SB2147 101ST GENERAL ASSEMBLY

LRB101 09428 JLS 54526 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2147

Introduced 2/15/2019, by Sen. Ram Villivalam

SYNOPSIS AS INTRODUCED:

New Act

Creates the Uniform Limited Cooperative Association Act. Provides for the organization and operation of limited cooperative associations. Provides that a limited cooperative association organized under the Act is an autonomous, unincorporated association of persons united to meet their mutual interests through a jointly owned enterprise primarily controlled by those persons, which authorizes the combination of ownership and receipt of benefits by members for whose interests the association is formed and permits investments by members who may receive returns on their investments and a share of control. Provides for: filing with the Secretary of State; organic rules; membership; members' interests; marketing contracts; directors; officers; indemnification and advancement of expenses; contributions; allocations; distributions; dissolution; actions; disposing of assets; foreign cooperatives; merger; interest exchange; conversion; domestication; and other matters.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Article 1. GENERAL PROVISIONS

Section 101. Short title. This Act may be cited as the Uniform Limited Cooperative Association Act.

Section 102. Definitions. In this Act:

(1) "Articles of organization" means the articles of organization of a limited cooperative association required by Section 301. The term includes the articles as amended or restated.

(2) "Board of directors" means the board of directors of a limited cooperative association.

(3) "Bylaws" means the bylaws of a limited cooperative association. The term includes the bylaws as amended or restated.

(4) "Contribution," except as used in Section 1008(c), means a benefit that a person provides to a limited cooperative association to become or remain a member or in the person's capacity as a member.

(5) "Cooperative" means a limited cooperative association or an entity organized under any cooperative law of any jurisdiction.

(6) "Director" means a director of a limited cooperative association.

(7) "Distribution," except as used in Section 1007(a), means a transfer of money or other property from a limited cooperative association to a member because of the member's financial rights or to a transferee of a member's financial rights.

(8) "Entity" means a person other than an individual.

(9) "Financial rights" means the right to participate in allocations and distributions as provided in Articles 10 and 12 but does not include rights or obligations under a marketing contract governed by Article 7.

(10) "Foreign cooperative" means an entity organized in a jurisdiction other than this State under a limited cooperative association law similar to this Act.

(11) "Governance rights" means the right to participate in governance of a limited cooperative association.

(12) "Investor member" means a member that has made a contribution to a limited cooperative association and

(A) is not required by the organic rules to conduct patronage with the association in the member's capacity as an investor member in order to receive the member's interest; or

(B) is not permitted by the organic rules to conduct patronage with the association in the member's capacity as an investor member in order to receive the member's interest.

(13) "Jurisdiction", used to refer to a political entity, means the United States, a state, a foreign country, or a political subdivision of a foreign country.

(14) "Jurisdiction of formation" means the jurisdiction whose law governs the internal affairs of an entity.

(15) "Limited cooperative association" means an association formed under this Act or that becomes subject to this Act under Article 16.

(16) "Member" means a person that is admitted as a patron member or investor member, or both, in a limited cooperative association. The term does not include a person that has dissociated as a member.

(17) "Member's interest" means the interest of a patron member or investor member under Section 601.

(18) "Members meeting" means an annual members meeting or special meeting of members.

(19) "Organic law" means the statute providing for the creation of an entity or principally governing its internal affairs.

(20) "Organic rules" means the articles of organization and bylaws of a limited cooperative association.

(21) "Organizer" means an individual who signs the initial articles of organization.

(22) "Patron member" means a member that has made a contribution to a limited cooperative association and:

(A) is required by the organic rules to conduct patronage with the association in the member's capacity as a patron member in order to receive the member's interest; or

(B) is permitted by the organic rules to conduct patronage with the association in the member's capacity as a patron member in order to receive the member's interest.

(23) "Patronage" means business transactions between a limited cooperative association and a person which entitle the person to receive financial rights based on the value or quantity of business done between the association and the person.

(24) "Person" means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

(25) "Principal office" means the principal executive office of a limited cooperative association or foreign cooperative, whether or not the office is located in this State.

(26) "Property" means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein.

(27) "Record", used as a noun, means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(28) "Registered agent" means an agent of an entity which is authorized to receive service of any process, notice, or demand required or permitted by law to be served on the entity.

(29) "Required information" means the information a limited cooperative association is required to maintain under Section 110.

(30) "Registered foreign cooperative" means a foreign cooperative that is registered to do business in this State pursuant to a statement of registration filed by the Secretary of State.

(31) "Sign" means, with present intent to authenticate or adopt a record:

(A) to execute or adopt a tangible symbol; or

(B) to attach to or logically associate with the record an electronic symbol, sound, or process.

(32) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(33) "Transfer" includes:

(A) an assignment;

(B) a conveyance;

(C) a sale;

(D) a lease;

(E) an encumbrance, including a mortgage or security interest;

(F) a gift; and

(G) a transfer by operation of law.

(34) "Voting group" means any combination of one or more voting members in one or more districts or classes that under the organic rules or this Act are entitled to vote and can be counted together collectively on a matter at a members meeting.

(35) "Voting member" means a member that, under the organic law or organic rules, has a right to vote on matters subject to vote by members under the organic law or organic rules.

(36) "Voting power" means the total current power of members to vote on a particular matter for which a vote may or is to be taken.

Section 103. Nature of limited cooperative association.

(a) A limited cooperative association organized under this Act is an autonomous, unincorporated association of persons united to meet their mutual interests through a jointly owned enterprise primarily controlled by those persons, which permits combining:

(1) ownership, financing, and receipt of benefits by the members for whose interests the association is formed; and

(2) separate investments in the association by members who may receive returns on their investments and a share of control.

(b) The fact that a limited cooperative association does not have one or more of the characteristics described in subsection (a) does not alone prevent the association from being formed under and governed by this Act nor does it alone provide a basis for an action against the association.

Section 104. Purpose and duration of limited cooperative association.

(a) A limited cooperative association is an entity distinct from its members.

(b) A limited cooperative association may be organized for any lawful purpose, regardless of whether for profit.

(c) Unless the articles of organization state a term for a limited cooperative association's existence, the association has perpetual duration.

Section 105. Powers. A limited cooperative association has the capacity to sue and be sued in its own name and has the power to do all things necessary or convenient to carry on its activities and affairs. An association may maintain an action against a member for harm caused to the association by the member's violation of a duty to the association or of the organic law or organic rules.

Section 106. Governing law. The law of this State governs:

(1) the internal affairs of a limited cooperative association; and

(2) the liability of a member as member and a director as director for the debts, obligations, or other liabilities of a limited cooperative association.

Section 107. Requirements of other laws.

(a) This Act does not alter or amend any law that governs the licensing and regulation of an individual or entity in carrying on a specific business or profession even if that law permits the business or profession to be conducted by a limited cooperative association, a foreign cooperative, or its members.

(b) A limited cooperative association may not conduct an activity that, under law of this State other than this Act, may be conducted only by an entity that meets specific requirements for the internal affairs of that entity unless the organic rules of the association conform to those requirements.

Section 108. Relation to restraint of trade and antitrust laws. To the extent a limited cooperative association or activities conducted by the association in this State meet the material requirements for other cooperatives entitled to an exemption from or immunity under any provision of the Illinois Antitrust Act, the association and its activities are entitled to the exemption or immunity. This Section does not create any new exemption or immunity for an association or affect any exemption or immunity provided to a cooperative organized under any other law.

Section 109. Effect of organic rules.

(a) The relations between a limited cooperative association and its members are consensual. Unless required, limited, or prohibited by this Act, the organic rules may provide for any matter concerning the relations among the members of the association and between the members and the association, the activities of the association, and the conduct of its activities.

(b) The matters referred to in paragraphs (1) through (11) may be varied only in the articles of organization. The articles may:

(1) state a term of existence for the association under Section 104(c);

(2) limit or eliminate the acceptance of new or additional members by the initial board of directors under Section 302(b);

(3) vary the limitations on the obligations and liability of members for association obligations under Section 504;

(4) require a notice of an annual members meeting to state a purpose of the meeting under Section 508(b);

(5) vary the board of directors meeting quorum under Section 815(a);

(6) vary the matters the board of directors may consider in making a decision under Section 820;

(7) specify causes of dissolution under Section 1202(1);

(8) delegate amendment of the bylaws to the board of directors pursuant to Section 405(f);

(9) provide for member approval of asset dispositions under Section 1401;

(10) subject to Section 820, provide for the elimination or limitation of liability of a director to the association or its members for money damages pursuant to Section 818;

(11) provide for permitting or making obligatory indemnification under Section 901(a); and

(12) provide for any matters that may be contained in the organic rules, including those under subsection (c).

(c) The matters referred to in paragraphs (1) through (25) may be varied only in the organic rules. The organic rules may:

(1) require more information to be maintained under Section 110 or provided to members under Section 505(j);

(2) provide restrictions on transactions between a member and an association under Section 111;

(3) provide for the percentage and manner of voting on amendments to the organic rules by district, class, or voting group under Section 404(a);

(4) provide for the percentage vote required to amend the bylaws concerning the admission of new members under Section 405(e)(5);

(5) provide for terms and conditions to become a member under Section 502;

(6) restrict the manner of conducting members meetings under Sections 506(c) and 507(e);

(7) designate the presiding officer of members meetings under Sections 506(e) and 507(g);

(8) require a statement of purposes in the annual meeting notice under Section 508(b);

(9) increase quorum requirements for members meetings under Section 510 and board of directors meetings under Section 815;

(10) allocate voting power among members, including patron members and investor members, and provide for the manner of member voting and action as permitted by Sections 511 through 517;

(11) authorize investor members and expand or restrict the transferability of members' interests to the extent provided in Sections 602 through 604;

(12) provide for enforcement of a marketing contract under Section 704(a);

(13) provide for qualification, election, terms, removal, filling vacancies, and member approval for compensation of directors in accordance with Sections 803 through 805, 807, 809, and 810;

(14) restrict the manner of conducting board meetings and taking action without a meeting under Sections 811 and 812;

(15) provide for frequency, location, notice and waivers of notice for board meetings under Sections 813 and 814;

(16) increase the percentage of votes necessary for board action under Section 816(b);

(17) provide for the creation of committees of the board of directors and matters related to the committees in accordance with Section 817;

(18) provide for officers and their appointment, designation, and authority under Section 822;

(19) provide for forms and values of contributions under Section 1002;

(20) provide for remedies for failure to make a contribution under Section 1003(b);

(21) provide for the allocation of profits and losses of the association, distributions, and the redemption or repurchase of distributed property other than money in accordance with Sections 1004 through 1007;

(22) specify when a member's dissociation is wrongful and the liability incurred by the dissociating member for damage to the association under Section 1101(b) and (c);

(23) provide the personal representative, or other legal representative of, a deceased member or a member adjudged incompetent with additional rights under Section 1103;

(24) increase the percentage of votes required for board of director approval of:

(A) a resolution to dissolve under Section 1205(a)(1);

(B) a proposed amendment to the organic rules under Section 402(a)(1);

(C) transaction under Article 16 as required under Section 518; and

(D) a proposed disposition of assets under Section 1403(1); and

(25) vary the percentage of votes required for members approval of:

(A) a resolution to dissolve under Section 1205;

(B) an amendment to the organic rules under Section 405;

(C) a transaction under Article 16 as required under Section 518; and

(D) a disposition of assets under Section 1404.

