NEWS & RESOURCES

membership

 

Fifth Season Cooperative Bylaws

Working together to build our regional food system

August 10, 2010

Note: For your reference, items in [parentheses] refer to related sections of Chapter 185 of the Wisconsin Statutes on co-op law.

Section I – Purpose of the Cooperative

Purpose

The Fifth Season Cooperative (“Co-op”) is a marketing and distribution co-op serving the local food system in the 7 Rivers region of western Wisconsin.

Section II – Membership

[For guidance, see Chapter 185.11]
  1. Classes of Membership

In the spirit of cooperation, we bring together multiple stakeholders or parties directly involved in sustaining a healthy local foodshed. These member classes include:

  1. Producer A grower who sells product through the Co-op which meets the Co-op’s most recent product standards, and is located within the 7 Rivers region. If a product cannot be produced to established quality standards by current Co-op members within the 7 Rivers region, the board may offer membership to an eligible producer within the region (as defined by the board of directors). A grower is eligible for membership as a “Producer Member” upon:

1) Purchase of one share of Class A membership stock.

2) Payment of any producer fees, as determined by the board of directors.

3) Compliance with all equity requirements of the Co-op.

4) Maintenance of active status. Producer members must deliver product through the Co-op at least once during the calendar year.

5) Executing a membership agreement with the Fifth Season Cooperative.

  1. Producer Groups An agricultural business located within the 7 Rivers region, that aggregates and/or processes product from the region. Producer Groups must meet the Co-op’s most recent product standards. An agricultural business is eligible for membership as a “Producer Group member” upon:

1) Purchase of one share of Class A membership stock.

2) Payment of any producer group fees, as determined by the board of directors.

3) Compliance with all equity requirements of the Co-op.

4) Maintenance of active status. Producer group members must deliver product through the Co-op at least once during the calendar year.

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5) Executing a membership agreement with the Fifth Season Cooperative.

6) Designation of producer group representative (for voting, meetings, etc.)

iii. Buyer An organization (including, but not limited to: universities, school districts, hospitals, nursing homes, restaurants, churches, and non-profits) that purchases products on a regular basis and is located within the 7 Rivers region. A Buyer understands that the Co-op may not provide product 365 days a year and is willing to make up the short falls using a source other than the Co-op. An organization is eligible for membership as a “Buyer Member” upon:

1) Payment of any fees, as determined by the board of directors.

2) Compliance with all equity requirements of the Co-op.

3) Maintenance of active status. Buyer group members must purchase product through the Co-op at least once during the calendar year.

4) Executing a membership agreement with the Fifth Season Cooperative.

  1. Processor A business that works with the Co-op to produce value-added products to the standards of the Cooperative and helps develop new products for the Co-op. The processor shall be located within the 7 Rivers region. A processing business is eligible for membership as a “Processor Member” upon:

1) Purchase of one share of Class A membership stock.

2) Payment of any fees, as determined by the board of directors.

3) Compliance with all equity requirements of the Co-op.

4) Maintenance of active status. Processor group members must deliver product through the Co-op at least once during the calendar year.

5) Executing a membership agreement with the Fifth Season Cooperative.

  1. Distributor A business located within the 7 Rivers region that transports Co-op products according to Co-op standards. A distribution business is eligible for membership as a “Distributor Member” upon:

1) Purchase of one share of Class A membership stock.

2) Payment of any fees, as determined by the board of directors.

3) Compliance with all equity requirements of the Co-op.

4) Maintenance of active status. Distributor group members must deliver product through the Co-op at least once during the calendar year.

5) Executing a membership agreement with the Fifth Season Cooperative.

  1. Worker An individual employed by the Co-op may be offered membership. A worker-member must fulfill eligibility requirements set by the board of directors. A wage or contract employee of the Fifth Season Cooperative is eligible for membership as a “Worker Member” upon:

1) Purchase of one share of Class A membership stock.

2) Compliance with all equity requirements of the Co-op.

3) Current employment with the Co-op.

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4) Meeting eligibility requirements for worker membership as set forth by the board of directors.

5) Executing a membership agreement with the Fifth Season Cooperative.

