's agent or attorney, who complies with section 7-56-307 to inspect or copy any records that the member is entitled to inspect or copy by said section within a prescribed time limit or, if none, within a reasonable time, the district court for the county in this state in which the street address of the cooperative's principal office is located or, if the cooperative has no principal office in this state, the district court for the county in which the street address of its registered agent is located or, if the cooperative has no registered agent, the district court for the city and county of Denver, may, on application of the member, summarily order the inspection or copying of the records demanded at the cooperative's expense.
(2) If a court orders inspection or copying of the records demanded, unless the cooperative proves that it refused inspection or copying in good faith because it had a reasonable basis for doubt about the right of the member or the member's agent or attorney to inspect or copy the records demanded:
(a) The court may order the losing party to pay the prevailing party's reasonable costs, including reasonable attorney fees;
(b) The court may order the losing party to pay the prevailing party for any damages the prevailing party shall have incurred by reason of the subject matter of the litigation;
(c) If inspection or copying is ordered pursuant to subsection (1) of this section, the court may order the cooperative to pay the member's inspection and copying expenses notwithstanding the provisions of section 7-56-307 (1); and
(d) The court may grant either party any other remedy provided by law.
(3) If a court orders inspection or copying of records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding member.
C.R.S. § 7-56-401 Directors - elections - remuneration - vacancy
7-56-401. Directors - elections - remuneration - vacancy. (1) The affairs of a cooperative formed under or subject to this article shall be managed by a board of not less than three directors as provided in the articles or bylaws elected by and from the members of the cooperative or designated representatives of members who are not individuals. If authorized by the articles or the bylaws, up to twenty percent of the board may consist of directors who are neither members nor representatives of members. Directors who are not members of the cooperative or representatives of members may be elected by a vote of two-thirds of the cooperative members present and voting. Nominations for the position of director shall be conducted in a manner provided in the bylaws or in a resolution of the board or of the members.
(2) The articles or bylaws may provide that the territory in which the cooperative has members shall be divided into districts and that the directors shall be elected according to such districts, either directly or by district delegates elected by the members in that district. In that case the articles or bylaws shall state the number of directors to be elected by each district and the manner and method of reapportioning the directors and of redistricting the territory covered by the cooperative. The bylaws may provide that primary elections shall be held in each district to elect the directors apportioned to such districts and that the result of all such primary elections shall be ratified at the next regular meeting of the cooperative or be considered final as to the cooperative.
(3) A cooperative may provide a reasonable remuneration for the time actually spent by its officers and directors in its service. No director, during the term of the director's office, shall be a party to a contract for profit with the cooperative differing in any way from the business relations accorded members of the cooperative.
(4) The articles or bylaws may limit directors from occupying any position in the cooperative on a regular salary or substantially full-time pay. The articles or bylaws may provide for an executive committee and may allot to the committee all the functions and powers of the board, subject to the general direction and control of the board.
(5) When a vacancy on the board occurs other than by expiration of term, the remaining members of the board, even though not a quorum, by a majority vote, shall fill the unexpired term, unless the articles or bylaws provide for an election of directors by district, in which event, unless the articles or bylaws provide for a different procedure, the board shall immediately call a special meeting of the members in the district to fill the vacancy.
C.R.S. § 7-56-402 Officers - titles - election - duties and authority - removal
7-56-402. Officers - titles - election - duties and authority - removal. (1) (a) The bylaws shall provide for one or more officers and the titles of those officers. The offices may include a board chair, one or more vice-chairs, a president, one or more vice-presidents, a secretary, a treasurer, and assistant officers or other officers. The officers shall be elected by the board or in any other manner prescribed in the bylaws. At least one officer shall be an individual at least eighteen years of age. At least one officer shall be a member of the board. One individual may simultaneously hold more than one office, but may not concurrently hold the offices of president and secretary.
(b) The bylaws or board of each cooperative shall designate one or more officers responsible for preparing and maintaining the minutes of board and membership meetings and all records required to be kept by section 7-56-107 and for authenticating records.
(2) All officers and agents of the cooperative, as between themselves and the cooperative, shall have such authority and perform such duties in the management of the cooperative as may be provided in the bylaws, or as may be determined by resolution of the board of directors not inconsistent with federal, state, and local law, the articles, and the bylaws.
(3) Unless otherwise provided in the articles or bylaws, the board may remove any officer at any time with or without cause.
C.R.S. § 7-56-403 Procedures for meetings of the board of directors
7-56-403. Procedures for meetings of the board of directors. (1) The board shall meet at least annually. The board may establish a time and place for regular board meetings and then may hold regular board meetings at such times without notice.
(2) Special meetings of the board shall require at least two days' notice of the date, time, and place. Unless otherwise provided by the articles or bylaws, purposes of a special meeting do not have to be stated in the notice of any special meeting.
(3) A director's attendance at a special meeting constitutes waiver of the notice requirement for that meeting unless the director objects to the lack of or method of notice and does not thereafter participate in the meeting or if notice of the purpose of the meeting was required but not given and the director objects to the transaction of business for that purpose and does not thereafter participate in the meeting with respect to that purpose.
(4) A director is considered to have assented to an action of the board unless:
(a) The director votes against it or abstains and causes the abstention to be recorded in the minutes of the meeting;
(b) The director objects at the beginning of the meeting and does not vote for it later;
(c) The director causes the director's dissent to be recorded in the minutes;
(d) The director does not attend the meeting at which the vote is taken; or
(e) The director gives notice of the director's objection in writing to the secretary within twenty-four hours after the meeting.
(5) Unless otherwise provided by the articles or bylaws:
(a) The board may permit any or all directors to participate in a regular or special meeting through the use of any means of communication by which all directors participating are able to communicate simultaneously with each other during the meeting;
(b) Actions of the board may be taken without a meeting if the action is agreed to by all members of the board and is evidenced by one or more written consents together signed by all directors and filed with the corporate records reflecting the action taken;
(c) Purposes of a special meeting do not have to be stated in the notice of any special meeting, but at least two days' notice of the date, time, and place shall be given.
C.R.S. § 7-56-404 Removal of director by the membership or the board
7-56-404. Removal of director by the membership or the board. (1) At a meeting called expressly for that purpose, as well as any other proper purpose, a director may be removed by the members in the manner provided in this section upon an affirmative vote of a majority of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) or, if removal of a director is by the board, then by a majority of the members of the board not subject to removal.
(2) The board may remove a director who does not meet the qualifications for board membership stated in the articles and bylaws of the cooperative.
(3) The members may remove one or more directors only for cause unless the articles or bylaws allow directors to be removed without cause.
(4) Removal of directors by the vote of the members shall be initiated by written petition signed by at least ten percent of the members stating the alleged causes or reasons for removing the director. No petition shall seek removal of more than one director.
(5) Within ninety days after receipt of a petition meeting the requirements of subsection (4) of this section, the board shall schedule the removal vote at a regular or special meeting of the membership upon determination by the board, if necessary, that cause has been stated. Any determination of cause shall be made by a majority of the directors not subject to removal petitions. If more than a majority of the board is subject to removal petitions, then the matter shall be promptly referred to an attorney who has been duly licensed to practice law in Colorado for at least five years and who has not previously represented the cooperative. The attorney's determination of whether cause has been stated shall be final for the purpose of whether to schedule a vote on removal.
(6) Any director subject to a removal petition under any provision of this section shall be promptly informed in writing by the board and shall have the opportunity, in person and by counsel, to be heard and present evidence at the meeting called for the vote. The persons seeking removal shall have the same opportunity.