(d) The organic rules must address members' contributions pursuant to Section 1001.

Section 110. Required information.

(a) Subject to subsection (b), a limited cooperative association shall maintain in a record available at its principal office:

(1) a list containing the name, last known street address and, if different, mailing address, and term of office of each director and officer;

(2) the initial articles of organization and all amendments to and restatements of the articles, together with a signed copy of any power of attorney under which any article, amendment, or restatement has been signed;

(3) the initial bylaws and all amendments to and restatements of the bylaws;

(4) all filed articles of merger, interest exchange, conversion, and domestication;

(5) all financial statements of the association for the 6 most recent years;

(6) the 6 most recent annual reports delivered by the association to the Secretary of State;

(7) the minutes of members meetings for the 6 most recent years;

(8) evidence of all actions taken by members without a meeting for the 6 most recent years;

(9) a list containing:

(A) the name, in alphabetical order, and last known street address and, if different, mailing address of each patron member and each investor member; and

(B) if the association has districts or classes of members, information from which each current member in a district or class may be identified;

(10) the federal income tax returns, any state and local income tax returns, and any tax reports of the association for the 6 most recent years;

(11) accounting records maintained by the association in the ordinary course of its operations for the 6 most recent years;

(12) the minutes of directors meetings for the 6 most recent years;

(13) evidence of all actions taken by directors without a meeting for the 6 most recent years;

(14) the amount of money contributed and agreed to be contributed by each member;

(15) a description and statement of the agreed value of contributions or benefits other than money made or provided and agreed to be made or provided by each member;

(16) the times at which, or events on the happening of which, any additional contribution is to be made by each member;

(17) for each member, a description and statement of the member's interest or information from which the description and statement can be derived; and

(18) all communications concerning the association made in a record to all members, or to all members in a district or class, for the 6 most recent years.

(b) If a limited cooperative association has existed for less than the period for which records must be maintained under subsection (a), the period records must be kept is the period of the association's existence.

(c) The organic rules may require that more information be maintained.

Section 111. Business transactions of member with limited cooperative association. Subject to Sections 818 and 819 and except as otherwise provided in the organic rules or a specific contract relating to a transaction, a member may lend money to and transact other business with a limited cooperative association in the same manner as a person that is not a member.

Section 112. Dual capacity. A person may have a patron member's interest and an investor member's interest. When such person acts as a patron member, the person is subject to this Act and the organic rules governing patron members. When such person acts as an investor member, the person is subject to this Act and the organic rules governing investor members.

Section 113. Permitted names.

(a) Use of the term "cooperative" or its abbreviation under this Act is not a violation of the provisions restricting the use of the term under the Agricultural Co-Operative Act or the Co-operative Act.

(b) The name of a limited cooperative association must contain the phrase "limited cooperative association" or "limited cooperative" or the abbreviation "L.C.A." or "LCA". "Limited" may be abbreviated as "Ltd.". "Cooperative" may be abbreviated as "Co-op" or "Coop". "Association" may be abbreviated as "Assoc." or "Assn.". A limited cooperative association or a member may enforce the restrictions on the use of the term "cooperative" under this Act.

(c) Except as otherwise provided in subsection (d), the name of a limited cooperative association, and the name under which a foreign cooperative may register to do business in this State, must be distinguishable on the records of the Secretary of State from any:

(1) name of an existing person whose formation required the filing of a record by the Secretary of State

and which is not at the time administratively dissolved;

(2) name of a limited liability partnership whose statement of qualification is in effect;

(3) name under which a person is registered to do business in this State by the filing of a record by the Secretary of State;

(4) name reserved under Section 116 or other law of this State providing for the reservation of a name by the filing of a record by the Secretary of State;

(5) name registered under Section 117 or other law of this State providing for the registration of a name by the filing of a record by the Secretary of State; and

(6) name registered under the Assumed Business Name Act.

(d) If a person consents in a record to the use of its name and submits an undertaking in a form satisfactory to the Secretary of State to change its name to a name that is distinguishable on the records of the Secretary of State from any name in any category of names in subsection (c), the name of the consenting person may be used by the person to which the consent was given.

(e) Except as otherwise provided in subsection (f), in determining whether a name is the same as or not distinguishable on the records of the Secretary of State from the name of another person, words, phrases, or abbreviations indicating a type of entity, such as "corporation", "corp.", "incorporated", "Inc.", "professional corporation", "P.C.", "PC", "professional association", "P.A.", "PA", "Limited", "Ltd.", "limited partnership", "L.P.", "LP", "limited liability partnership", "L.L.P.", "LLP", "registered limited liability partnership", "R.L.L.P.", "RLLP", "limited liability limited partnership", "L.L.L.P.", "LLLP", "registered limited liability limited partnership", "R.L.L.L.P." "RLLLP", "limited liability company", "L.L.C.", or "LLC", "limited cooperative association", "limited cooperative", "L.C.A.", or "LCA" may not be taken into account.

(f) A person may consent in a record to the use of a name that is not distinguishable on the records of the Secretary of State from its name except for the addition of a word, phrase, or abbreviation indicating the type of entity as provided in subsection (e). In such a case, the person need not change its name pursuant to subsection (c).

(g) A limited cooperative association or foreign cooperative may use a name that is not distinguishable from a name described in subsection (c)(1) through (6) if the association or foreign cooperative delivers to the Secretary of State a certified copy of a final judgment of a court of competent jurisdiction establishing the right of the association or foreign cooperative to use the name in this State.

Section 114. Reservation of power to amend or repeal. The General Assembly has the power to amend or repeal all or part of this Act at any time, and all limited cooperative associations and foreign cooperatives subject to this Act are governed by the amendment or repeal of this Act.

Section 115. Supplemental principles of law. Unless displaced by particular provisions of this Act, the principles of law and equity supplement this Act.

Section 116. Reservation of name.

(a) A person may reserve the exclusive use of a name that complies with Section 115 by delivering an application to the Secretary of State for filing. The application must set forth the name and address of the applicant and the name to be reserved. If the Secretary of State finds that the name is available, the Secretary of State shall reserve the name for the applicant's exclusive use for a period of 120 days.

(b) The owner of a reserved name may transfer the reservation to another person by delivering to the Secretary of State a signed notice in a record of the transfer which states the name and address of the person to which the reservation is being transferred.

Section 117. Registration of name.

(a) A foreign cooperative not registered to do business in this State under Article 15 may register its name, or an alternate name adopted pursuant to Section 1506, if the name is distinguishable upon on the records of the Secretary of State from the names that are not available under Section 115.

(b) To register its name or an alternate name adopted pursuant to Section 1506, a foreign cooperative must deliver to the Secretary of State for filing an application stating the cooperative's name, the jurisdiction and date of its formation, and any alternate name adopted pursuant to Section 1506. If the Secretary of State finds that the name applied for is available, the Secretary of State shall register the name for the applicant's exclusive use.

(c) The registration of a name under this Section is effective for one year after the date of registration.

(d) A foreign cooperative whose name registration is effective may renew the registration for successive one-year periods by delivering, not earlier than 3 months before the expiration of the registration, to the Secretary of State for filing a renewal application that complies with this Section. When filed, the renewal application renews the registration for a succeeding one-year period.

(e) A foreign cooperative whose name registration is effective may register as a foreign cooperative under the registered name or consent in a signed record to the use of that name by another person that is not an individual.

Section 118. Registered agent.

(a) Each limited cooperative association and each registered foreign cooperative shall designate and maintain a registered agent in this State. The designation of a registered agent is an affirmation of fact by the association or foreign cooperative that the agent has consented to serve.

(b) A registered agent for a limited cooperative association or registered foreign cooperative must have a place of business in this State.

(c) The only duties under this Act of a registered agent that has complied with this Act are:

(1) to forward to the limited cooperative association or registered foreign cooperative at the address most recently supplied to the agent by the association or foreign cooperative any process, notice, or demand pertaining to the association or foreign cooperative which is served on or received by the agent;(1) to forward to the limited cooperative association or registered foreign cooperative at the address most recently supplied to the agent by the association or foreign cooperative any process, notice, or demand pertaining to the association or foreign cooperative which is served on or received by the agent;

(2) If the registered agent resigns, to provide the notice required by Section 120(c) to the limited cooperative association or foreign cooperative at the address most recently supplied to the agent by the association or foreign cooperative; and

(3) to keep current the information with respect to the agent in the articles of organization or foreign registration statement.

Section 119. Change of registered agent or address for registered agent by limited cooperative association.

(a) A limited cooperative association or registered foreign cooperative may change its registered agent or the address of its registered agent by delivering to the Secretary of State for filing a statement of change that states:

(1) the name of the association or foreign cooperative; and

(2) the information that is to be in effect as a result of the filing of the statement of change.

(b) The members or directors of a limited cooperative association need not approve the filing of:

(1) a statement of change under this Section; or

(2) a similar filing changing the registered agent or registered office, if any, of the association in any other jurisdiction.

(c) A statement of change under this Section designating a new registered agent is an affirmation of fact by the limited cooperative association or registered foreign cooperative that the agent has consented to serve.

(d) As an alternative to using the procedure in this Section, a limited cooperative association may amend its articles of organization.

Section 120. Resignation of registered agent.

(a) A registered agent may resign as agent for a limited cooperative association or registered foreign cooperative by delivering to the Secretary of State for filing a statement of resignation that states:

(1) the name of the association or foreign cooperative;

(2) the name of the agent;

(3) that the agent resigns from serving as registered agent for the association or foreign cooperative; and

(4) the address of the association or foreign cooperative to which the agent will send the notice required by subsection (c).