  1. Community Supporter – An individual, business, or organization located within the 7 Rivers region that believes in the mission and wants to support the efforts of the Co-op may join the cooperative as a Community Supporter. A Community Supporter is not a member as defined above, does not share in patronage refunds and is not eligible to serve on the board. Community Supporter voting rights are limited to major events in the life of the Co-op (merger, consolidation, division, acquisition, or dissolution per state statutes 185.52, 185.61, 185.52 and 185.63). An individual or entity is eligible for membership as a “Community Supporter Member” upon:

1) Purchase of Class B Stock in such amounts as determined by the board of directors.

2) Compliance with all equity requirements of the Co-op.

3) Executing a Community Supporter agreement with the Fifth Season Cooperative.

  1. Membership Rights

1) Be eligible for patronage refunds (see Finances section).

2) Participate in annual and special membership meetings.

3) Vote in elections for the board or on ballots.

4) Serve on the board of directors or on committees.

  1. Membership Responsibilities

Members are expected to participate in the activities of the Co-op, including, but not limited to the following:

1) Contribute to the Co-op’s capital by purchasing a membership shares.

2) Patronize the Co-op.

3) Know and understand the criteria for participation, product standards, bylaws, and policies of the Co-op.

4) Participate in any educational activities mandated by the board of directors or product committees.

5) Keep current on the activities and actions of the Co-op, attend annual and special member meetings, vote in elections, and respond to surveys.

6) Participate in committee work.

7) Share experience and provide member-to-member education as requested.

8) Assist in the development of new products or product uses.

9) Promote the Co-op and encourage others to become members.

10) Contact local, state, and federal representatives on issues related to the Co-op’s mission.

  1. Termination of Membership – [See Chapter 185.11(4) for guidance.]
  2. Resignation Members wishing to leave the Co-op must submit a written note to the secretary. Resigning members are responsible for fulfilling all outstanding obligations. The Class A membership stock is redeemable at the discretion of the Board of Directors. 4
  3. Involuntary termination The board of directors may terminate an individual or organization’s membership for one of the following reasons:
  4. Did not participate in the Co-op for one year or more
  5. Violated terms of Co-op policy, board policy, product standards, or these bylaws
  6. Acted contrary to the best interests of the Co-op.

Members may be expelled for cause from the Co-op by a majority vote of the board of directors. The board may only terminate membership during a board meeting. The Class A membership stock is redeemable at the discretion of the Board of Directors.

Termination of membership will use the following procedure:

  1. The board will send a certified letter stating the reason for the proposed termination and outline specific incidences of violation of policies or bylaws. The letter must be sent at least seven days prior to the vote to terminate membership.
  2. The member will be invited to the board meeting to be heard.
  3. The decision of the board is final.

Section III – Meetings

[For guidance, see Chapter 185.13]

There are 2 types of membership meetings:

 annual membership meetings

 special membership meetings

  1. Annual Meetings – [See Chapter 185.13(1), (2) and 185.06(2)]

Legally, every Co-op in Wisconsin must hold a membership meeting at least once a year.

  1. The first annual meeting will be held within six months of the Co-op’s incorporation date. Subsequent annual meetings will be held every February. The purpose of the annual meeting is for:
  2. The officers and board to report on the business of the Co-op, including a financial summary.
  3. Members to elect directors for board vacancies.
  4. Members to consider and vote upon any amendments to the bylaws and any other business which may properly come before the members.
  5. Details about running an annual meeting:
  6. The board will name a time and place for the annual meeting and set at least 30 days in advance.
  7. The president (or a designee) will chair the meeting.
  8. The secretary (or a designee) will keep meeting minutes.
  9. Special Meetings – [See Chapter 185.13(3), (4)]

Sometimes there is important information or decisions for the entire membership to consider. This may require calling a special member meeting (rather than waiting for the 5

next annual meeting). The board may call a special meeting or the members may call a special meeting.