C.R.S. § 7-56-405 Removal of director by judicial proceeding
7-56-405. Removal of director by judicial proceeding. (1) A director may be removed by the district court for the county in this state in which the street address of the cooperative's principal office is located or, if the cooperative has no principal office in this state, by the district court for the county in which the street address of its registered agent is located or, if the cooperative has no registered agent, by the district court for the city and county of Denver, in a proceeding commenced either by the cooperative or by at least ten percent of the members, if the court finds that the director engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the cooperative, and that removal is in the best interests of the cooperative.
(2) If the members commence a proceeding under subsection (1) of this section, they shall make the cooperative a party defendant.
(3) The court that removes a director may bar the director from reelection for a period prescribed by the court.
C.R.S. § 7-56-406 Indemnification and personal liability of directors, officers, employees, and agents
7-56-406. Indemnification and personal liability of directors, officers, employees, and agents. (1) Unless limited in the cooperative's articles, the cooperative shall have the same powers, rights, and obligations and shall be subject to the same limitations with respect to indemnification and personal liability of directors, officers, employees, and agents as apply to domestic corporations as set forth in article 109 of this title. Cooperative directors, officers, employees, and agents shall have the same rights as directors, officers, employees, and agents of domestic corporations as set forth in article 109 of this title. For purposes of this section, any reference to shareholders having the right to vote in article 109 of this title shall be construed to refer to members of the cooperative having the right to vote.
(2) (a) The articles may eliminate or limit the liability of a director of the cooperative to the cooperative or its members for monetary damages for any breach of the duty of care arising after the date the provision in the articles became effective, including the effective date of any provision adopted under a prior statute, except any acts or omissions in bad faith or that involve intentional misconduct or a knowing violation of law; any transaction from which the director derived an improper personal benefit; any unlawful liquidating distributions of assets to members, unlawful loans to directors, or unlawful guarantees of loans to directors; unlawful dividends; unlawful stock or other equity repurchases; or any other unlawful distribution that was voted for or assented to if the director did not act in conformance with the standard of care as set forth in section 7-108-401.
(b) No provision pursuant to paragraph (a) of this subsection (2) shall eliminate or limit the liability of a director or officer to the cooperative or its members for monetary damages for any act or omission occurring prior to the date when such provision becomes effective.
(c) A distribution of stock or other equity repurchase is unlawful if it renders the cooperative unable to pay its debts as they become due in the usual course of business or, unless the articles permit otherwise, causes the assets to be less than the liabilities plus the amount necessary to satisfy the interests of the holders of securities or other equity capital preferential to those receiving the distribution, if dissolved at the time of the distribution.
(d) No director or officer shall be personally liable for any tort committed by an employee unless the director or officer was personally involved.
(e) Unless otherwise provided in the articles or bylaws, each director shall discharge the duties as a director, including duties as a member of a committee, in accordance with the provisions of section 7-108-401. Unless otherwise provided in the articles or bylaws, each officer with discretionary authority shall discharge such officer's duties under that authority in accordance with the provisions of section 7-108-401. For purposes of this subsection (2), references to "corporation" and "shareholders" in section 7-108-401 shall be construed as referring to "cooperative" and "members" respectively.
C.R.S. § 7-56-407 Persons to be bonded
7-56-407. Persons to be bonded. At the discretion of the board of a cooperative, any officer, employee, or agent handling funds or negotiable instruments or property of or for the cooperative may be bonded for the faithful performance of the person's duties and obligations.
C.R.S. § 7-56-408 Registered office and registered agent - repeal
7-56-408. Registered office and registered agent - repeal. (Repealed)
C.R.S. § 7-56-409 Registered agent - service of process
7-56-409. Registered agent - service of process. Part 7 of article 90 of this title, providing for registered agents and service of process, applies to cooperatives formed under or subject to this article.
C.R.S. § 7-56-501 Powers
7-56-501. Powers. (1) Every cooperative has the power, except as specifically limited by this article or by its own articles or bylaws:
(a) To have perpetual existence and succession by its domestic entity name unless limited by the articles;
(b) To sue and be sued and to complain and defend in courts of law and equity;
(c) To make and use a common seal, alter the same at its pleasure, and to use such seal or a facsimile thereof, including a rubber stamp, by impressing or affixing it or by reproducing it in any other manner;
(d) To purchase, receive, lease, and otherwise acquire, and to own, hold, improve, use, and otherwise deal with, real or personal property or any legal or equitable interest in property, wherever located;
(e) To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;
(f) To purchase, receive, subscribe for, and otherwise acquire shares and other interests in, and obligations of, any other entity, including any other cooperative, and to own, hold, vote, use, sell, mortgage, lend, pledge, and otherwise dispose of, and deal in and with, the same;
(g) To make contracts and guarantees; incur liabilities; borrow money; issue notes, bonds, and other obligations, which may be convertible into or include the option to purchase other securities of the cooperative; and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income;
(h) To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;
(i) To be a partner, member, associate, trustee, promoter, or manager of, or to hold any similar position with, any entity;
(j) To conduct its business, locate offices, and exercise the powers granted by this article within or outside this state;
(k) To elect directors and officers and appoint employees and agents of the cooperative, define their duties, fix their compensation, and lend them money and credit;
(l) To pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share options and rights plans, and benefit or incentive plans for any or all of its current or former directors, officers, employees, and agents;
(m) To make payments or donations for the public welfare or for charitable, scientific, or educational purposes;
(n) To regulate and limit the right of members to transfer their memberships, stock, or other equity;
(o) To make and amend its articles and bylaws for the management of its affairs and to make provisions in its articles for the terms and limitations of stock ownership or membership and for the distribution of its earnings;
(p) To indemnify its directors, officers, employees, and agents to the extent provided or permitted in this article and to eliminate or limit the personal liability of a director, officers, employees, or agents of the cooperative, as provided in accordance with section 7-56-406; however, no such provision shall eliminate or limit the liability of a director or officer to the association or to its members for monetary damages for any act or omission occurring prior to the effective date of such provision;
(q) To establish in its bylaws procedures for the disposition of funds when declared payable by the cooperative and unclaimed by the holder three years after notification has been mailed to the holder's last-known address of record on the books of the cooperative, which disposition may consist of transferring the funds to the general operating account of the cooperative;
(r) To establish, secure, own, and develop patents, trademarks, and copyrights;
(s) To make advance payments and advances to members;
(t) To act as the agent or representative of any member for any lawful purpose or in any lawful transaction of the cooperative;
books of the cooperative, which disposition may consist of transferring the funds to the general operating account of the cooperative;
(r) To establish, secure, own, and develop patents, trademarks, and copyrights;
(s) To make advance payments and advances to members;
(t) To act as the agent or representative of any member for any lawful purpose or in any lawful transaction of the cooperative;
(u) To purchase or otherwise acquire and to hold, own, and exercise all rights of ownership in, and to sell, transfer, or pledge or guarantee the payment of dividends or interest on, or the retirement or redemption of shares of the stock or bonds of any person engaged in any lawful activity;
(v) To allocate earnings and pay patronage dividends;
(w) To use per unit retains;
(x) To prohibit or place limitations on amounts or rates of dividends payable on any class of capital stock or other equity investment in the cooperative;
(y) To engage in any activity in connection with the purchase, hiring, or use by its members or other patrons of goods, services, products, equipment, supplies, utilities, telecommunications, housing, or health care;
(z) To establish amounts for reasonable and necessary reserves for bad debts, obsolescence, grain, quality and grade, contingent losses, working capital, debt retirement, buildings and equipment, and ownership retirement and to provide that no member or other person entitled to share in the allocation of the cooperative's net margins or other funds shall have any rights except upon dissolution when the entire reserve funds of the cooperative shall be distributed in accordance with applicable federal, state, and local law and the articles and bylaws of the cooperative;
(aa) To manufacture, sell, or supply goods, machinery, equipment, supplies, or services to its members and to other patrons or persons;
(aa.5) To adopt a trade name;
(bb) To finance one or more of the activities in this section; and
(cc) To perform every other form or type of act that is necessary or proper for accomplishing any lawful purpose of the cooperative not prohibited to it by law or its articles and bylaws or that is conducive to or expedient for the interest or benefit of the cooperative.