(b) A statement of resignation takes effect on the earlier of:

(1) the 31st day after the day on which it is filed by the Secretary of State; or

(2) the designation of a new registered agent for the limited cooperative association or registered foreign cooperative.

(c) A registered agent promptly shall furnish to the limited cooperative association or registered foreign cooperative notice in a record of the date on which a statement of resignation was filed.

(d) When a statement of resignation takes effect, the registered agent ceases to have responsibility under this Act for any matter thereafter tendered to it as agent for the limited cooperative association or registered foreign cooperative. The resignation does not affect any contractual rights the association or foreign cooperative has against the agent or that the agent has against the association or foreign cooperative.

(e) A registered agent may resign with respect to a limited cooperative association or registered foreign cooperative whether or not the association or foreign cooperative is in good standing.

Section 121. Change of name or address by registered agent.

(a) If a registered agent changes its name or address, the agent may deliver to the Secretary of State for filing a statement of change that states:

(1) the name of the limited cooperative association or registered foreign cooperative represented by the registered agent;

(2) the name of the agent as currently shown in the records of the Secretary of State for the association or foreign cooperative;

(3) if the name of the agent has changed, its new name; and

(4) if the address of the agent has changed, its new address.

(b) A registered agent promptly shall furnish notice to the represented limited cooperative association or registered foreign cooperative of the filing by the Secretary of State of the statement.

Section 122. Service of process, notice, or demand.

(a) A limited cooperative association or registered foreign cooperative may be served with any process, notice, or demand required or permitted by law by serving its registered agent.

(b) If a limited cooperative association or registered foreign cooperative ceases to have a registered agent, or if its registered agent cannot with reasonable diligence be served, the association or foreign cooperative may be served by registered or certified mail, return receipt requested, or by similar commercial delivery service, addressed to the association or foreign cooperative at its principal office. The address of the principal office must be as shown on the association's or cooperative's most recent annual report filed by the Secretary of State. Service is effected under this subsection on the earliest of:

(1) the date the association or foreign cooperative receives the mail or delivery by the commercial delivery service;

(2) the date shown on the return receipt, if signed by the association or foreign cooperative; or

(3) five days after its deposit with the United States Postal Service or with the commercial delivery service, if correctly addressed and with sufficient postage or payment. (c) If process, notice, or demand cannot be served on a limited cooperative association or registered foreign cooperative pursuant to subsection (a) or (b), service may be made by handing a copy to the individual in charge of any regular place of business or activity of the association or foreign cooperative if the individual served is not a plaintiff in the action. (d) Service of process, notice, or demand on a registered agent must be in a written record. (e) Service of process, notice, or demand may be made by other means under law other than this Act.

Article 2. FILING AND OTHER REPORTS

Section 201. Signing of records to be delivered for filing to Secretary of State.

(a) A record delivered to the Secretary of State for filing pursuant to this Act must be signed as follows:

(1) A limited cooperative association's initial articles of organization must be signed by at least one person acting as an organizer.

(2) A statement of withdrawal under Section 206 must be signed as provided in that Section.

(3) Except as otherwise provided in paragraph (4), a record signed by an existing association must be signed by an officer.

(4) A record filed on behalf of a dissolved association must be signed by a person winding up activities under Section 1206(b) or a person appointed under Section 1206(c) to wind up those activities.

(5) Any other record delivered on behalf of a person to the Secretary of State for filing must be signed by that person.

(b) A record delivered for filing under this Act may be signed by an agent. Whenever this Act requires a particular individual to sign a record and the individual is deceased or incompetent, the record may be signed by a legal representative of the individual.

(c) A person that signs a record as an agent or legal representative affirms as a fact that the person is authorized to sign the record.

Section 202. Signing and filing pursuant to judicial order.

(a) If a person required by this Act to sign or deliver a record to the Secretary of State for filing under this Act does not do so, any other person that is aggrieved may petition the circuit court to order:

(1) the person to sign the record;

(2) the person to deliver the record to the Secretary of State for filing; or

(3) the Secretary of State to file the record unsigned.

(b) If the petitioner under subsection (a) is not the limited cooperative association or foreign cooperative to which the record pertains, the petitioner shall make the association or foreign cooperative a party to the action.

(c) A record filed under subsection (a)(3) is effective without being signed.

Section 203. Liability for inaccurate information in filed record.

(a) If a record delivered to the Secretary of State for filing under this Act and filed by the Secretary of State contains inaccurate information, a person that suffers a loss by reliance on the information may recover damages for the loss from a person that signed the record or caused another to sign it on the person's behalf and knew at the time the record was signed that the information was inaccurate.

(b) An individual who signs a record authorized or required to be filed under this Act affirms under penalty of perjury that the information stated in the record is accurate.

Section 204. Filing requirements.

(a) To be filed by the Secretary of State pursuant to this Act, a record must be received by the Secretary of State, comply with this Act, and satisfy the following:

(1) The filing of the record must be required or permitted by this Act.

(2) The record must be physically delivered in written form unless and to the extent the Secretary of State permits electronic delivery of records.

(3) The words in the record must be in English, and numbers must be in Arabic or Roman numerals, but the name of an entity need not be in English if written in English letters or Arabic or Roman numerals.

(4) The record must be signed by a person authorized or required under this Act to sign the record.

(5) The record must state the name and capacity, if any, of each individual who signed it, either on behalf of the individual or the person authorized or required to sign the record, but need not contain a seal, attestation, acknowledgment, or verification.

(b) If law other than this Act prohibits the disclosure by the Secretary of State of information contained in a record delivered to the Secretary of State for filing, the Secretary of State shall file the record if the record otherwise complies with this Act but may redact the information.

(c) When a record is delivered to the Secretary of State for filing, any fee required under this Act and any fee, tax, interest, or penalty required to be paid under this Act or law other than this Act must be paid in a manner permitted by the Secretary of State or by that law.

(d) The Secretary of State may require that a record delivered in written form be accompanied by an identical or conformed copy.

(e) The Secretary of State may provide forms for entity filings required or permitted to be made by this Act, but, except as otherwise provided in subsection (f), their use is not required.

(f) The Secretary of State may require that a cover sheet for a filing be on a form prescribed by the Secretary of State.

Section 205. Effective date and time. Except as otherwise provided in Section 206 and subject to Section 207(d), a record filed under this Act is effective:

(1) on the date and at the time of its filing by the Secretary of State, as provided in Section 208;

(2) on the date of filing and at the time specified in the record as its effective time, if later than the time under paragraph (1);

(3) at a specified delayed effective time and date, which may not be more than 90 days after the date of filing; or

(4) if a delayed effective date is specified, but no time is specified, at 12:01 a.m. on the date specified, which may not be more than 90 days after the date of filing.

Section 206. Withdrawal of filed record before effectiveness.

(a) Except as otherwise provided in Sections 1624, 1634, 1644, and 1654, a record delivered to the Secretary of State for filing may be withdrawn before it takes effect by delivering to the Secretary of State for filing a statement of withdrawal.

(b) A statement of withdrawal must:

(1) be signed by each person that signed the record being withdrawn, except as otherwise agreed by those persons;

(2) identify the record to be withdrawn; and

(3) if signed by fewer than all the persons that signed the record being withdrawn, state that the record is withdrawn in accordance with the agreement of all the persons that signed the record.

(c) On filing by the Secretary of State of a statement of withdrawal, the action or transaction evidenced by the original record does not take effect.

Section 207. Correcting filed record.

(a) A person on whose behalf a filed record was delivered to the Secretary of State for filing may correct the record if:

(1) the record at the time of filing was inaccurate;

(2) the record was defectively signed; or

(3) the electronic transmission of the record to the Secretary of State was defective.

(b) To correct a filed record, a person on whose behalf the record was delivered to the Secretary of State must deliver to the Secretary of State for filing a statement of correction.

(c) A statement of correction:

(1) may not state a delayed effective date;

(2) must be signed by the person correcting the filed record;

(3) must identify the filed record to be corrected;

(4) must specify the inaccuracy or defect to be corrected; and

(5) must correct the inaccuracy or defect.

(d) A statement of correction is effective as of the effective date of the filed record that it corrects except as to persons relying on the uncorrected filed record and adversely affected by the correction. For those purposes and as to those persons, the statement of correction is effective when filed.

Section 208. Duty of Secretary of State to file; review of refusal to file; delivery of record by Secretary of State.

(a) The Secretary of State shall file a record delivered to the Secretary of State for filing which satisfies this Act. The duty of the Secretary of State under this Section is ministerial.

(b) When the Secretary of State files a record, the Secretary of State shall record it as filed on the date and at the time of its delivery. After filing a record, the Secretary of State shall deliver to the person that submitted the record a copy of the record with an acknowledgment of the date and time of filing and, in the case of a statement of denial, also to the limited cooperative association to which the statement pertains.

(c) If the Secretary of State refuses to file a record, the Secretary of State shall, not later than 15 business days after the record is delivered:

(1) return the record or notify the person that submitted the record of the refusal; and

(2) provide a brief explanation in a record of the reason for the refusal.

(d) If the Secretary of State refuses to file a record, the person that submitted the record may petition the circuit court to compel filing of the record. The record and the explanation of the Secretary of State of the refusal to file must be attached to the petition. The court may decide the matter in a summary proceeding.

(e) The filing of or refusal to file a record does not:

(1) affect the validity or invalidity of the record in whole or in part; or

(2) create a presumption that the information contained in the record is correct or incorrect.

(f) Except as provided by Section 122 or by law other than this Act, the Secretary of State may deliver any record to a person by delivering it:

(1) in person to the person that submitted it;

(2) to the address of the person's registered agent;

(3) to the principal office of the person; or

(4) to another address the person provides to the Secretary of State for delivery.

Section 209. Certificate of good standing or registration.

(a) On request of any person, the Secretary of State shall issue a certificate of good standing for a limited cooperative association or a certificate of registration for a registered foreign cooperative.

(b) A certificate under subsection (a) must state:

(1) the limited cooperative association's name or the registered foreign cooperative's name used in this State;

(2) in the case of a limited cooperative association:

(A) that articles of organization have been filed and have taken effect;

(B) the date the articles became effective;

(C) the period of the association's duration if the records of the Secretary of State reflect that its period of duration is less than perpetual; and

(D) that:

(i) no statement of dissolution, statement of administrative dissolution, or statement of termination has been filed;

(ii) the records of the Secretary to State do not otherwise reflect that the association has been dissolved or terminated; and

iii) a proceeding is not pending under Section 1214;

(3) in the case of a registered foreign cooperative, that it is registered to do business in this State;

(4) that all fees, taxes, interest, and penalties owed to this State by the limited cooperative association or foreign cooperative and collected through the Secretary of State have been paid, if:

(A) payment is reflected in the records of Secretary of State; and

(B) nonpayment affects the good standing or registration of the association or foreign cooperative;

(5) that the most recent annual report required by Section 210 has been delivered to the Secretary of State for filing; and

(6) other facts reflected in the records of the Secretary of State pertaining to the limited cooperative association or foreign cooperative which the person requesting the certificate reasonably requests.