  1. Protocols for a board initiated special meeting
  2. The board president or the board of directors may call a special member meeting.
  3. The board will set the agenda.
  4. The president (or a designee) will chair the meeting.
  5. The secretary (or a designee) will keep meeting minutes.
  6. The president shall give notice of a special members’ meeting. (See meeting notification procedures below.)
  7. Remember – No business shall be considered at a special members’ meeting except as covered in the notice of the meeting.
  8. Protocols for a member initiated meeting
  9. If at least 20% of the membership signs a petition submitted to the president requesting a special meeting, the president shall call a special meeting.
  10. The member calling the meeting shall state the agenda and may designate a chair and secretary for the meeting.
  11. The president shall give notice of a special members’ meeting. (See meeting notification procedures below.)
  12. Remember – No business shall be considered at a special members’ meeting except as covered in the notice of the meeting.
  13. Notifying Members about Annual or Special Meetings – [See Chapter 185.13(4)]

Members must be notified of either an annual or special member meeting in the follow ways:

  1. Notice must be in writing, in a format accessible to all members.
  2. Notice shall state the place, day, and hour of the meeting.
  3. Meeting notice must be sent not less than 7 nor more than 30 days prior to the meeting date to all members.
  4. Notice shall be given to stockholders having limited voting rights if they have or may have the right to vote at the meeting.
  5. Notice will state the nature of the business expected to be conducted.
  6. For special member meetings, only business stated in the notice will receive a final action or vote during the meeting.
  7. Voting Procedures – [See Chapter 185.12]
  8. Wisconsin Co-op law is specific about how votes are cast. This means:
  9. Only Co-op members may vote at any member meeting, except stockholders may vote on major structural changes within the Co-op (merger, consolidation, divisions, acquisition, and dissolution) as provided for in the statutes.
  10. Each member has only one vote.
  11. Voting may be in person or by methods approved by the board. Voting may take place over a 30 day duration. Notice of a vote must include exact language of the proposed change and a brief justification of the proposed change.

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  1. A simple majority (51%) of the votes cast will decide a question (except where a higher percentage is specified in the bylaws or required by applicable law).
  2. Voting by proxy is not allowed in any Wisconsin co-op.
  3. Absentee ballots – [See Chapter 185.12(5)]
  4. The board may authorize absentee ballots on specific questions (including election or removal of directors on the board).
  5. If the board provides absentee ballots on a specific motion, neither the motion nor any resolution to which it pertains may be amended.
  6. An absent member may submit a written and signed vote if the individual has been notified in writing of the exact motion or resolution.
  7. Members represented by absentee signed vote will be counted in computing a quorum only for those questions being voted upon.

iii. Designated vote for organizational members – [See 185.12(1) final sentence.]

Members that are not natural persons (such as organizations, businesses, or households) must designate a representative authorized to cast a single vote on Co-op issues. These members may also designate an alternative representative.

  1. The designation must be in writing.
  2. The designation must be provided to the secretary at or before the member meeting.
  3. The written designation will remain effective until it is replaced by a more recent written designation.
  4. Quorum – [See Chapter 185.14]

Wisconsin co-op law is very specific about the minimum number of people necessary for a meeting or a vote to be valid. The law states:

  1. A quorum at a member meeting shall be 10% of the first 100 members plus 5% of additional members.
  2. A quorum shall never be more than 50 members (unless these by-laws provide for a larger number) nor less than 5 members or a majority of all members, whichever is smaller.
  3. Members represented by signed ballots may be counted in computing a quorum only on those motions for which the signed ballots were submitted.

Section IV – Board of Directors

[For guidance, see Chapter 185.31]
  1. Powers of the Board – [Chapter 185.31(1)]

All powers of the Cooperative, except those reserved to the Members, shall be exercised by or under the authority of the board. The board of directors will set, implement, and interpret policies to further the mission of the Co-op.

  1. Number and qualifications of the board – [See 185.31(1) & (2)]
  2. The board shall consist of seven (7) directors.
  3. Directors must be members of the Cooperative.

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  1. There will be three (3) directors representing membership classes and four (4) directors voted upon at-large by all members. If in any year there are no members of a membership class in the Co-op, that representative seat will default to being temporarily filled at-large. The three membership class representative directors are:
  2. Producer Representative – elected by members of the producer membership class.
  3. Buyer Representative – elected by members of the buyer membership class.
  4. Worker Representative – elected by members of the worker membership class.
  5. The four at-large directors will be elected by the entire membership.
  6. Board terms – [See 185.31(3)]

Directors will be elected by the members at annual membership meetings or at a special member meeting called to fill a vacancy.