(2) In addition to the powers granted in subsection (1) of this section, each agricultural cooperative incorporated under this article has the following powers:
(a) To engage in any activity in connection with the marketing, selling, preserving, raising, harvesting, drying, processing, manufacturing, canning, packing, grading, storing, handling, and utilization of any products, by-products, or services produced or delivered to the cooperative by its members or other patrons;
(b) To engage in any activity in connection with agricultural education and research and to represent its members' interests in legislative and administrative forums.
(3) In addition to the powers specifically given in this article, a cooperative has all powers, rights, and privileges granted by the law of this state to domestic corporations or domestic nonprofit corporations that are not inconsistent with the provisions of this article.
(4) The powers enumerated in this article shall vest in every cooperative in this state formed under this article, or that has elected to be subject to this article, although they may not be stated in its charter or in its articles.
C.R.S. § 7-56-502 Marketing or purchasing contracts
7-56-502. Marketing or purchasing contracts. Cooperatives limiting membership to agricultural producers may make and execute marketing or purchasing contracts requiring the members to sell or purchase, for any period of time not over ten years, all or any specified part of their agricultural products or specified commodities, goods, services, or input supplies exclusively to or through the cooperative or any facilities utilized or to be created by the cooperative. If such producers contract to sell to the cooperative, it shall be conclusively held that title to the products passes absolutely and unreservedly, except for recorded liens, to the cooperative upon delivery or at any other specified time if expressly and definitely agreed to in the contract. The contract may provide, among other things, that the cooperative may sell or resell the products delivered by its members with or without taking title to the products and pay over to its members the resale price, after deducting all necessary selling, overhead, and other costs and expenses, including interest or dividends on stock which shall not exceed eight percent per annum, and reserves for proper purposes.
C.R.S. § 7-56-503 Remedies for breach of marketing or purchasing contract
7-56-503. Remedies for breach of marketing or purchasing contract. (1) The bylaws or the marketing or purchasing contracts of an agricultural cooperative may fix as liquidated damages specific sums to be paid by a member to the cooperative upon the breach by the member of any provision of the marketing or purchasing contract regarding the sale, purchase, receipt, or delivery or withholding of products or other goods and may further provide that the member will pay all costs, premiums for bonds, expenses, and fees if any action is brought upon the contract by the cooperative. All such provisions shall be valid and enforceable in the courts of this state, and clauses providing for liquidated damages shall be enforceable as such and shall not be regarded as penalties.
(2) In the event of any breach or threatened breach of a marketing or purchasing contract by a member, the cooperative shall be entitled to an injunction to prevent the further breach of the contract and to a decree of specific performance of the contract. Pending the adjudication of the action and upon filing a sufficient bond and verified complaint showing the breach or threatened breach, the cooperative shall be entitled to a temporary restraining order and preliminary injunction against the member.
(3) In any action upon a marketing contract, it shall be conclusively presumed that a landowner, landlord, or lessor is able to control the delivery of products or other goods produced on such landowner's, landlord's, or lessor's land by tenants or others whose tenancy or possession or work on such land or the terms of whose tenancy or possession or labor on such land was created or changed after execution by the landowner, landlord, or lessor of such marketing contract. The remedies provided in this section for nondelivery or breach shall lie and be enforceable against such landowner, landlord, or lessor in any such action upon a marketing contract.
C.R.S. § 7-56-504 Inducing breach of marketing or purchasing contract
7-56-504. Inducing breach of marketing or purchasing contract. Any person who knowingly induces any member of an agricultural cooperative formed under this article, or under similar statutes of another jurisdiction with similar restrictions and rights and operating in this state, to break the member's marketing or purchasing contract or agreement with the cooperative shall be subject to all available civil remedies, including but not limited to injunctive relief.
C.R.S. § 7-56-505 Purchases of property or other interests
7-56-505. Purchases of property or other interests. If a cooperative with preferred stock or preferred equity purchases or otherwise acquires any interest in any property, stock, or interest in another entity, it may, with the consent of the person or persons from whom the property or interests are being acquired, discharge the obligations incurred in the purchase or other acquisition, wholly or in part, by exchanging for the acquired property, stock, or interest shares or amounts of its preferred stock or preferred equity in an amount that, at par or stated value, would equal the value of the property, stock, or interest so purchased, as determined by the board. A transfer to the cooperative of the property, stock, or interest purchased or otherwise acquired shall be equivalent to payment in cash for the shares or amounts of preferred stock or preferred equity issued by the cooperative.
C.R.S. § 7-56-506 Warehouse receipts - interest in warehouse entities
7-56-506. Warehouse receipts - interest in warehouse entities. If a cooperative formed under or that has elected to be subject to this article organizes, forms, operates, owns, controls, has an interest in, owns stock of, or is a member of any commodities warehouse, the warehouse may issue legal warehouse receipts to the cooperative against the commodities delivered by it or to any other person, and any legal warehouse receipt shall be considered as adequate collateral to the extent of the usual and current value of the commodity represented by the receipt. If the warehouse is licensed or licensed and bonded under the law of this state, any other state, or the United States, its warehouse receipt delivered to the cooperative on commodities of the cooperative or its members or delivered by the cooperative or its members shall not be challenged or discriminated against because of ownership or control, wholly or in part, by the cooperative.
C.R.S. § 7-56-507 Application of other laws
7-56-507. Application of other laws. (1) If a matter is not addressed in this article, the "Colorado Business Corporation Act", articles 101 to 117 of this title, shall apply to the cooperatives formed under or subject to this article; except that a cooperative may elect to have the provisions of the "Colorado Revised Nonprofit Corporation Act", articles 121 to 137 of this title, apply to it if such cooperative does so in its articles or by a resolution of its members that is delivered to the secretary of state for filing pursuant to part 3 of article 90 of this title that states that the cooperative elects to have the provisions of the "Colorado Revised Nonprofit Corporation Act", articles 121 to 137 of this title, apply to it. A cooperative may revoke such election by amending its articles or by delivering to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of change that states that the cooperative revokes its election to have the provisions of the "Colorado Revised Nonprofit Corporation Act", articles 121 to 137 of this title, apply to it and that the revocation of such election has been approved by resolution of its members.
(2) Any exemptions under any existing law applying to goods or agricultural products in the possession or under the control of an individual producer shall apply similarly and completely to such goods or products when delivered by its members to, and in the possession or under the control of, the cooperative.