(c) Subject to any qualification stated in the certificate, a certificate issued by the Secretary of State may be relied on as conclusive evidence of the facts stated in the certificate.

Section 210. Annual report for Secretary of State.

(a) A limited cooperative association or registered foreign cooperative shall deliver to the Secretary of State for filing an annual report that states:

(1) the name of the association or foreign cooperative;

(2) the name and street and mailing addresses of its registered agent in this State;

(3) the street and mailing addresses of its principal office;

(4) the name of at least one director; and

(5) in the case of a foreign cooperative, its jurisdiction of formation and any alternative name adopted under Section 1506.

(b) Information the annual report must be current as of the date the report is signed by the limited cooperative association or registered foreign cooperative.

(c) The first annual report must be delivered to the Secretary of State for filing after January 1 and before April 1 of the year following the calendar year in which the limited cooperative association's articles of organization became effective or the registered foreign cooperative registered to do business in this State. Subsequent annual reports must be delivered to the Secretary of State for filing after January 1 and before April 1 of each calendar year thereafter.

(d) If an annual report does not contain the information required by this Section, the Secretary of State promptly shall notify the reporting limited cooperative association or registered foreign cooperative in a record and return the report for correction.

(e) If an annual report under this Section contains the name or address of a registered agent which differs from the information shown in the records of the Secretary of State immediately before the report becomes effective, the differing information is considered a statement of change under Section 119.

Section 211. Filing fees. The filing fee for records filed under this Article by the Secretary of State shall be set by rule of the Secretary of State.

Article 3. ORGANIZATION OF LIMITED

COOPERATIVE ASSOCIATION

Section 301. Formation of limited cooperative association; articles of organization.

(a) One or more persons may act as organizers to form a limited cooperative association by delivering to the Secretary of State for filing articles of organization.

(b) The articles of organization must state:

(1) the name of the limited cooperative association, which must comply with Section 115;

(2) the purposes for which the association is formed;

(3) the street and mailing addresses in this State of the initial registered agent;

(4) the street and mailing addresses of the initial principal office;

(5) the name and street and mailing addresses of each organizer; and

(6) the term for which the association is to exist if other than perpetual.

(c) Subject to Section 109, articles of organization may contain any other provisions in addition to those required by subsection (a).

(d) A limited cooperative association is formed after articles of organization that substantially comply with subsection (a) are delivered to the Secretary of State, are filed, and become effective under Section 205.

Section 302. Organization of limited cooperative association.

(a) After a limited cooperative association is formed:

(1) if initial directors are named in the articles of organization, the initial directors shall hold an organizational meeting to adopt initial bylaws and carry on any other business necessary or proper to complete the organization of the association; or

(2) if initial directors are not named in the articles of organization, the organizers shall designate the initial directors and call a meeting of the initial directors to adopt initial bylaws and carry on any other business necessary or proper to complete the organization of the association.

(b) Unless the articles of organization otherwise provide, the initial directors may cause the limited cooperative association to accept members, including those necessary for the association to begin business.

(c) Initial directors need not be members.

(d) An initial director serves until a successor is elected and qualified at a members meeting or the director is removed, resigns, is adjudged incompetent, or dies.

Section 303. Bylaws.

(a) Bylaws must be in a record and, if not stated in the articles of organization, must include:

(1) a statement of the capital structure of the limited cooperative association, including:

(A) the classes or other types of members' interests and relative rights, preferences, and restrictions granted to or imposed upon each class or other type of member's interest; and

(B) the rights to share in profits or distributions of the association;

(2) a statement of the method for admission of members;

(3) a statement designating voting and other governance rights, including which members have voting power and any restriction on voting power;

(4) a statement that a member's interest is transferable if it is to be transferable and a statement of the conditions upon which it may be transferred;

(5) a statement concerning the manner in which profits and losses are allocated and distributions are made among patron members and, if investor members are authorized, the manner in which profits and losses are allocated and how distributions are made among investor members and between patron members and investor members;

(6) a statement concerning:

(A) whether persons that are not members but conduct business with the association may be permitted to share in allocations of profits and losses and receive distributions;

(B) the manner in which profits and losses are allocated and distributions are made with respect to those persons; and

(7) a statement of the number and terms of directors or the method by which the number and terms are determined.

(b) Subject to Section 109(c) and the articles of organization, bylaws may contain any other provision for managing and regulating the affairs of the association.

(c) In addition to amendments permitted under Article 4, the initial board of directors may amend the bylaws by a majority vote of the directors at any time before the admission of members.

Article 4. AMENDMENT OF ORGANIC RULES OF LIMITED COOPERATIVE

ASSOCIATION

Section 401. Authority to amend organic rules.

(a) A limited cooperative association may amend its organic rules under this Article for any lawful purpose. In addition, the initial board of directors may amend the bylaws of an association under Section 303.

(b) Unless the organic rules otherwise provide, a member does not have a vested property right resulting from any provision in the organic rules, including a provision relating to the management, control, capital structure, distribution, entitlement, purpose, or duration of the limited cooperative association.

Section 402. Notice and action on amendment of organic rules.

(a) Except as provided in Sections 401(a) and 405(f), the organic rules of a limited cooperative association may be amended only at a members meeting. An amendment may be proposed by either:

(1) a majority of the board of directors, or a greater percentage if required by the organic rules; or

(2) one or more petitions signed by at least 10 % of the patron members or at least 10 % of the investor members.

(b) The board of directors shall call a members meeting to consider an amendment proposed pursuant to subsection (a). The meeting must be held not later than 90 days following the proposal of the amendment by the board or receipt of a petition. The board must mail or otherwise transmit or deliver in a record to each member:

(1) the proposed amendment, or a summary of the proposed amendment and a statement of the manner in which a copy of the amendment in a record may be reasonably obtained by a member;

(2) a recommendation that the members approve the amendment, or if the board determines that because of conflict of interest or other special circumstances it should not make a favorable recommendation, the basis for that determination;

(3) a statement of any condition of the board's submission of the amendment to the members; and

(4) notice of the meeting at which the proposed amendment will be considered, which must be given in the same manner as notice for a special meeting of members.

Section 403. Method of voting on amendment of organic rules.

(a) A substantive change to a proposed amendment of the organic rules may not be made at the members meeting at which a vote on the amendment occurs.

(b) A nonsubstantive change to a proposed amendment of the organic rules may be made at the members meeting at which the vote on the amendment occurs and need not be separately voted upon by the board of directors.

(c) A vote to adopt a nonsubstantive change to a proposed amendment to the organic rules must be by the same percentage of votes required to pass a proposed amendment.

Section 404. Voting by district, class, or voting group.

(a) This Section applies if the organic rules provide for voting by district or class, or if there is one or more identifiable voting groups that a proposed amendment to the organic rules would affect differently from other members with respect to matters identified in Section 405(e)(1) through (5). Approval of the amendment requires the same percentage of votes of the members of that district, class, or voting group required in Sections 405 and 514.

(b) If a proposed amendment to the organic rules would affect members in 2 or more districts or classes entitled to vote separately under subsection (a) in the same or a substantially similar way, the districts or classes affected must vote as a single voting group unless the organic rules otherwise provide for separate voting.

Section 405. Approval of amendment.

(a) Subject to Section 404 and subsections (c) and (d), an amendment to the articles of organization must be approved by:

(1) at least two-thirds of the voting power of members present at a members meeting called under Section 402; and

(2) if the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage vote by patron members.

(b) Subject to Section 404 and subsections (c), (d), (e) and (f), an amendment to the bylaws must be approved by:

(1) at least a majority vote of the voting power of all members present at a members meeting called under Section 402, unless the organic rules require a greater percentage; and

(2) if a limited cooperative association has investor members, a majority of the votes cast by patron members, unless the organic rules require a larger affirmative vote by patron members.

(c) The organic rules may require that the percentage of votes under subsection (a)(1) or (b)(1) be:

(1) a different percentage that is not less than a majority of members voting at the meeting;

(2) measured against the voting power of all members; or

(3) a combination of paragraphs (1) and (2).

(d) Consent in a record by a member must be delivered to a limited cooperative association before delivery of an amendment to the articles of organization or restated articles of organization for filing pursuant to Section 407, if as a result of the amendment the member will have:

(1) personal liability for an obligation of the association; or

(2) an obligation or liability for an additional contribution.

(e) The vote required to amend bylaws must satisfy the requirements of subsection (a) if the proposed amendment modifies:

(1) the equity capital structure of the limited cooperative association, including the rights of the association's members to share in profits or distributions, or the relative rights, preferences, and restrictions granted to or imposed upon one or more districts, classes, or voting groups of similarly situated members;

(2) the transferability of a member's interest;

(3) the manner or method of allocation of profits or losses among members;

(4) the quorum for a meeting and the rights of voting and governance; or

(5) unless otherwise provided in the organic rules, the terms for admission of new members.

(f) Except for the matters described in subsection (e), the articles of organization may delegate amendment of all or a part of the bylaws to the board of directors without requiring member approval.

(g) If the articles of organization delegate amendment of bylaws to the board of directors, the board shall provide a description of any amendment of the bylaws made by the board to the members in a record not later than 30 days after the amendment, but the description may be provided at the next annual members meeting if the meeting is held within the 30-day period.

Section 406. Restated articles of organization. A limited cooperative association, by the affirmative vote of a majority of the board of directors taken at a meeting for which the purpose is stated in the notice of the meeting, may adopt restated articles of organization that contain the original articles as previously amended. Restated articles may contain amendments if the restated articles are adopted in the same manner and with the same vote as required for amendments to the articles under Section 405(a). Upon filing, restated articles supersede the existing articles and all amendments.

Section 407. Amendment or restatement of articles of organization; filing.

(a) To amend its articles of organization, a limited cooperative association must deliver to the Secretary of State for filing an amendment of the articles, or restated articles of organization or articles of merger, interest exchange, conversion, or domestication pursuant to Article 16, which contain one or more amendments of the articles of organization, stating:

(1) the name of the association;

(2) the date of filing of the association's initial articles; and

(3) the text of the amendment.