  1. Directors will serve for three (3) year terms.
  2. Terms are staggered to preserve the continuity of governance. (In electing the first board, two directors shall be elected for a one year term, two directors for a two year term, and three directors for a three year term.)
  3. Temporary board – [See 185.06(1)]

The first board of directors of the Co-op shall be the signatories of the articles of incorporation. They shall serve until the first annual meeting of the membership, at which time the members will elect the board of directors.

  1. Board vacancies – [See 185.31(5)]

Whenever there is a board vacancy, the remaining directors may, at the next board of directors meeting, elect a member to fill the vacancy until the next annual member meeting. If the vacancy is a representative of a membership class (producer, buyer, worker), the board will appoint another member of that same membership class.

  1. Any vacancy created by an increase in the number of directors must be made by a vote of the membership at a member meeting.
  2. Within 20 days after any change on the board, the secretary will file the Newly Elected Officers and Directors report with the Wisconsin Department of Financial Institutions.
  3. Removal of Directors – [See 185.31(4)]
  4. Board removal

 If a director fails to attend two (2) consecutive board meetings without an excused absence, the board has the option to remove that director and fill the vacancy.

 If a director acts contrary to the best interests of the Cooperative, the board has the option to remove that director and fill the vacancy.

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 If the resulting vacancy is a representative of a membership class (producer, buyer, or worker), the board will appoint another member of that same membership class.

  1. Membership removal

 An at-large director may be removed upon a majority vote of all members.

 A membership class (producer, buyer, or worker) may remove their representative by a majority vote of their membership class.

  1. Reimbursement and compensation [See 185.36]

The Cooperative will reimburse board members for reasonable expenses connected with fulfilling board of director duties.

  1. Compensation, if any, for board members will be determined by members at annual or special membership meetings.
  2. No board director may vote upon reimbursement for their services.
  3. Conflict of interest
  4. It shall be the duty of all board directors to make prompt and full disclosure to the board of any personal, professional, or financial conflict of interest in a matter under discussion.
  5. A board member shall not participate in any vote on any matter in which the director has a conflict of interest as defined in these by-laws or by the board.
  6. Directors will follow the board’s conflict of interest policy.
  7. Regular board meetings – [See 185.32(1)]
  8. The board of directors will hold, at a minimum, 10 meetings per year at a time and place the president chooses. The president or a designee will chair the meetings. The secretary or a designee will keep meeting minutes.
  9. Board meeting schedule – Distribution of a schedule of time and places for regular meetings shall be sufficient notice to conduct legal business.
  10. Any board meeting may be conducted by telephone or other electronic means of communication through which the directors may simultaneously hear one another.
  11. Any action required or permitted to be taken at a meeting of the board of directors may be taken by written action signed by all of the directors. The written action is effective when signed by all the directors and shall have the same force and effect as a unanimous vote at a meeting.
  12. Quorum [Chapter 185.32(2)] – A majority of the directors in office shall constitute a quorum for transaction of business. An act of the majority of the directors present at a meeting at which a quorum is present shall be an act of the board.
  13. Special Board Meetings [See 185.32]

Special meetings of the board may be held from time to time. 9

  1. The meeting will be called by the president or by any 2 directors.
  2. Held at a time and place designated in the meeting notice.
  3. Only business specified in the written notice may be conducted.

Appearance at a meeting will constitute a waiver of notice, except when a director attends the meeting and objects to the transaction of business because the meeting was not lawfully convened.

  1. Indemnification and director liability [See 185.034-185.039]

No director of the Co-op shall be personally liable to the Co-op or its members for monetary damages for breach of fiduciary duty as director, except for liability:

  1. For breach of the director’s duty of loyalty to the Co-op or its members;
  2. For acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; or
  3. For a transaction from which the director derived an improper personal benefit.

The Co-op shall indemnify a director or officer in good standing for all reasonable expenses incurred in a legal proceeding due to her or his position on the board.