C.R.S. § 7-56-508 Cooperatives not in restraint of trade
7-56-508. Cooperatives not in restraint of trade. No cooperative formed under or subject to this article shall solely by its organization and existence be deemed to be a conspiracy or a combination in restraint of trade, an illegal monopoly, or an attempt to lessen competition or to fix prices arbitrarily, nor shall the marketing or purchasing contracts and agreements between any cooperative and its members or any agreements authorized in this article be considered illegal as such, in unlawful restraint of trade, or as part of a conspiracy or combination to accomplish an improper or illegal purpose.
C.R.S. § 7-56-509 Exemption from securities laws
7-56-509. Exemption from securities laws. Any security, patronage refund, per unit retain certificate, capital credit, evidence of membership, preferred equity certificate, or other equity instrument issued, sold, or reported by a cooperative as an investment in its stock or capital to the patrons of a cooperative formed under or subject to this article or a similar law of any other jurisdiction and authorized to transact business or conduct activities in this state is exempt from the securities laws contained in the "Colorado Securities Act", article 51 of title 11, C.R.S. Such securities, patronage refunds, per unit retain certificates, capital credits, or evidences of membership, preferred equity certificates or other equity instruments may be issued, sold, or reported lawfully by the issuer or its directors, officers, members, or salaried employees without the necessity of the issuer or its directors, officers, members, or employees being registered as brokers or dealers under the "Colorado Securities Act", article 51 of title 11, C.R.S.
C.R.S. § 7-56-510 Renewable energy cooperatives - powers
7-56-510. Renewable energy cooperatives - powers. (1) In addition to the powers granted in this article, renewable energy cooperatives may generate electricity from renewable resources or technologies and transmit and sell electricity at wholesale.
(2) No renewable energy cooperative shall sell electricity at retail or have a certificated territory in the state except as allowed for its own service or pursuant to public utility law or other legal authority.
C.R.S. § 7-56-601 Encumbering property
7-56-601. Encumbering property. The board of a cooperative has full power and authority, without approval of its members, to mortgage, pledge, encumber, dedicate to the repayment of indebtedness, whether with or without recourse, or otherwise encumber any or all of the cooperative's property, whether or not in the usual and regular course of business, and to execute and deliver mortgages, deeds of trust, security agreements, or other instruments for such purposes.
C.R.S. § 7-56-602 Merger, conversion, or consolidation or share or equity capital exchange
7-56-602. Merger, conversion, or consolidation or share or equity capital exchange. (1) One or more cooperatives formed under or that have elected to be subject to this article may be merged, consolidated, or shares or equity capital exchanged with another domestic cooperative or another domestic entity, or may convert to any form of entity permitted by section 7-90-201, upon such terms, for such purpose, and by such domestic entity name as may be agreed upon, which domestic entity name shall comply with part 6 of article 90 of this title.
(2) (a) With respect to a cooperative that is a party to a plan of merger, conversion, consolidation, or share or equity capital exchange, unless a different vote is required by the articles or bylaws, the plan shall be approved by a two-thirds majority of all the members of the board of the cooperative and by a two-thirds majority of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1). If a higher or lower percentage vote of members is required by the articles or bylaws for approval, not less than a majority of those present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) nor more than a two-thirds majority of all voting members of the cooperative shall be required.
(b) A cooperative shall not permit proportional voting to apply to a vote of members on a plan of merger, conversion, consolidation, or share or equity capital exchange pursuant to this section.
(c) If voting by mail is permitted, the notice of the meeting shall be mailed to each member and have a mail ballot attached to it.
(d) A cooperative may establish different requirements for plans between or among two or more cooperatives and for plans where a noncooperative entity is a party to the plan.
(e) The vote required for approval of a plan by an entity that is a party to the plan and that is not a cooperative entity shall be governed by the law applicable to the noncooperative entity.
(3) If a party to the merger, conversion, consolidation, or share or equity capital exchange is the owner of real property in the state of Colorado and the merger, conversion, consolidation, or share or equity capital exchange would affect the title to the real property, a copy of a statement of merger, conversion, consolidation, or share or equity capital exchange, certified by the secretary of state, shall be filed for record in the office of the county clerk and recorder in the county or counties in which the real property is situated.
C.R.S. § 7-56-603 Procedure for consolidation, share or equity capital exchange, conversion, and merger
7-56-603. Procedure for consolidation, share or equity capital exchange, conversion, and merger. (1) A plan for consolidation or share or equity capital exchange must state the following:
(a) The entity name of each entity planning to consolidate or exchange shares or equity capital and the principal office address of its principal office;
(b) The entity name of the surviving entity, or of the acquiring entity, and the principal office address of its principal office;
(c) A statement that the consolidating entities are consolidated with the surviving entity, or that the acquiring entity is acquiring shares or equity capital of the other entities, and the section of this article pursuant to which the consolidation or exchange is effected;
(d) Any amendments to the articles of the surviving party to be effected by the consolidation or equity capital exchange; and
(e) With respect to agricultural and other cooperatives exempted from the operation of laws such as the federal and state securities or antitrust laws, any steps necessary to maintain such exemption if the cooperative wishes to maintain such status.
(2) The plan of consolidation or share or equity capital exchange may state any other provisions relating to the consolidation or share or equity capital exchange.
(2.3) A plan of conversion shall comply with section 7-90-201.3.
(2.7) A plan of merger shall comply with section 7-90-203.3.
(3) Nothing in this section shall be deemed to limit the power of a cooperative or other entity to acquire all or part of the shares or equity capital of another cooperative through a voluntary exchange or through an agreement with the members of such other cooperative.
C.R.S. § 7-56-604 Merger of parent and subsidiary
7-56-604. Merger of parent and subsidiary. (1) Notwithstanding the provisions of sections 7-56-602 and 7-56-603, by complying with the provisions of this section, any parent cooperative owning one hundred percent of the voting shares, memberships, or interests and having a right to vote of a subsidiary may either merge such subsidiary into itself or merge itself into such subsidiary.
(2) The boards of the parent cooperative and of the subsidiary shall adopt by resolution, and the members of both the parent cooperative and the subsidiary shall approve, a plan of merger that states the following:
(a) The entity names of the parent cooperative and subsidiary and the entity name of the surviving party;
(b) The terms and conditions of the proposed merger;
(c) The manner and basis of converting the shares of the parent cooperative and subsidiary into shares, obligations, or other securities of the surviving party or any other cooperative into money or other property in whole or part;
(d) Any amendments to the articles of the surviving party to be effected by the merger; and
(e) Any other provisions relating to the merger as are deemed necessary or desirable.
(3) The members of the parent cooperative shall not be required to vote on the merger unless the articles, bylaws, or the board requires otherwise; except that if, as a result of the merger, the voting shares, memberships, or other interests of members of the parent cooperative would be materially altered, then the members of the parent cooperative shall have the right to vote on the plan of merger. If the members of the parent cooperative have the right to vote on the plan of merger, the parent cooperative shall mail a copy or summary of the plan of merger to each member of the parent cooperative who has the right to vote on the plan and all parties to the merger. Notice and meeting requirements as provided for in this article shall apply.
(4) If the members of the parent cooperative have the right to vote on the plan of merger, unless the articles, bylaws, or the board requires a greater or lesser vote, the plan of merger, consolidation, or share or equity capital exchange shall be approved by a majority of the members of the parent cooperative present and voting on the plan in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1). Upon approval of a plan of merger pursuant to this section, a statement of merger shall be delivered to the secretary of state, for filing pursuant to part 3 of article 90 of this title, and a copy of the statement of merger, certified by the secretary of state, shall be filed for record in each of the counties, if any, in which such filing is required by section 7-56-602 (3).