(b) Before the beginning of the initial meeting of the board of directors, an organizer who knows that information in the filed articles of organization was inaccurate when the articles were filed or has become inaccurate due to changed circumstances shall promptly:

(1) cause the articles to be amended; or

(2) if appropriate, deliver an amendment to the Secretary of State for filing pursuant to Section 204.

(c) To restate its articles of organization, a limited cooperative association must deliver to the Secretary of State for filing a restatement designated as such in its heading.

(d) Upon filing, an amendment of the articles of organization or other record containing an amendment of the articles which has been properly adopted by the members is effective as provided in Section 205.

Article 5. MEMBERS

Section 501. Members. To begin business, a limited cooperative association must have at least 2 patron members unless the sole member is a cooperative.

Section 502. Becoming member.

(a) If a limited cooperative association is to have only one cooperative member upon formation, the cooperative becomes a member as agreed by that cooperative and the organizer of the association. That cooperative and the organizer may be, but need not be, different persons. If different, the organizer acts on behalf of the initial cooperative member.

(b) If a limited cooperative association is to have more than one member upon formation, those persons become members as agreed by the persons before the formation of the association. The organizer acts on behalf of the persons in forming the association and may be, but need not be, one of the persons.

(c) After formation of a limited cooperative association, a person becomes a member:

(1) as provided in the organic rules;

(2) as the result of a transaction effective under Article 16;

(3) with the affirmative vote or consent of all the members; or

(4) as provided in Section 1202(3).

Section 503. No agency power of member as member.

(a) A member is not an agent of a limited cooperative association solely by reason of being a member.

(b) A person's status as a member does not prevent or restrict law other than this Act from imposing liability on a limited cooperative association because of the person's conduct.

Section 504. Liability of members and directors.

(a) A debt, obligation, or other liability of a limited cooperative association is solely the debt, obligation, or other liability of the association. A member or director is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or other liability of the association solely by reason of being or acting as a member or director of the association. This subsection applies regardless of the dissolution of the association.

(b) The failure of a limited cooperative association to observe formalities relating to the exercise of its powers or management of its activities and affairs is not a ground for imposing liability on any member or director for a debt, obligation, or other liability of the association.

Section 505. Right of members and dissociated members to information.

(a) On reasonable notice, a member may inspect and copy during regular business hours, at the principal office or a reasonable location specified by the limited cooperative association, required information listed in Sections 110(a)(1) through (8). A member need not have any particular purpose for seeking the information. The association is not required to provide the same information listed in Section 110(a)(1) through (8) to the same member more than once during a 6-month period.

(b) On reasonable notice, a member may inspect and copy during regular business hours, at the principal office or a reasonable location specified by the limited cooperative association, required information listed in Section 110(a)(9), (10), (12), (13), (16), and (18), if:

(1) the member seeks the information in good faith and for a proper purpose reasonably related to the member's interest;

(2) the demand includes a description with reasonable particularity of the information sought and the purpose for seeking the information;

(3) the information sought is directly connected to the member's purpose; and

(4) the demand is reasonable.

(c) Not later than 10 business days after receipt of a demand pursuant to subsection (b), a limited cooperative association shall provide, in a record, the following information to the member that made the demand:

(1) if the association agrees to provide the demanded information:

(A) what information the association will provide in response to the demand; and

(B) a reasonable time and place at which the association will provide the information; or

(2) if the association declines to provide some or all of the demanded information, the association's reasons for declining.

(d) On 10 days' demand made in a record received by a limited cooperative association, a dissociated member may have access to information to which the person was entitled while a member if the information pertains to the period during which the person was a member, the person seeks the information in good faith, and the person satisfies the requirements imposed on a member by subsection (b)(2). The association shall respond to a demand made pursuant to this subsection in the manner provided in subsection (b)(3).

(e) Not later than 10 business days after receipt by a limited cooperative association of a demand made by a member in a record, but not more often than once in a 6-month period, the association shall deliver to the member a record stating the information with respect to the member required by Section 110(a)(17).

(f) In addition to any restriction or condition stated in its organic rules, a limited cooperative association, as a matter within the ordinary course of its activities and affairs, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this Section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient. In a dispute concerning the reasonableness of a restriction under this subsection, the association has the burden of proving reasonableness.

(g) A limited cooperative association may charge a person that makes a demand under this Section reasonable costs of copying, limited to the costs of labor and material.

(h) A member or dissociated member may exercise rights under this Section through an agent or, in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the organic rules or under subsection (g) applies both to the agent or legal representative and the member or dissociated member.

(i) The rights stated in this Section do not extend to a person as transferee.

(j) The organic rules may require a limited cooperative association to provide more information than required by this Section and may establish conditions and procedures for providing the information.

Section 506. Annual meeting of members.

(a) Members shall meet annually at a time provided in the organic rules or set by the board of directors not inconsistent with the organic rules.

(b) An annual members meeting may be held inside or outside this State at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules.

(c) Unless the organic rules otherwise provide, members may attend or conduct an annual members meeting through any means of communication if all members attending the meeting can communicate with each other during the meeting.

(d) The board of directors shall report, or cause to be reported, at the association's annual members meeting the association's business and financial condition as of the close of the most recent fiscal year.

(e) Unless the organic rules otherwise provide, the board of directors shall designate the presiding officer of the association's annual members meeting.

(f) Failure to hold an annual members meeting does not affect the validity of any action by the limited cooperative association.

Section 507. Special meeting of members.

(a) A special meeting of members may be called only:

(1) as provided in the organic rules;

(2) by a majority vote of the board of directors on a proposal stating the purpose of the meeting;

(3) by demand in a record signed by members holding at least 20 % of the voting power of the persons in any district or class entitled to vote on the matter that is the purpose of the meeting stated in the demand; or

(4) by demand in a record signed by members holding at least 10 % of the total voting power of all the persons entitled to vote on the matter that is the purpose of the meeting stated in the demand.

(b) A demand under subsection (a)(3) or (4) must be submitted to the officer of the limited cooperative association charged with keeping its records.

(c) Any voting member may withdraw its demand under subsection (a)(3) or (4) before receipt by the limited cooperative association of demands sufficient to require a special meeting of members.

(d) A special meeting of members may be held inside or outside this State at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules.

(e) Unless the organic rules otherwise provide, members may attend or conduct a special meeting of members through the use of any means of communication if all members attending the meeting can communicate with each other during the meeting.

(f) Only business within the purpose or purposes stated in the notice of a special meeting of members may be conducted at the meeting.

(g) Unless the organic rules otherwise provide, the presiding officer of a special meeting of members shall be designated by the board of directors.

Section 508. Notice of members meeting.

(a) A limited cooperative association shall notify each member of the time, date, and place of a members meeting at least 15 and not more than 60 days before the meeting.

(b) Unless the organic rules otherwise provide, notice of an annual members meeting need not include any purpose of the meeting.

(c) Notice of a special meeting of members must include each purpose of the meeting as contained in the demand under Section 507(a)(3) or (4) or as voted upon by the board of directors under Section 507(a)(2).

(d) Notice of a members meeting must be given in a record unless oral notice is reasonable under the circumstances.

Section 509. Waiver of members meeting notice.

(a) A member may waive notice of a members meeting before, during, or after the meeting.

(b) A member's participation in a members meeting is a waiver of notice of that meeting unless the member objects to the meeting at the beginning of the meeting or promptly upon the member's arrival at the meeting and does not thereafter vote for or assent to action taken at the meeting.

Section 510. Quorum of members. Unless the organic rules otherwise require a greater number of members or percentage of the voting power, the voting member or members present at a members meeting constitute a quorum.

Section 511. Voting by patron members. Except as provided by Section 512(a), each patron member has one vote. The organic rules may allocate voting power among patron members as provided in Section 512(a).

Section 512. Allocation of voting power of patron member.

(a) The organic rules may allocate voting power among patron members on the basis of one or a combination of the following:

(1) one member, one vote;

(2) use or patronage;

(3) equity; or

(4) if a patron member is a cooperative, the number of its patron members.

(b) The organic rules may provide for the allocation of patron member voting power by districts or class, or any combination thereof.

Section 513. Voting by investor members. If the organic rules provide for investor members, each investor member has one vote, unless the organic rules otherwise provide. The organic rules may provide for the allocation of investor member voting power by class, classes, or any combination of classes.

Section 514. Voting requirements for members. If a limited cooperative association has both patron and investor members, the following rules apply:

(1) the total voting power of all patron members may not be less than a majority of the entire voting power entitled to vote.

(2) action on any matter is approved only upon the affirmative vote of at least a majority

(A) all members voting at the meeting unless more than a majority is required by Article 4, 12, 14, or 16 or the organic rules; and

(B) votes cast by patron members unless the organic rules require a larger affirmative vote by patron members.

(3) The organic rules may provide for the percentage of the affirmative votes that must be cast by investor members to approve the matter.

Section 515. Manner of voting.

(a) Unless the organic rules otherwise provide, voting by a proxy at a members meeting is prohibited. This subsection does not prohibit delegate voting based on district or class.

(b) If voting by a proxy is permitted, a patron member may appoint only another patron member as a proxy and, if investor members are permitted, an investor member may appoint only another investor member as a proxy.

(c) The organic rules may provide for the manner of and provisions governing the appointment of a proxy.

(d) The organic rules may provide for voting on any question by ballot delivered by mail or voting by other means on questions that are subject to vote by members.

Section 516. Action without a meeting.

(a) Unless the organic rules require that action be taken only at a members meeting, any action that may be taken by the members may be taken without a meeting if each member entitled to vote on the action consents in a record to the action.

(b) Consent under subsection (a) may be withdrawn by a member in a record at any time before the limited cooperative association receives a consent from each member entitled to vote.

(c) Consent to any action may specify the effective date or time of the action.

Section 517. Districts and delegates; classes of members.

(a) The organic rules may provide for the formation of geographic districts of patron members and:

(1) for the conduct of patron member meetings by districts and the election of directors at the meetings; or

(2) that districts may elect district delegates to represent and vote for the district at members meetings.

(b) A delegate elected under subsection (a)(2) has one vote unless voting power is otherwise allocated by the organic rules.

(c) The organic rules may provide for the establishment of classes of members, for the preferences, rights, and limitations of the classes, and:

(1) for the conduct of members meetings by classes and the election of directors at the meetings; or

(2) that classes may elect class delegates to represent and vote for the class in members meetings.