Section V – Officers

[For guidance, see 185.35]
  1. Election – At the first board meeting following the annual meeting, the board of directors will elect from among themselves a president, a vice president, a secretary and a treasurer. At their discretion, the board may choose to combine the office of secretary and treasurer. Officers will hold office for one year unless removed early by resignation or for cause. In the case of death, resignation, or disability of any officer, the board may declare the office vacant and appoint any eligible member for that position.
  2. Duties of the President – The president shall be the principal executive officer of the Co-op and preside at member and board meetings. The president may call special meetings of the board or members. With the board’s approval, the president may sign contracts or other necessary documents.
  3. Duties of the Vice President – In the absence of the president, the vice president will perform the duties of the president. The vice president will organize the annual review of the Co-op’s manager.
  4. Duties of the Secretary – The secretary will record and distribute accurate minutes of all member, committee, and board meetings. The secretary will submit required correspondence to the Wisconsin Department of Financial Institutions, keep reports required by law, and sign meeting minutes. Upon election of a successor, the secretary shall turn over all books and other Co-op property to the board. 10
  5. Duties of the Treasurer – The treasurer is responsible for all financial matters of the Cooperative and provides members with financial reports at each meeting and a financial statement at the end of each year. Upon election of a successor, the treasurer shall turn over all monies, property, books, records and documents pertaining to the board.

Section VI – Finances

[For guidance, see Chapter 185.45]
  1. Net proceeds [See 185.45(3)]

In accordance with accepted accounting practices and section 185.45(1), Wisconsin Statutes, the annual net proceeds from operations, if any, may be distributed to the membership as patronage refunds or may be retained as income to the Co-op. The board will annually review the finances of the co-op and decide how the net proceeds shall be used to further the goals of the co-op and the membership in accordance with section 185(2), Wisconsin Statutes.

  1. Apportionment of losses [See 185.45(6)]

All or any part of the net proceeds may be applied to losses incurred in prior years. In the best interests of the Cooperative, the board may apportion losses.

  1. Patronage refunds to members [See 185.45(3)]

In the event that the board decides to distribute all or part of net proceeds as patronage refunds to members, the following shall be distributed and paid to patrons, in accordance with the ratio of their patronage (business transactions) to the total patronage (business transactions by all members, as follows:

  1. Reserves (retained capital equity). The board may create reasonable reserves for necessary purposes to retain a portion of net proceeds in the Co-op to help keep operations on a sound financial basis. The retained portion of the patronage refund is allocated to the member’s equity account and paid out at a later date.
  2. Patronage refunds. All remaining funds shall be distributed and paid to patrons.
  3. Equity records [From the IRS code]

The records of the Co-op will be kept in such a manner that the patronage refunds and any retained capital equity (allocated or unallocated) of each member of the Cooperative may be determined at any time. Within 8.5 months after the close of the Co-op’s tax year, each patron (member) will receive a “written notice of allocation” which reports each member’s patronage refund and capital retained for the year.

  1. Equity redemption for terminating members. When a member terminates membership, the equity held within the Co-op will be refunded, upon written request to the board, in accordance with board policy on equity redemption.
  2. Equity retirement for deceased members. Upon the death of a member, that member’s heirs or legal representative may request, in writing, the retirement of the deceased member’s capital account. The capital account will be redeemed in accordance with board policy.

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  1. Unclaimed equity. Any equity or patronage refunds which remain unclaimed six years after the date authorized for redemption or retirement will be paid or distributed according to Wisconsin statutes in effect at that time for the disposition of unclaimed funds.
  2. Consent to patronage distributions

“Consent to patronage distributions” means that all members will report their co-op patronage refunds and retained capital equity to the IRS as earnings. Each year members will receive a 1099 form itemizing their patronage refunds earned in that year.

Each member of this cooperative as of the effective date of this by-law who continues as a member after such date, and each person who shall after such date become a member shall, by such act alone, consent that the amount of any distribution with respect to patronage occurring in any fiscal year of the association beginning after XXX (date of incorporation), and which are made in written notices of allocation (as defined in 26 USCA 1388), and which are received by said member from the cooperative, will be taken into account by said member at their stated dollar amounts in the manner provided in 26 USCA 1384(a), less any amount which may be excluded under 26 USCA 1385(b) in the taxable year in which such written notices of allocation are received by said member.