(5) (Deleted by amendment, L. 98, p. 612, § 6, effective July 1, 1998.)
C.R.S. § 7-56-604.5 Statement of merger or conversion
7-56-604.5. Statement of merger or conversion. (1) After a plan of merger is approved, the surviving entity shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of merger pursuant to section 7-90-203.7. If the plan of merger provides for amendments to the articles of incorporation of the surviving entity, the surviving entity shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment effecting the amendments.
(2) After a plan of conversion is approved, the converting entity shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of conversion pursuant to section 7-90-201.7.
C.R.S. § 7-56-605 Statement of consolidation or share or equity capital exchange
7-56-605. Statement of consolidation or share or equity capital exchange.
(1) (Deleted by amendment, L. 2004, p. 1415, § 56, effective July 1, 2004.)
(2) After a plan of consolidation or share or equity capital exchange is approved by all necessary action of all parties, the acquiring entity shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title 7, a statement of consolidation or a statement of exchange stating:
(a) The entity name of each entity that is a party to the consolidation or the shares of which will be acquired and the principal office address of its principal office;
(b) The entity name of the consolidated or acquiring entity and the principal office address of its principal office; and
(c) The effective date of the consolidation or share or equity capital exchange.
(c.5) and (d) (Deleted by amendment, L. 2004, p. 1415, § 56, effective July 1, 2004.)
(3) The consolidation or share or equity capital exchange shall be effective as provided in section 7-90-304.
C.R.S. § 7-56-606 Effect of merger, conversion, consolidation, or share or equity capital exchange
7-56-606. Effect of merger, conversion, consolidation, or share or equity capital exchange. (1) The effect of a merger is determined by section 7-90-204.
(2) The effect of a conversion is determined by section 7-90-202.
(3) When a consolidation takes effect:
(a) Each nonsurviving party to the consolidation consolidates into the surviving party, and the separate existence of every party to the consolidation except the surviving party ceases;
(b) The title to all real estate and other property owned by each nonsurviving party is transferred to and vested in the surviving party without reversion or impairment. Such transfer to and vesting in the surviving party shall be deemed to occur by operation of law, and no consent or approval of any other person shall be required in connection with any such transfer or vesting unless such consent or approval is specifically required in the event of consolidation by law or by express provision in any contract, agreement, decree, order, or other instrument to which any of the parties so consolidated is a party or by which it is bound.
(c) The surviving party has all liabilities of each party to the consolidation;
(d) A proceeding pending against any party to the consolidation may be continued as if the consolidation did not occur or the surviving party may be substituted in the proceeding for the party whose existence ceased;
(e) The articles of the surviving party are amended to the extent provided in the plan of consolidation; and
(f) The shares of each such party to the consolidation that are to be converted into shares, obligations, or other securities of the surviving or any other party or into money or other property are converted, and the former holders of the shares or equity capital are entitled only to the rights provided in the statement of consolidation.
(4) When a share or equity capital exchange takes effect, the shares or equity capital of each acquired party are exchanged as provided in the plan, and the former holders of the shares or equity capital are entitled only to the exchange rights provided in the articles of share or equity capital exchange.
C.R.S. § 7-56-606.5 Merger with foreign entity
7-56-606.5. Merger with foreign entity. (1) One or more domestic cooperatives may merge with one or more foreign entities if:
(a) The merger is permitted by section 7-90-203 (2);
(b) The foreign entity complies with section 7-90-203.7 if it is the surviving entity of the merger; and
(c) Each domestic cooperative complies with the applicable provisions of sections 7-56-602 and 7-56-603 and, if it is the surviving cooperative of the merger, with section 7-56-604.5.
(2) Upon the merger taking effect, the surviving foreign entity of a merger shall comply with section 7-90-204.5.
C.R.S. § 7-56-607 Consolidation or share or equity capital exchange with foreign business
7-56-607. Consolidation or share or equity capital exchange with foreign business. (1) One or more domestic cooperatives may consolidate or enter into a share or equity capital exchange with one or more foreign entities if:
(a) In a consolidation, the consolidation is permitted by the law of the jurisdiction under which each foreign entity is formed and each foreign entity complies with that law in effecting the consolidation;
(b) In a share or equity capital exchange, the cooperative whose shares or equity will be acquired is a domestic or foreign cooperative, and if a share or equity capital exchange is permitted by the law of the jurisdiction under the law of which the acquiring entity is formed;
(c) The foreign entity complies with the provisions of section 7-56-605 if it is the surviving or new entity in a consolidation or acquiring entity in a share or equity capital exchange; and
(d) The foreign entity is the surviving entity in the consolidation or the acquiring entity of the share or equity capital exchange and it complies with section 7-56-605.
(1.5) (Deleted by amendment, L. 2007, p. 222, § 8, effective May 29, 2007.)
(2) Upon the consolidation or share or equity capital exchange taking effect, the surviving foreign entity of a consolidation and the acquiring foreign entity of a share or equity capital exchange:
(a) Shall either:
(I) Appoint a registered agent if the foreign entity has no registered agent and maintain a registered agent pursuant to part 7 of article 90 of this title, whether or not the foreign entity is otherwise subject to that part, to accept service in any proceeding based on a cause of action arising with respect to any domestic entity that is merged into the foreign entity or the ownership interests of which are acquired in a share or equity capital exchange; or
(II) Be deemed to have authorized service of process on it in connection with any such proceeding by mailing in accordance with section 7-90-704 (2); and
(b) Shall comply with part 8 of article 90 of this title if it is to transact business or conduct activities in this state.
(3) (Deleted by amendment, L. 2004, p. 1417, § 58, effective July 1, 2004.)
(4) Subsection (2) of this section does not prescribe the only means, or necessarily the required means, of serving a surviving foreign entity in a consolidation or an acquiring foreign entity in a share or equity capital exchange.
(5) This section does not limit the power of a foreign entity to acquire all or part of the shares of one or more classes or series of a domestic cooperative through a voluntary exchange of shares or otherwise.
C.R.S. § 7-56-608 Dissenters' rights - definitions
7-56-608. Dissenters' rights - definitions. (1) As used in this section:
(a) "Dissenter" means a member eligible to vote who exercises the right to dissent provided in this section at the time and in the manner required by this section.
(b) "Interest" means interest required to be paid pursuant to this section at the average rate currently paid by the cooperative subject to this section on its principal bank loans or, if none, at the legal rate specified in section 5-12-101, C.R.S.
(c) "Stated value" means the original cost paid by a person for capital stock or membership fees, as recorded in the records of the cooperative, in order to qualify for membership and the right to vote in the cooperative, and for other equity capital the amount stated in the records of the cooperative that is required to make a payment under this section.
(2) If the board of a cooperative subject to this article submits to the members of the cooperative for approval a plan of merger, conversion, consolidation, or share or equity capital exchange and if following the merger, conversion, consolidation, or share or equity capital exchange there will be members of any cooperative involved in the proposed transaction who would no longer be eligible for membership or other voting interest in the surviving or resulting entity, the ineligible members shall be entitled to repayment of their equity interests in the cooperative in accordance with this section.
(3) If the board of a cooperative subject to this article submits to the members of the cooperative for approval a plan to sell all or substantially all of the cooperative's assets and not dissolve following the sale, the members of the cooperative shall be entitled to repayment of their equity interests in the cooperative in accordance with this section.