(d) A delegate elected under subsection (c)(2) has one vote unless voting power is otherwise allocated by the organic rules.

Section 518. Approval of transaction under Article 16.

(a) For a limited cooperative association to approve a plan for a transaction under Article 16, the plan must be approved by a majority of the board of directors, or a greater vote if required by the organic rules, and the board shall call a members meeting to consider the plan, hold the meeting not later than 90 days after approval of the plan by the board, and mail or otherwise transmit or deliver in a record to each member:

(1) the plan, or a summary of the plan and a statement of the manner in which a copy of the plan in a record reasonably may be obtained by a member;

(2) a recommendation that the members approve the plan, or if the board determines that because of a conflict of interest or other circumstances it should not make a favorable recommendation, the basis for that determination;

(3) a statement of any condition of the board's submission of the plan to the members; and

(4) notice of the meeting at which the plan will be considered, which must be given in the same manner as notice of a special meeting of members.

(b) Subject to subsections (c) and (d), a plan must be approved by:

(1) at least two-thirds of the voting power of members present at a members meeting called under subsection (a); and

(2) if the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage vote by patron members.

(c) The organic rules may provide that the required vote under subsection (b)(1) be:

(1) a different fraction that is not less than a majority of members voting at the meeting;

(2) measured against the voting power of all members; or

(3) a combination of paragraphs (1) and (2).

(d) The vote required under subsections (b) and (c) to approve a plan may not be less than the vote required for the members of the limited cooperative association to amend the articles of organization.

(e) A member's consent in a record to a plan must be delivered to the limited cooperative association before delivery to the Secretary of State for filing of articles of merger, interest exchange, conversion, or domestication if, as a result of the merger, interest exchange, conversion, or domestication, the member will have interest holder liability for debts, obligations, or other liabilities that are incurred after the transaction becomes effective.

(f) The voting requirements for districts, classes, or voting groups under Section 404 apply to approval of a transaction under this Article.

Article 6. MEMBER'S INTEREST IN LIMITED COOPERATIVE

ASSOCIATION

Section 601. Member's interest. A member's interest:

(1) is personal property;

(2) consists of:

(A) governance rights;

(B) financial rights; and

(C) the right or obligation, if any, to do business with the limited cooperative association; and

(3) may be in certificated or uncertificated form.

Section 602. Patron and investor members' interests.

(a) Unless the organic rules establish investor members' interests, a member's interest is a patron member's interest.

(b) Unless the organic rules otherwise provide, if a limited cooperative association has investor members, while a person is a member of the association, the person:

(1) if admitted as a patron member, remains a patron member;

(2) if admitted as an investor member, remains an investor member; and

(3) if admitted as a patron member and investor member remains a patron and investor member if not dissociated in one of the capacities.

Section 603. Transferability of member's interest.

(a) The provisions of this Act relating to the transferability of a member's interest are subject to the Uniform Commercial Code.

(b) Unless the organic rules otherwise provide, a member's interest other than financial rights is not transferable.

(c) Unless a transfer is restricted or prohibited by the organic rules, a member may transfer its financial rights in the limited cooperative association.

(d) The terms of any restriction on transferability of financial rights must be:

(1) set forth in the organic rules and the member records of the association; and

(2) conspicuously noted on any certificates evidencing a member's interest.

(e) A transferee of a member's financial rights, to the extent the rights are transferred, has the right to share in the allocation of profits or losses and to receive the distributions to the member transferring the interest to the same extent as the transferring member.

(f) A transferee of a member's financial rights does not become a member upon transfer of the rights unless the transferee is admitted as a member by the limited cooperative association.

(g) A limited cooperative association need not give effect to a transfer under this Section until the association has notice of the transfer.

(h) A transfer of a member's financial rights in violation of a restriction on transfer contained in the organic rules is ineffective if the intended transferee has notice of the restriction at the time of transfer.

Section 604. Security interest and set-off.

(a) A member or transferee may create an enforceable security interest in its financial rights in a limited cooperative association.

(b) Unless the organic rules otherwise provide, a member may not create an enforceable security interest in the member's governance rights in a limited cooperative association.

(c) The organic rules may provide that a limited cooperative association has a security interest in the financial rights of a member to secure payment of any indebtedness or other obligation of the member to the association. A security interest provided for in the organic rules is enforceable under, and governed by, Article 9 of the Uniform Commercial Code.

(d) Unless the organic rules otherwise provide, a member may not compel the limited cooperative association to offset financial rights against any indebtedness or obligation owed to the association.

Section 605. Charging order.

(a) On application by a judgment creditor of a member or transferee, a court may enter a charging order against the financial rights of the judgment debtor for the unsatisfied amount of the judgment. Except as otherwise provided in subsection (f), a charging order constitutes a lien on the judgment debtor's financial rights and requires the limited cooperative association to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

(b) To the extent necessary to effectuate the collection of distributions pursuant to a charging order under subsection (a), the court may:

(1) appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made; and

(2) make all other orders necessary to give effect to the charging order.

(c) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the financial rights. Except as otherwise provided in subsection (f), the purchaser at the foreclosure sale obtains only the financial rights that are subject to the charging order, does not thereby become a member, and is subject to Section 603.

(d) At any time before foreclosure under subsection (c), the member or transferee whose financial rights are subject to a charging order under subsection (a) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

(e) At any time before foreclosure under subsection (c), the limited cooperative association or one or more members whose financial rights are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order. Unless the organic rules otherwise provide, the association may act under this subsection only with the consent of all members whose financial rights are not subject to the charging order.

(f) If a court forecloses a charging order lien against the sole member of a limited cooperative association:

(1) the court shall confirm the sale;

(2) the purchaser at the sale obtains the member's entire interest, not only the member's financial rights;

(3) the purchaser thereby becomes a member; and

(4) the person whose interest was subject to the foreclosed charging order is dissociated as a member.

(g) This Act does not deprive any member or transferee of the benefit of any exemption law applicable to the member's or transferee's financial rights.

(h) This Section provides the exclusive remedy by which a person seeking in the capacity of judgment creditor to enforce a judgment against a member or transferee may satisfy the judgment from the judgment debtor's financial rights.

Article 7. MARKETING CONTRACTS

Section 701. Authority. In this Article, "marketing contract" means a contract between a limited cooperative association and another person, that need not be a patron member:

(1) requiring the other person to sell, or deliver for sale or marketing on the person's behalf, a specified part of the person's products, commodities, or goods exclusively to or through the association or any facilities furnished by the association; or

(2) authorizing the association to act for the person in any manner with respect to the products, commodities, or goods.

Section 702. Marketing contracts.

(a) If a marketing contract provides for the sale of products, commodities, or goods to a limited cooperative association, the sale transfers title to the association upon delivery or at any other specific time expressly provided by the contract.

(b) A marketing contract may:

(1) authorize a limited cooperative association to create an enforceable security interest in the products, commodities, or goods delivered; and

(2) allow the association to sell the products, commodities, or goods delivered and pay the sales price on a pooled or other basis after deducting selling costs, processing costs, overhead, expenses, and other charges.

(c) Some or all of the provisions of a marketing contract between a patron member and a limited cooperative association may be contained in the organic rules.

Section 703. Duration of marketing contract. The initial duration of a marketing contract may not exceed 10 years, but the contract may be self-renewing for additional periods not exceeding 5 years each. Unless the contract provides for another manner or time for termination, either party may terminate the contract by giving notice in a record at least 90 days before the end of the current term.

Section 704. Remedies for breach of contract.

(a) Damages to be paid to a limited cooperative association for breach or anticipatory repudiation of a marketing contract may be liquidated, but only at an amount or under a formula that is reasonable in light of the actual or anticipated harm caused by the breach or repudiation. A provision that so provides is not a penalty.

(b) Upon a breach of a marketing contract, whether by anticipatory repudiation or otherwise, a limited cooperative association may seek:

(1) an injunction to prevent further breach; and

(2) specific performance.

(c) The remedies in this Section are in addition to any other remedies available to an association under law other than this Act.

Article 8. DIRECTORS AND OFFICERS

Section 801. Board of directors.

(a) A limited cooperative association must have a board of directors of at least 3 individuals, unless the association has fewer than 3 members. If the association has fewer than 3 members, the number of directors may not be fewer than the number of members.

(b) The affairs of a limited cooperative association must be managed by, or under the direction of, the board of directors. The board may adopt policies and procedures that do not conflict with the organic rules or this Act.

(c) An individual is not an agent for a limited cooperative association solely by being a director.

Section 802. No liability as director for limited cooperative association's obligations. A debt, obligation, or other liability of a limited cooperative association is solely that of the association and is not a debt, obligation, or liability of a director solely by reason of being a director. An individual is not personally liable, directly or indirectly, for an obligation of an association solely by reason of being a director.

Section 803. Qualifications of directors.

(a) Unless the organic rules otherwise provide, and subject to subsection (c), each director of a limited cooperative association must be an individual who is a member of the association or an individual who is designated by a member that is not an individual for purposes of qualifying and serving as a director. Initial directors need not be members.

(b) Unless the organic rules otherwise provide, a director may be an officer or employee of the limited cooperative association.

(c) If the organic rules provide for nonmember directors, the number of nonmember directors may not exceed:

(1) one, if there are 2 through 4 directors;

(2) two, if there are 5 through 8 directors; or

(3) one-third of the total number of directors if there are at least 9 directors.

(d) The organic rules may provide qualifications for directors in addition to those in this Section.

Section 804. Election of directors and composition of board.

(a) Unless the organic rules require a greater number:

(1) the number of directors that must be patron members may not be fewer than:

(A) one, if there are 2 or 3 directors;

(B) two, if there are 4 or 5 directors;

(C) three, if there are 6 through 8 directors; or

(D) one-third of the directors if there are at least 9 directors; and

(2) a majority of the board of directors must be elected exclusively by patron members.

(b) Unless the organic rules otherwise provide, if a limited cooperative association has investor members, the directors who are not elected exclusively by patron members are elected by the investor members.

(c) Subject to subsection (a), the organic rules may provide for the election of all or a specified number of directors by one or more districts or classes of members.

(d) Subject to subsection (a), the organic rules may provide for the nomination or election of directors by districts or classes, directly or by district delegates.

(e) If a class of members consists of a single member, the organic rules may provide for the member to appoint a director or directors.

(f) Unless the organic rules otherwise provide, cumulative voting for directors is prohibited.

(g) Except as otherwise provided by the organic rules, subsection (e), or Sections 302, 516, 517, and 809, member directors must be elected at an annual members meeting.