Section VII – Administration

  1. Fiscal year The fiscal year of the Cooperative shall end on December 31.
  2. Seal [See 185.49]- The Co-op will not have a seal. Whenever any document is required to be sealed, an officer will place a notation stating the Co-op does not have a seal.
  3. Records [See 185.47]– Copies of the articles of incorporation, bylaws, and records of all board of directors and annual meetings will be kept at the cooperative office.
  4. Articles of Incorporation [See 185.05(2)] – In case of any inconsistency between the articles of incorporation and these bylaws, the provisions of the articles of incorporation are controlling.
  5. Execution of Instruments – All contracts, leases, deeds, and other obligations authorized to be executed on behalf of the Co-op will be signed by the president or one or more other officers only as determined by the board of directors.
  6. Insurance [See 185.041] – This cooperative shall have the power to purchase and maintain insurance on behalf of anyone acting on behalf of the Co-op.
  7. Financial Review – The Co-op’s financial accounts will be reviewed and reported on at least once a year by a review committee selected by the board. An independent auditor may be selected at the board’s discretion to assist the review committee. An annual report including accounting information or appropriate summaries shall be available to the membership. (Changed 11/2/2011) 12
  8. Severability – If a court of competent jurisdiction judges any section, clause, provision, or portion of these by-laws void or invalid, the remainder of these by-laws will not be affected.
  9. Committees The board may create temporary or standing committees. Committee powers shall be specifically stated by board resolution, and in no case shall any such committee exceed its conferred powers.
  10. Advisory Council – The board of directors may invite non-cooperative members from the community to advise the board of directors in a non-voting capacity on various business strategy, financial, managerial, or other policy issues. Members of the advisory council may be reimbursed for incidental expenses, but not be paid a stipend for their time.

Section VIII – Amendments to the Bylaws

  1. Initial bylaws [See 185.07(1)]

After the Cooperative is incorporated, the temporary board may adopt the initial bylaws. Members may amend or adopt the initial bylaws and any subsequently adopted by-laws, by the board or membership, at any annual membership meeting, or special meeting where notice of the proposed amendment is given.

  1. Member initiated amendments to the bylaws [See 185.07(3)]

These bylaws may be amended at any membership meeting by a three-fourths (3/4) majority of the members voting, unless otherwise provided by law. Any and all proposed changes of the bylaws shall be included in the notice of a membership meeting given to all members as described in Section IV of these bylaws.

  1. Board initiated amendments to the bylaws [See 185.07(1) and (2)]

The board of directors may amend the bylaws with immediate effect. Any bylaw adopted or amended by the board shall be reported at the next regular member meeting. Any such bylaw shall be at any time subject to amendment or repeal by the members.

Section IX – Dissolution

  1. Voluntary dissolution [See 185.71]

At any member meeting, whether or not a quorum is present, the co-op may dissolve if:

  1. Proper notice. Notice that a resolution for dissolution will be considered and acted upon has been included in the notice of meeting; and
  2. ¾ member vote. The resolution is approved by three-fourths of the member votes cast. Stockholders may vote on the resolution for dissolution if authorized by the Articles of Incorporation.

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When the resolution is adopted, either a committee designated by the resolution or the board shall liquidate all assets and pay the net proceeds of such liquidation available for distribution to all persons entitled to the same by law, the articles, and the bylaws.

The board will submit articles of dissolution to the Wisconsin Department of Financial Institutions in accordance with chapter 185.71 of the Wisconsin Statutes.

  1. Involuntary dissolution [See 185.72]

In the event of a decree by a circuit court that the Cooperative must be involuntarily dissolved, the Cooperative will follow chapter 185.72 of the Wisconsin Statutes.

Bylaws drafted by Margaret M. Bau, Cooperative Development Specialist, USDA Rural Development.

Revisions of May 12, 2010, by Attorney George C. Wilbur and June 2, 2010, by the steering committee.