(4) A cooperative that proposes to be a party to a merger, conversion, consolidation, share or equity capital exchange, or a sale of assets, as described in subsection (2) or (3) of this section, shall include in the notice of the membership meeting at which the vote of the members is taken thereon an explanation of the right to dissent and the requirement to give written notice of intent to demand payment by a member having the right to do so under this section.
(5) A member who may be entitled to repayment of the member's equity interests in the cooperative in accordance with this section shall give written notice of the member's intention to demand payment before the vote is taken at the membership meeting at which a vote on the proposed merger, conversion, consolidation, share or equity capital exchange, or sale of assets is to be taken. Upon giving notice, the member shall no longer be entitled to vote on the proposed transaction. The written notice shall include the name of the member in which the stock or membership is held on the records of the cooperative and the member's address and social security or federal tax identification number. Failure to give written notice of intention to demand payment in the prescribed manner disqualifies the member from demanding payment under this section.
ote on the proposed transaction. The written notice shall include the name of the member in which the stock or membership is held on the records of the cooperative and the member's address and social security or federal tax identification number. Failure to give written notice of intention to demand payment in the prescribed manner disqualifies the member from demanding payment under this section.
(6) If the merger, conversion, consolidation, share or equity capital exchange, or sale of assets described in subsection (2) or (3) of this section is approved by the members of the cooperative in the manner applicable to any other entity that is a party to the transaction, the surviving, resulting, or new entity, including a cooperative that is to sell all or substantially all of its assets, shall be required to make the payments provided in this section. The surviving, resulting, or new entity shall give written notice to all dissenters who have given notice to dissent pursuant to this section. The notice shall include the address at which the surviving, resulting, or new entity will receive payment demands, the requirement to submit stock or membership certificates or certification of the loss or destruction thereof, the period in which demands will be received which shall be not less than thirty days from the date of the notice, and where applicable, a statement of qualifications for membership or other voting interest in the surviving or new entity.
(7) Within the period stated in the notice described in subsection (6) of this section, a dissenter may deliver a written demand for payment to the surviving, resulting, or new entity, or in the case of a sale of assets subject to this section, to the cooperative selling its assets, stating the address to which payment is to be made and, where applicable, a statement as to the reasons why the dissenter no longer qualifies for membership or a voting interest in the surviving, resulting, or new entity.
(8) Within thirty days after receipt of a demand for payment, the surviving, resulting, or new entity or, in the case of a sale of assets subject to this section, the cooperative selling its assets shall pay to the dissenter:
(a) The stated value of the initial investment of the dissenter in stock or membership fees in the cooperative as recorded in the records of the cooperative made to qualify the dissenter to be a member of the cooperative; and
(b) The stated value of all other equity capital of the dissenter in the cooperative as recorded in the records of the surviving, resulting, or new entity, or in the case of a sale of assets subject to this section, of the cooperative selling its assets; except that, in the case of any merger, conversion, consolidation, or share or equity capital exchange, if the surviving, resulting, or new entity has, by written agreement or operation of law other than this section, become liable to repay the other equity capital of the dissenter, the repayment of other equity capital shall be made by the surviving, resulting, or new entity under the same conditions and time frame, but not more than fifteen years, that would have applied if the member or equity holder had withdrawn or been terminated from the cooperative that is not the surviving, resulting, or new entity immediately prior to the effective date of the merger, conversion, consolidation, or share or equity capital exchange. If payment is not made on the date required by this subsection (8), the recipient shall be entitled to interest from the date the payment should have been made until the date payment is actually made.
(9) Notwithstanding any provisions of law to the contrary, holders of equity capital who are not members of the cooperative shall under no circumstances be entitled to dissenter's rights.
(10) Section 7-90-206 (2) applies to a conversion in which the cooperative is the converting entity.
C.R.S. § 7-56-609 Sale or other disposition of property without member approval
7-56-609. Sale or other disposition of property without member approval. (1) A cooperative may, on the terms and conditions and for the consideration determined by the board:
(a) Sell, lease, exchange, or otherwise dispose of any of its property in the usual and regular course of business; except that a sale, lease, exchange, or other disposition of all, or substantially all, of its property shall never be considered to be in the usual and regular course of business;
(b) Transfer to itself any or all of the property of a domestic or foreign entity when all the voting rights of the transferor are owned, directly or indirectly, by the transferee cooperative.
(2) Unless otherwise provided in the articles or bylaws, approval by the members of a transaction described in subsection (1) of this section is not required.
C.R.S. § 7-56-610 Sale or other disposition of property requiring member approval
7-56-610. Sale or other disposition of property requiring member approval. (1) A cooperative may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property, with or without its good will, only on the terms and conditions and for the consideration determined by the board and if the board proposes or submits and the members approve the transaction. A sale, lease, exchange, or other disposition of all, or substantially all, of the property of a cooperative, with or without its good will, in connection with its dissolution, other than pursuant to a court order, shall be subject to the requirements of this section; but a sale, lease, exchange, or other disposition of all, or substantially all, of the property of a cooperative, with or without its good will, pursuant to a court order shall not be subject to the requirements of this section. If a resolution to dissolve the cooperative that is adopted by the members of a cooperative pursuant to section 7-56-702 contemplates the sale of all or substantially all of the cooperative's property in connection with the dissolution, the adoption of that resolution by the members shall also be an authorization to sell all or substantially all of the cooperative's property pursuant to this section.
(2) If a cooperative is entitled to vote or otherwise consent, other than in the usual and regular course of its business, with respect to the sale, lease, exchange, or other disposition of all, or substantially all, of its property with or without the good will of another entity that it controls, and if the shares or other interests held by the cooperative in such other entity constitute all, or substantially all, of the property of the cooperative, then the cooperative shall consent to such transaction only if its board proposes and its members approve the giving of consent.
(3) For a transaction described in subsection (1) of this section or a consent described in subsection (2) of this section to be approved by the members:
(a) The board, by a two-thirds majority vote of all its members, shall recommend the transaction or the consent to the members unless the board determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the members with the submission of the transaction or the consent; and
(b) The members entitled to vote on the transaction or the consent shall approve the transaction or the consent as provided in subsection (6) of this section.
(4) The board may condition the effectiveness of the transaction or the consent on any basis.
(5) The cooperative shall give proper notice to each member entitled to vote on the transaction described in subsection (1) of this section or the consent described in subsection (2) of this section of the members' meeting at which the transaction or the consent will be voted upon. The notice shall:
(a) State that the purpose, or one of the purposes, of the meeting is to consider:
(I) In the case of action pursuant to subsection (1) of this section, the sale, lease, exchange, or other disposition of all, or substantially all, of the property of the cooperative; or
(II) In the case of action pursuant to subsection (2) of this section, the cooperative's consent to the sale, lease, exchange, or other disposition of all, or substantially all, of the property of another entity, which entity shall be identified in the notice, shares or other interests of which are held by the cooperative and constitute all, or substantially all, of the property of the cooperative; and
In the case of action pursuant to subsection (2) of this section, the cooperative's consent to the sale, lease, exchange, or other disposition of all, or substantially all, of the property of another entity, which entity shall be identified in the notice, shares or other interests of which are held by the cooperative and constitute all, or substantially all, of the property of the cooperative; and
(b) Contain or be accompanied by a description of the transaction, in the case of action pursuant to subsection (1) of this section, or by a description of the transaction underlying the consent, in the case of action pursuant to subsection (2) of this section.