Section 805. Term of director.

(a) Unless the organic rules otherwise provide, and subject to subsections (c) and (d) and Section 302(d), the term of a director expires at the annual members meeting following the director's election or appointment. The term of a director may not exceed 3 years.

(b) Unless the organic rules otherwise provide, a director may be reelected.

(c) Except as otherwise provided in subsection (d), a director continues to serve until a successor director is elected or appointed and qualifies or the director is removed, resigns, is adjudged incompetent, or dies.

(d) Unless the organic rules otherwise provide, a director does not serve the remainder of the director's term if the director ceases to qualify to be a director.

Section 806. Resignation of director. A director may resign at any time by giving notice in a record to the limited cooperative association. Unless the notice states a later effective date, a resignation is effective when the notice is received by the association.

Section 807. Removal of director. Unless the organic rules otherwise provide, the following rules apply:

(1) Members may remove a director with or without cause.

(2) A member or members holding at least 10 % of the total voting power entitled to be voted in the election of a director may demand removal of the director by one or more signed petitions submitted to the officer of the limited cooperative association charged with keeping its records.

(3) Upon receipt of a petition for removal of a director, an officer of the association or the board of directors shall:

(A) call a special meeting of members to be held not later than 90 days after receipt of the petition by the association; and

(B) mail or otherwise transmit or deliver in a record to the members entitled to vote on the removal, and to the director to be removed, notice of the meeting which complies with Section 508.

(4) A director is removed if the votes in favor of removal are equal to or greater than the votes required to elect the director.

Section 808. Suspension of director by board.

(a) A board of directors may suspend a director if, considering the director's course of conduct and the inadequacy of other available remedies, immediate suspension is necessary for the best interests of the association and the director is engaging, or has engaged, in:

(1) fraudulent conduct with respect to the association or its members;

(2) gross abuse of the position of director;

(3) intentional or reckless infliction of harm on the association; or

(4) any other behavior, act, or omission as provided by the organic rules.

(b) A suspension under subsection (a) is effective for 30 days unless the board of directors calls and gives notice of a special meeting of members for removal of the director before the end of the 30-day period in which case the suspension is effective until adjournment of the meeting or the director is removed.

Section 809. Vacancy on board.

(a) Unless the organic rules otherwise provide, a vacancy on the board of directors must be filled:

(1) within a reasonable time by majority vote of the remaining directors until the next annual members meeting or a special meeting of members called to fill the vacancy; and

(2) for the unexpired term by members at the next annual members meeting or a special meeting of members called to fill the vacancy.

(b) Unless the organic rules otherwise provide, if a vacating director was elected or appointed by a class of members or a district:

(1) the new director must be of that class or district; and

(2) the selection of the director for the unexpired term must be conducted in the same manner as would the selection for that position without a vacancy.

(c) If a member appointed a vacating director, the organic rules may provide for that member to appoint a director to fill the vacancy.

Section 810. Remuneration of directors. Unless the organic rules otherwise provide, the board of directors may set the remuneration of directors and of nondirector committee members appointed under Section 817(a).

Section 811. Meetings.

(a) A board of directors shall meet at least annually and may hold meetings inside or outside this State.

(b) Unless the organic rules otherwise provide, a board of directors may permit directors to attend or conduct board meetings through the use of any means of communication, if all directors attending the meeting can communicate with each other during the meeting.

Section 812. Action without meeting.

(a) Unless prohibited by the organic rules, any action that may be taken by a board of directors may be taken without a meeting if each director consents in a record to the action.

(b) Consent under subsection (a) may be withdrawn by a director in a record at any time before the limited cooperative association receives consent from all directors.

(c) A record of consent for any action under subsection (a) may specify the effective date or time of the action.

Section 813. Meetings and notice.

(a) Unless the organic rules otherwise provide, a board of directors may establish a time, date, and place for regular board meetings, and notice of the time, date, place, or purpose of those meetings is not required.

(b) Unless the organic rules otherwise provide, notice of the time, date, and place of a special meeting of a board of directors must be given to all directors at least 3 days before the meeting, the notice must contain a statement of the purpose of the meeting, and the meeting is limited to the matters contained in the statement.

Section 814. Waiver of notice of meeting.

(a) Unless the organic rules otherwise provide, a director may waive any required notice of a meeting of the board of directors in a record before, during, or after the meeting.

(b) Unless the organic rules otherwise provide, a director's participation in a meeting is a waiver of notice of that meeting unless:

(1) the director objects to the meeting at the beginning of the meeting or promptly upon the director's arrival at the meeting and does not thereafter vote in favor of or otherwise assent to the action taken at the meeting; or

(2) the director promptly objects upon the introduction of any matter for which notice under Section 813 has not been given and does not thereafter vote in favor of or otherwise assent to the action taken on the matter.

Section 815. Quorum.

(a) Unless the articles of organization provide for a greater number, a majority of the total number of directors specified by the organic rules constitutes a quorum for a meeting of the directors.

(b) If a quorum of the board of directors is present at the beginning of a meeting, any action taken by the directors present is valid even if withdrawal of directors originally present results in the number of directors being fewer than the number required for a quorum.

(c) A director present at a meeting but objecting to notice under Section 814(b)(1) or (2) does not count toward a quorum.

Section 816. Voting.

(a) Each director shall have one vote for purposes of decisions made by the board of directors.

(b) Unless the organic rules otherwise provide, the affirmative vote of a majority of directors present at a meeting is required for action by the board of directors.

Section 817. Committees.

(a) Unless the organic rules otherwise provide, a board of directors may create one or more committees and appoint one or more individuals to serve on a committee.

(b) Unless the organic rules otherwise provide, an individual appointed to serve on a committee of a limited cooperative association need not be a director or member.

(c) An individual who is not a director and is serving on a committee has the same rights, duties, and obligations as a director serving on the committee.

(d) Unless the organic rules otherwise provide each committee of a limited cooperative association may exercise the powers delegated to it by the board of directors, but a committee may not:

(1) approve allocations or distributions except according to a formula or method prescribed by the board of directors;

(2) approve or propose to members action requiring approval of members; or

(3) fill vacancies on the board of directors or any of its committees.

Section 818. Standards of conduct and liability. Except as otherwise provided in Section 820:

(1) the discharge of the duties of a director or member of a committee of the board of directors is governed by the law applicable to directors of entities organized under the Business Corporation Act of 1083; and

(2) the liability of a director or member of a committee of the board of directors is governed by the law applicable to directors of entities organized under the Business Corporation Act of 1983.

Section 819. Conflict of interest.

(a) The law applicable to conflicts of interest between a director of an entity organized under the Business Corporation Act of 1983 governs conflicts of interest between a limited cooperative association and a director or member of a committee of the board of directors.

(b) A director does not have a conflict of interest under this Act or the organic rules solely because the director's conduct relating to the duties of the director may further the director's own interest.

Section 820. Other considerations of directors. Unless the articles of organization otherwise provide, in considering the best interests of a limited cooperative association, a director of the association in discharging the duties of director, in conjunction with considering the long and short term interest of the association and its patron members, may consider:

(1) the interest of employees, customers, and suppliers of the association;

(2) the interest of the community in which the association operates; and

(3) other cooperative principles and values that may be applied in the context of the decision.

Section 821. Right of director or committee member to information. A director or a member of a committee appointed under Section 817 may obtain, inspect, and copy all information regarding the state of activities and financial condition of the limited cooperative association and other information regarding the activities of the association if the information is reasonably related to the performance of the director's duties as director or the committee member's duties as a member of the committee. Information obtained in accordance with this Section may not be used in any manner that would violate any duty of or to the association.

Section 822. Appointment and authority of officers.

(a) A limited cooperative association has the officers:

(1) provided in the organic rules; or

(2) established by the board of directors in a manner not inconsistent with the organic rules.

(b) The organic rules may designate or, if the rules do not designate, the board of directors shall designate, one of the association's officers for preparing all records required by Section 110 and for the authentication of records.

(c) Unless the organic rules otherwise provide, the board of directors shall appoint the officers of the limited cooperative association.

(d) Officers of a limited cooperative association shall perform the duties the organic rules prescribe or as authorized by the board of directors not in a manner inconsistent with the organic rules.

(e) The election or appointment of an officer of a limited cooperative association does not of itself create a contract between the association and the officer.

(f) Unless the organic rules otherwise provide, an individual may simultaneously hold more than one office in a limited cooperative association.

Section 823. Resignation and removal of officers.

(a) The board of directors may remove an officer at any time with or without cause.

(b) An officer of a limited cooperative association may resign at any time by giving notice in a record to the association. Unless the notice specifies a later time, the resignation is effective when the notice is given.

Article 9. INDEMNIFICATION

Section 901. Indemnification and advancement of expenses; insurance.

(a) Indemnification and advancement of expenses of an individual who has incurred liability or is a party, or is threatened to be made a party, to litigation because of the performance of a duty to, or activity on behalf of, a limited cooperative association is governed by the Business Corporation Act of 1983.

(b) A limited cooperative association may purchase and maintain insurance on behalf of any individual against liability asserted against or incurred by the individual to the same extent and subject to the same conditions as provided by the Business Corporation Act of 1983.

Article 10. CONTRIBUTIONS, ALLOCATIONS, AND DISTRIBUTIONS

Section 1001. Members' contributions. The organic rules must establish the amount, manner, or method of determining any contribution requirements for members or must authorize the board of directors to establish the amount, manner, or other method of determining any contribution requirements for members.

Section 1002. Contribution and valuation.

(a) Unless the organic rules otherwise provide, the contributions of a member to a limited cooperative association may consist of property transferred to, services performed for, or another benefit provided to the association or an agreement to transfer property to, perform services for, or provide another benefit to the association.

(b) The receipt and acceptance of contributions and the valuation of contributions must be reflected in a limited cooperative association's records.

(c) Unless the organic rules otherwise provide, the board of directors shall determine the value of a member's contributions received or to be received and the determination by the board of directors of valuation is conclusive for purposes of determining whether the member's contribution obligation has been met.

Section 1003. Contribution agreements.

(a) Except as otherwise provided in the agreement, the following rules apply to an agreement made by a person before formation of a limited cooperative association to make a contribution to the association:

(1) The agreement is irrevocable for 6 months after the agreement is signed by the person unless all parties to the agreement consent to the revocation.

