HB 441 (BR 1484) - M. Denham, J. Tilley, M. King, T. McKee, R. Palumbo, W. Stone, B. Yonts
AN ACT relating to business entities.
Establish KRS Chapter 272A and create new sections of various subchapters thereof to provide that the chapter may be cited as the "Kentucky Uniform Limited Cooperative Association Act"; establish definitions; authorize the creation of limited cooperative associations; describe the characteristics of uniform limited cooperative associations in terms of membership, ownership, profit-making status, and duration of existence; identify the powers of the limited cooperative association and state that the laws of the Commonwealth govern its internal affairs and liability; state that the principles of law and equity are supplemental and that strict construction of statutes in derogation of common law do not apply to provisions governing limited cooperative associations; establish other principles of law; establish rights, penalties, and other matters in organic rules and make organic rules govern relations between members, directors, and assignees in the limited cooperative association; make the limited cooperative association a limited liability pass-through entity; state that the agreements among or within the limited cooperative association shall not be deemed a restraint of trade; require names of limited cooperative associations to be in accordance with laws of the Commonwealth; identify the items that may be contained in the articles of association and which of those items may be varied in the organic rules; require maintenance of records in the limited cooperative association's principal office; allow a limited cooperative association to have patron members and investor members and the rules that govern the interests and prerogatives of those members; require the limited cooperative association to maintain a registered agent in the Commonwealth; state the rules that govern records sent to the Secretary of State's Office for execution and the rights of and damages for failure to follow those rules; require an annual report to be sent to the Secretary of State's Office and establish new fees for documents filed for a limited cooperative association; allow a limited cooperative association to be formed by one or more organizers and provide the method of formally establishing the limited cooperative association, including the contents of the articles of association; establish the initial steps to be taken after forming a limited cooperative association, including naming directors, holding meetings, accepting members, and establishing by-laws and the contents of the by-laws; allow the limited cooperative association to amend the organic rules and the by-laws and the method for so doing; state when amendments to organic rules may be made and voted on by both district and class and the quorum and voting majority for approval; allow for voting on restatement of articles of association and specify the filing requirements for amended articles of association; require two patron members before the limited cooperative association may conduct business; prohibit a member from binding a limited cooperative association solely by reason of membership; distinguish and unobligate the debt and liability of a member from that of the limited cooperative association; prescribe the method of fulfilling a demand for a record of the limited cooperative association; prescribe the requirements for annual, special, and other meetings, including notification, notification waivers, and quorum; require each patron member to have one vote, except when the organic rules allocate voting power on another basis; establish the voting power of patron members and investor members and prohibit voting by proxy and allow, under specified circumstances vote actions without a meeting; allow for formation of geographic districts for patron members and make a member's interest personal property with governance, financial, and business rights with a limited cooperative association; make the membership as patron or investor status, or both, predicated on the status when admitted into the limited cooperative association; prescribe how and when a member's interests are transferrable and subject transferability to the Uniform Commercial Code; prescribe the method to satisfy a judgment against a member out of the financial rights; define "marketing contract" and establish the time for transfer of title on goods associated with the contract and authorizations to create security interests and sell goods and settle accounts on a pooled or other basis; allow provisions of marketing contracts to be contained in the organic rules; prescribe the initial duration of the marketing contract at ten years with a self-renewing provision for five years and termination with notice 90 days before the end of the current term; require damages for breach of contract to be reasonable; specify other types of relief and allow damages to be liquidated; require at least three directors of a limited cooperative association unless the cooperative has less than three members; set the number of directors for a different number of patron members and allow for deviations in the organic rules; clarify that the director is not a registered agent by virtue of that duty and identify eligibility characteristics of the director; prohibit liabilities of the limited cooperative association from being that of the director; make the director liable for personal acts of negligence, wrongful acts, or misconduct; set the term of the directorship, and the re-election rules; allow for a director to be removed or suspended or to resign, and prescribe the method for