(6) Member approval of a transaction or consent described in subsections (1) and (2) of this section shall require an affirmative vote of two-thirds majority of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1); but the two-thirds voting requirement may be reduced to not less than a majority of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1), or may be increased to up to two-thirds of all members entitled to vote, by a provision contained in the articles or bylaws of the cooperative. The cooperative may also provide in its articles or bylaws for different voting requirements with respect to a transaction between one or more cooperatives subject to this article or similar law of other states and between the cooperative and one or more entities formed under or subject to different law of this or other states. A cooperative may not permit proportional voting to apply to a vote of members with respect to the sale of all or substantially all of the property of the cooperative pursuant to this section.
(7) After a transaction described in subsection (1) of this section or a consent described in subsection (2) of this section is authorized, the transaction may be abandoned or the consent withheld or revoked, subject to any contractual rights or other limitations on such abandonment, withholding, or revocation, by a unanimous vote of the board or the vote of two-thirds of all the members.
(8) If the members do not approve of a transaction or consent as described in subsections (1) and (2) of this section, the board may prohibit the consideration and submittal of a similar proposal to the members for a period of two years following the members' vote.
C.R.S. § 7-56-701 Authorization of dissolution before issuance of memberships
7-56-701. Authorization of dissolution before issuance of memberships. If a cooperative has not yet issued memberships, a majority of its directors or, if the initial directors designated in the articles have not met or if not designated in the articles have not been elected, a majority of its incorporators, may authorize the dissolution of the cooperative.
C.R.S. § 7-56-702 Authorization of dissolution after issuance of memberships
7-56-702. Authorization of dissolution after issuance of memberships. (1) After memberships have been issued, dissolution of a cooperative may be authorized in the following manner:
(a) The board, by a two-thirds majority vote of all its members, shall first adopt a resolution recommending dissolution that conforms to the requirements of paragraph (c) of this subsection (1);
(b) The board shall submit the resolution adopted pursuant to paragraph (a) of this subsection (1) to the members;
(c) The resolution adopted pursuant to paragraph (a) of this subsection (1) shall state the reasons why the termination of the affairs of the cooperative is deemed advisable, the time by which it should be accomplished, whether or not the board may revoke dissolution, and the names of three persons and two alternates to act as trustees in liquidation who shall have all the powers of the board to do all things they deem necessary for the efficient distribution of claims to creditors, in liquidation and termination of the affairs of the cooperative, including the sale of all or substantially all of the cooperative's property as they deem necessary if the resolution also provides for a sale of the property. Such trustees and alternates need not be members of the cooperative. Any vacancies in the trusteeship shall be first filled by the designated alternates and then may be filled by such persons as may be designated by the remaining trustees.
(2) The board may condition the effectiveness of the dissolution on any basis.
(3) The cooperative shall give notice to each member of the regular or special meeting at which the resolution to dissolve will be voted upon. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the proposal to dissolve the cooperative. The notice shall contain or be accompanied by a copy of the proposal or a summary thereof, including a description of the proposed distribution of the cooperative's assets and, if voting by mail is permitted, with a mail ballot attached to it.
(4) The proposal to dissolve shall be approved by a two-thirds majority vote of the members present and voting in person or in any other manner authorized by the cooperative pursuant to section 7-56-305 (1) at a regular or special meeting called for such purpose. A cooperative shall not permit proportional voting to apply to a vote of members on a resolution to dissolve pursuant to this section.
C.R.S. § 7-56-703 Articles of dissolution
7-56-703. Articles of dissolution. (1) At any time after dissolution is authorized, the cooperative may dissolve by delivering to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of dissolution stating:
(a) The domestic entity name of the cooperative;
(b) The principal office address of the cooperative's principal office; and
(c) That the cooperative is dissolved.
(d) to (f) (Deleted by amendment, L. 2004, p. 1418, § 59, effective July 1, 2004.)
(2) A cooperative is dissolved upon the effective date of its filed articles of dissolution.
(3) (Deleted by amendment, L. 2003, p. 2232, § 101, effective July 1, 2004.)
C.R.S. § 7-56-704 Revocation of dissolution
7-56-704. Revocation of dissolution. (Repealed)
C.R.S. § 7-56-705 Effect of dissolution
7-56-705. Effect of dissolution. (1) A dissolved cooperative continues its existence but may not carry on any business except as is appropriate to wind up and liquidate its business and affairs, including:
(a) Collecting its assets;
(b) Disposing of its assets that will not be distributed in kind to its members or equity holders;
(c) Discharging or making provision for discharging its liabilities;
(d) Distributing its remaining assets among its members or equity holders according to their interests; and
(e) Doing every other act necessary to wind up and liquidate its business and affairs.
(2) Unless otherwise stated in the articles or bylaws, the assets shall be used to pay, in the following order:
(a) Liquidation expenses, including reasonable payment and reimbursement for the time and expenses of the trustees in liquidation and their consultants;
(b) All debts and liabilities according to their respective priorities;
(c) Amounts invested in the cooperative that have a specific preference in liquidation over other amounts invested in the cooperative;
(d) Without priority and on a pro rata basis, amounts invested in the cooperative, whether as membership fees, common stock, or otherwise, which are required by the cooperative to be invested in order for a person to be a member or to be subject to per unit retains or be entitled to participate in the allocation of net margins on terms and conditions established in the cooperative's bylaws or by the cooperative's board;
(e) Without priority and on a pro rata basis, retained patronage, per unit retains, other amounts withheld from or allocated to a patron of the cooperative, or any direct contributions to the capital of the cooperative not described in paragraph (d) of this subsection (2), all as shown on the books and records of the cooperative;
(f) Any remaining assets, including reserves, if any, shall be distributed among such members of the cooperative, as shown in the records of the cooperative, without priority and on a pro rata basis, as shall be practicable as determined by the trustees in liquidation. In making their determination, the trustees in liquidation may limit those persons entitled to share in the distribution to persons entitled to share in the allocation of the cooperative's net margins during a limited specified period of time.
(g) With respect to subsections (2)(e) and (2)(f) of this section, the amounts to be distributed shall be paid to the persons entitled to them as promptly as reasonably possible after the filing of the articles of dissolution by the secretary of state, but in no event shall the distributions be made later than seven years following the filing of the articles of dissolution by the secretary of state unless distribution is prevented by circumstances beyond the control of the trustees in liquidation.
(3) Dissolution of a cooperative does not:
(a) Transfer title to the cooperative's property;
(b) Prevent transfer of its memberships or securities, although the authorization to dissolve may provide for closing the cooperative's membership, stock, or other equity transfer records;
(c) Subject its directors or officers to standards of conduct different from those otherwise applicable to them prior to dissolution;
(d) Change quorum or voting requirements for its board or members; change provisions for selection, resignation, or removal of its directors or officers, or both; or change provisions for amending its bylaws or its articles;
(e) Prevent commencement of a proceeding by or against the cooperative in its cooperative name; or
(f) Abate or suspend a proceeding pending by or against the cooperative on the effective date of dissolution.
(4) A dissolved cooperative may dispose of claims against it pursuant to sections 7-90-911 and 7-90-912.
C.R.S. § 7-56-706 Disposition of known claims by notification
7-56-706. Disposition of known claims by notification. (Repealed)
C.R.S. § 7-56-707 Disposition of claims by publication
7-56-707. Disposition of claims by publication. (Repealed)
C.R.S. § 7-56-708 Enforcement of claims against dissolved cooperative
7-56-708. Enforcement of claims against dissolved cooperative. (Repealed)
C.R.S. § 7-56-709 Service on dissolved cooperative - repeal
7-56-709. Service on dissolved cooperative - repeal. (Repealed)
C.R.S. § 7-56-710 Grounds for administrative dissolution
7-56-710. Grounds for administrative dissolution. (Repealed)
C.R.S. § 7-56-711 Procedure for and effect of administrative dissolution
7-56-711. Procedure for and effect of administrative dissolution. (Repealed)
C.R.S. § 7-56-712 Reinstatement following administrative dissolution
7-56-712. Reinstatement following administrative dissolution. (Repealed)
C.R.S. § 7-56-713 Appeal from denial of reinstatement
7-56-713. Appeal from denial of reinstatement. (Repealed)
C.R.S. § 7-56-714 Grounds for judicial dissolution
7-56-714. Grounds for judicial dissolution. (1) A cooperative may be dissolved in a proceeding brought in court by the attorney general if it is established that:
(a) The cooperative obtained its organization through fraud; or
(b) The cooperative has exceeded or abused the authority conferred upon it by law.
(2) A cooperative may be dissolved in a proceeding brought in court by not less than ten percent of the total number of members if it is established that:
(a) The directors are deadlocked in the management of the cooperative's affairs, the members are unable to break the deadlock, and irreparable injury to the cooperative is threatened or suffered, or the business and affairs of the cooperative can no longer be conducted to the advantage of the members generally;
(b) The directors or those in control of the cooperative have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; or
(c) The members are deadlocked in voting power and have failed for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors.
(3) A cooperative may be dissolved in a proceeding brought in court by a creditor if it is established that:
(a) A creditor's claim has been reduced to judgment, the execution on the judgment has been returned unsatisfied, and the cooperative is insolvent; or
(b) The cooperative is insolvent and the cooperative has admitted in writing that a creditor's claim is due and owing.
(4) (a) If a cooperative has been dissolved by voluntary action taken under sections 7-56-701 to 7-56-705:
(I) The cooperative may bring a proceeding in court to wind up and liquidate its business and affairs under judicial supervision in accordance with section 7-56-716; or
(II) The attorney general, a member, or a creditor, as the case may be, may bring a proceeding in court to wind up and liquidate the business and affairs of the cooperative under judicial supervision in accordance with section 7-56-716, upon establishing the grounds set forth for such person, respectively, in subsections (1) to (3) of this section.
(b) As used in sections 7-56-715 to 7-56-717, a "proceeding to dissolve the cooperative" includes a proceeding brought under this subsection (4), and a "decree of dissolution" includes an order of court entered in a proceeding under this subsection (4) that directs that the business and affairs of a cooperative be wound up and liquidated under judicial supervision.
C.R.S. § 7-56-715 Procedure for judicial dissolution
7-56-715. Procedure for judicial dissolution. (1) A proceeding to dissolve a cooperative brought by the attorney general shall be brought in the district court for the county in this state in which the street address of the cooperative's principal office is located or, if the cooperative has no principal office in this state, in the district court for the county in which the street address of its registered agent is located or, if the cooperative has no registered agent, in the district court for the city and county of Denver. A proceeding brought by any other party named in section 7-56-714 shall be brought in the district court for the county in this state in which the street address of the cooperative's principal office is located or, if the cooperative has no principal office in this state, in the district court for the county in which the street address of its registered agent is located or, if the cooperative has no registered agent, in the district court for the city and county of Denver.
(2) A court in a proceeding brought to dissolve a cooperative may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the cooperative's assets, wherever located, and carry on the business of the cooperative until a full hearing can be held.
C.R.S. § 7-56-716 Receivership or custodianship
7-56-716. Receivership or custodianship. (1) A court in a proceeding to dissolve a cooperative may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage the business and affairs, of the cooperative. The court shall hold a hearing, after giving notice to all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian pursuant to this section. The court appointing a receiver or custodian has exclusive jurisdiction over the cooperative and all of its property, wherever located.
(2) The court may appoint an individual, a domestic entity, or a foreign entity or other entity authorized to transact business or conduct activities in this state as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
(3) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
(a) The receiver may:
(I) Dispose of all or any part of the property of the cooperative, wherever located, at a public or private sale, if authorized by the court; and
(II) Sue and defend in the receiver's own name as receiver of the cooperative in all courts; or
(b) The custodian may exercise all of the powers of the cooperative, through or in place of its board or officers, to the extent necessary to manage the affairs of the cooperative in the best interests of its members and creditors.
(4) The court, during a receivership, may redesignate the receiver as custodian, and during a custodianship may redesignate the custodian as receiver if doing so is in the best interests of the cooperative and its members and creditors.
(5) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and such person's counsel from the assets of the cooperative or proceeds from the sale of the assets.
C.R.S. § 7-56-717 Decree of dissolution
7-56-717. Decree of dissolution. (1) If after a hearing the court determines that one or more grounds for judicial dissolution described in section 7-56-714 exist, it may enter a decree dissolving the cooperative and stating the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the secretary of state, who shall file it pursuant to part 3 of article 90 of this title.
(2) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the cooperative's business and activities in accordance with section 7-56-705 or 7-56-716 and the giving of notice to the cooperative's registered agent, or to the secretary of state if it has no registered agent, and to claimants in accordance with sections 7-90-911 and 7-90-912.
(3) The assets of the dissolved cooperative, after payment of administrative expenses, shall be distributed in accordance with the provisions of section 7-56-705.
(4) The court's order or decision may be appealed as in other civil proceedings.
C.R.S. § 7-56-718 Certain assignments of assets in dissolution
7-56-718. Certain assignments of assets in dissolution. In the winding up of the affairs of a cooperative when certain assets are not liquid and secured creditors having claim on these assets have been satisfied, the trustees in liquidation or other persons charged with winding up the cooperative's affairs are authorized to make assignment of such assets to the unsecured creditors in settlement of their claims. If assignment is refused in writing, and in the judgment of the trustees there is no liquidity or market value and the costs involved in delaying the winding up of the affairs of the cooperative exceed the potential benefits, the trustees are authorized to assign the assets or future proceeds to any local or statewide nonprofit organization that has as one of its principal purposes education or community service. The trustees shall under no circumstances be liable to any member or equity holder in the cooperative for any claim on any assets assigned by the trustees pursuant to the authority of this section.
C.R.S. § 7-56-801 Authority to transact business or conduct activities required
7-56-801. Authority to transact business or conduct activities required. Part 8 of article 90 of this title, providing for the transaction of business or the conduct of activities by foreign entities, applies to foreign cooperatives.
C.R.S. § 7-56-802 Registered agent - service of process
7-56-802. Registered agent - service of process. Part 7 of article 90 of this title, providing for registered agents and service of process, applies to foreign cooperatives.
C.R.S. § 7-56-901 Application to existing cooperatives
7-56-901. Application to existing cooperatives. (1) A domestic corporation, association, or cooperative formed under this article before July 1, 1996, shall be governed by the provisions of this article.
(2) A cooperative formed under article 57 of this title before July 1, 1996, until it elects to be governed by the provisions of this article pursuant to section 7-56-205, shall be deemed to have been formed under, and shall be governed by, the provisions of article 55 of this title as in effect immediately prior to July 1, 1996.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://leg.colorado.gov/sites/default/files/images/olls/crs2024-title-07.docxFetched: 10/6/2026