qualifying a successor and filling vacancies; allow the board to set the pay of the directors, appoint and remove officers, and prescribe the duties of the board of directors generally, including holding meetings, voting, and establishing committees; specify the duties of the director and officers of the limited cooperative association; require organic rules to contain matters on contribution requirements of members and allocating profits among members and others; establish deductions and set asides for determining profit distributions; establish the rules governing contributions to the limited cooperative association; specify what kind of distribution may be made to members to satisfy requirements and set redemption and repurchase requirements; allow members to disassociate from the limited cooperative association and prescribe the rules that govern it; prescribe the method of dissolution and winding up operations of the limited cooperative association, including discharging obligations to creditors, disposition of claims against it, court-prescribed security for claims, and required filing for dissolution; allow members to maintain a derivative action against a limited cooperative association; permit the Attorney General to maintain an action against a foreign limited cooperative association in violation of the rules of governing them in the Commonwealth; specify actions that do and do not require approval by the limited cooperative association; establish definitions to govern mergers and conversions of limited cooperative associations; prescribe how to effectuate and the conditions for mergers and conversions, including voting; allow for electronic signatures; prohibit the laws governing limited cooperative associations from impacting existing cooperatives or associations; require existing cooperatives to be governed by KRS Chapter 272 unless that cooperative elects to convert to a limited cooperative association and prescribe a method of conversion; amend KRS 292.400 to exempt a patron member's interest in a limited cooperative association and all patronage refunds from the securities registration requirements; amend KRS 14A.1-070 to define "foreign limited cooperative association" and "limited cooperative association"; amend KRS 14A.3-010 to prescribe what is in a name for a limited cooperative association and delete the case that the name "cooperative" may be used for a for-profit entity; delete authorization to use name of another entity in the Commonwealth under specified circumstances; amend KRS 14A.2-020 to include documents to be delivered on behalf of a limited cooperative association; amend KRS 14A.2-040 to include articles of association and amendments in documents to be filed with the county clerk; amend KRS 14A.6-010 to include limited cooperative associations among the entities to file annual reports with the Secretary of State; amend KRS 14A.9-030 to include foreign limited cooperative associations among those entities to file certificates of authority with the Secretary of State; amend KRS 365.015 to include limited cooperative associations among the types of businesses that file under real names; prohibit use of assumed names unless filed certificate contains assumed name; delete execution of certificates under assumed names and certificates of withdrawal under assumed names for partnerships, business trusts, corporations, and limited liability companies; include limited cooperative associations among entities that file certificates of assumed name with the county clerk; amend 14A.3-040 to conform internal references; amend KRS 14.105 to include limited cooperative associations among entities for which electronic signatures are accepted by the Secretary of State; amend KRS 141.424 to allow agriculture cooperatives formed as limited cooperative associations to apportion the biodiesel credit among patron members of the association; amend KRS 141.4246 to allow agriculture cooperative associations formed as limited cooperative associations to apportion the ethanol or cellulosic ethanol credit among patron members; amend KRS 247.4475 to allow agricultural cooperatives organized as limited cooperative associations to handle collection and disbursements of the assessment; amend KRS 247.490 to allow agricultural cooperatives formed as limited cooperative associations to handle the collection and disbursement of assessments for members.
HB 441 - AMENDMENTS
HCS - Retain original provisions; amend Sections 11, 64, 71 and 104 to make grammatical and technical corrections.
SCS - Make technical corrections.
Feb 22-introduced in House
Feb 23-to Agriculture & Small Business (H)
Feb 24-posted in committee
Feb 29-reported favorably, 1st reading, to Calendar with Committee Substitute
Mar 1-2nd reading, to Rules; posted for passage in the Regular Orders of the Day for Friday, March 2, 2012
Mar 5-3rd reading, passed 92-2 with Committee Substitute
Mar 6-received in Senate
Mar 8-to Judiciary (S)
Mar 27-taken from Judiciary (S); 1st reading; returned to Judiciary (S)
Mar 28-taken from Judiciary (S); 2nd reading; returned to Judiciary (S)
Mar 29-reported favorably, to Rules with Committee Substitute as a Consent Bill
Mar 30-recommitted to Judiciary (S)
Apr 12-taken from Judiciary (S); to Rules (S); posted for passage in the Consent Orders (2) of the Day for Thursday, April 12, 2012; 3rd reading, passed 37-0 with Committee Substitute ; received in House; to Rules (H); posted for passage for concurrence in Senate Committee Substitute ; House concurred in Senate Committee Substitute ; passed 93-0; enrolled, signed by each presiding officer; delivered to Governor
Apr 23-signed by Governor (Acts ch. 160)