(2) If a person does not make a required contribution:

(A) the person is obligated, at the option of the association, once formed, to contribute money equal to the value of that part of the contribution that has not been made, and the obligation may be enforced as a debt to the association; or

(B) the association, once formed, may rescind the agreement if the debt remains unpaid more than 20 days after the association demands payment from the person, and upon rescission the person has no further rights or obligations with respect to the association.

(b) Unless the organic rules or an agreement to make a contribution other than money to a limited cooperative association otherwise provide, if a person does not make a required contribution to an association, the person or the person's estate is obligated, at the option of the association, to contribute money equal to the value of the part of the contribution which has not been made.

Section 1004. Allocations of profits and losses.

(a) The organic rules may provide for allocating profits of a limited cooperative association among members, among persons that are not members but conduct business with the association, to an unallocated account, or to any combination thereof. Unless the organic rules otherwise provide, losses of the association must be allocated in the same proportion as profits.

(b) Unless the organic rules otherwise provide, all profits and losses of a limited cooperative association must be allocated to patron members.

(c) If a limited cooperative association has investor members, the organic rules may not reduce the allocation to patron members to less than 50 % of profits. For purposes of this subsection, the following rules apply:

(1) amounts paid or due on contracts for the delivery to the association by patron members of products, goods, or services are not considered amounts allocated to patron members.

(2) amounts paid, due, or allocated to investor members as a stated fixed return on equity are not considered amounts allocated to investor members.

(d) Unless prohibited by the organic rules, in determining the profits for allocation under subsections (a), (b), and (c), the board of directors may first deduct and set aside a part of the profits to create or accumulate:

(1) an unallocated capital reserve; and

(2) reasonable unallocated reserves for specific purposes, including expansion and replacement of capital assets; education, training, cooperative development; creation and distribution of information concerning principles of cooperation; and community responsibility.

(e) Subject to subsections (b) and (f) and the organic rules, the board of directors shall allocate the amount remaining after any deduction or setting aside of profits for unallocated reserves under subsection (d):

(1) to patron members in the ratio of each member's patronage to the total patronage of all patron members during the period for which allocations are to be made; and

(2) to investor members, if any, in the ratio of each investor member's contributions to the total contributions of all investor members.

(f) For purposes of allocation of profits and losses or specific items of profits or losses of a limited cooperative association to members, the organic rules may establish allocation units or methods based on separate classes of members or, for patron members, on class, function, division, district, department, allocation units, pooling arrangements, members' contributions, or other equitable methods.

Section 1005. Distributions.

(a) Unless the organic rules otherwise provide and subject to Section 1007, the board of directors may authorize, and the limited cooperative association may make, distributions to members.

(b) Unless the organic rules otherwise provide, distributions to members may be made in any form, including money, capital credits, allocated patronage equities, revolving fund certificates, and the limited cooperative association's own or other securities.

Section 1006. Redemption or repurchase. Property distributed to a member by a limited cooperative association, other than money, may be redeemed or repurchased as provided in the organic rules but a redemption or repurchase may not be made without authorization by the board of directors. The board may withhold authorization for any reason in its sole discretion. A redemption or repurchase is treated as a distribution for purposes of Section 1007.

Section 1007. Limitations on distributions.

(a) In this Section, "distribution" does not include reasonable compensation for present or past services or other payments made in the ordinary course of business for commodities or goods or under a bona fide retirement or other bona fide benefits program.

(b) A limited cooperative association may not make a distribution, including a distribution under Section 1208, if after the distribution:

(1) the association would not be able to pay its debts as they become due in the ordinary course of the association's activities and affairs; or

(2) the association's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the association were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of members whose preferential rights are superior to the rights of persons receiving the distribution.

(c) A limited cooperative association may base a determination that a distribution is not prohibited under subsection (b) on:

(1) financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; or

(2) a fair valuation or other method that is reasonable under the circumstances.

(d) Except as otherwise provided in subsection (e), the effect of a distribution allowed under subsection (b) is measured:

(1) in the case of a distribution by purchase, redemption, or other acquisition of financial rights in the limited cooperative association, as of the earlier of:

(A) the date money or other property is transferred or debt is incurred by the association; or

(B) the date the person entitled to the distribution ceases to own the financial rights being acquired by the association in return for the distribution;

(2) in the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and

(3) in all other cases, as of the date:

(A) the distribution is authorized, if the payment occurs not later than 120 days after that date; or

(B) the payment is made, if the payment occurs more than 120 days after the distribution is authorized.

(e) A limited cooperative association's indebtedness incurred by reason of a distribution made in accordance with this Section is at parity with the association's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.

(f) A limited cooperative association's indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of subsection (b) if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that payment of a distribution could then be made under this Section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made.

(g) In measuring the effect of a distribution under Section 1208, the liabilities of a dissolved limited cooperative association do not include any claim that has been disposed of under Section 1209, 1210, or 1211.

Section 1008. Liability for improper distributions; limitation of action.

(a) If a director of a limited cooperative association consents to a distribution made in violation of Section 1007 and in consenting to the distribution fails to comply with Section 818, the director is personally liable to the association for the amount of the distribution that exceeds the amount that could have been distributed without the violation of Section 1007.

(b) A person that receives a distribution knowing that the distribution violated Section 1007 is personally liable to the limited cooperative association but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under Section 1007.

(c) A director against whom an action is commenced because the director is liable under subsection (a) may:

(1) implead any other director that is liable under subsection (a) and seek to enforce a right of contribution from the director; and

(2) implead any person that received a distribution in violation of subsection (b) and seek to enforce a right of contribution from the person in the amount the person received in violation of subsection (b).

(d) An action under this Section is barred unless commenced not later than 2 years after the distribution.

Section 1009. Relation to state securities law. A patron member's interest in a limited cooperative association has the same exemption as provided for substantially similar interests in cooperatives under the Illinois Securities Law of 1953.

Section 1010. Alternative distribution of unclaimed property, distributions, redemptions, or payments. A limited cooperative association may distribute unclaimed property, distributions, redemptions, or payments under Revised Uniform Unclaimed Property Act.

Article 11. DISSOCIATION

Section 1101. Member's dissociation.

(a) A person has the power to dissociate as a member at any time.

(b) Unless the organic rules otherwise provide, a member's dissociation from a limited cooperative association is wrongful only if:

(1) it is in breach of an express provision of the organic rules; or

(2) it occurs before the termination of the limited cooperative association and:

(A) the person is expelled as a member under subsection (d)(3) or (4); or

(B) in the case of a person that is not an individual, trust other than a business trust, or estate, the person is expelled or otherwise dissociated as a member because it dissolved or terminated in bad faith.

(c) Unless the organic rules otherwise provide, a person that wrongfully dissociates as a member is liable to the limited cooperative association and to the other members for damages caused by the dissociation. The liability is in addition to any other debt, obligation, or liability of the person to the association.

(d) A member is dissociated as a member when:

(1) the limited cooperative association receives notice in a record of the member's express will to dissociate as a member, or if the member specifies in the notice an effective date later than the date the association received notice, on that later date;

(2) an event stated in the organic rules as causing the person's dissociation occurs;

(3) the person's entire interest is transferred in a foreclosure sale under Section 605(f);

(4) the person is expelled as a member under the organic rules;

(5) the person is expelled as a member by the board of directors if:

(A) it is unlawful to carry on the limited cooperative association's activities and affairs with the person as a member;

(B) there has been a transfer of all the member's financial rights in the association, other than:

(i) a transfer for security purposes; or

(ii) a charging order in effect under Section 605 which has not been foreclosed;

(C) the person is an unincorporated entity that has been dissolved and its activities and affairs are being wound up; or

(D) the person is a corporation or cooperative and:

(i) the person filed a certificate of dissolution or the equivalent, or the jurisdiction of formation revoked the person's charter or right to conduct business;

(ii) the association sends a notice to the person that it will be expelled as a member for a reason described in clause (i); and

(iii) not later than 90 days after the notice was sent under clause (ii), the person did not revoke its certificate of dissolution or the equivalent, or the jurisdiction of formation did not reinstate the person's charter or right to conduct business; or

(E) the member is an individual and is adjudged incompetent;

(6) in the case of an individual, the individual dies;

(7) in the case of a member that is a testamentary or inter vivos trust or is acting as a member by virtue of being a trustee of a trust, the trust's entire financial rights in the limited cooperative association are distributed;

(8) in the case of a person that is an estate or is acting as a member by virtue of being a personal representative of an estate, the estate's entire financial interest in the association is distributed;

(9) in the case of a person that is not an individual, partnership, limited liability company, cooperative, corporation, trust, or estate, the existence of the person terminates; or

(10) the association's participation in a transaction under Article 16 that causes the person to cease to be a member.

Section 1102. Effect of dissociation.

(a) When a person is dissociated as a member:

(1) the person's right to participate as a member in the management and conduct of the limited cooperative association's activities and affairs terminates; and

(2) subject to Section 1103 and Article 16, any financial rights owned by the person in the person's capacity as a member immediately before dissociation are owned by the person as a transferee.

(b) A person's dissociation as a member does not of itself discharge the person from any debt, obligation, or other liability to the limited cooperative association or the other members which the person incurred while a member.

Section 1103. Power of legal representative of deceased member. If a member dies, the deceased member's legal representative may exercise for the purposes of settling the estate, the rights the deceased member had under Section 505.

Article 12. DISSOLUTION

Section 1201. Dissolution and winding up. A limited cooperative association is dissolved only as provided in this Article and upon dissolution winds up in accordance with this Article.

Section 1202. Nonjudicial dissolution. Except as otherwise provided in Sections 1203 and 1215, a limited cooperative association is dissolved and its activities must be wound up:

(1) upon the occurrence of an event or at a time specified in the articles of organization;

(2) upon the action of the association's organizers, board of directors, or members under Section 1204 or 1205; or

(3) 90 days after the dissociation of a member, which results in the association having one patron member and no other members, unless the association:

(A) has a sole member that is a cooperative; or

(B) not later than the end of the 90-day period, admits at least one member in accordance with the organic rules and has at least 2 members, at least one of which is a patron member.

Section 1203. Judicial dissolution. The circuit court may dissolve a limited cooperative association or order any action that under the circumstances is appropriate and equitable: (1) in a proceeding initiated by the Attorney General, if:

(1) in a proceeding initiated by the Attorney General, if:

(A) the association obtained its articles of organization through fraud; or

(B) the association has continued to exceed or abuse the authority conferred upon it by law; or

(2) in a proceeding initiated by a member, if:

(A) the directors are deadlocked in the management of the association's affairs, the members are unable to break the deadlock, and irreparable injury to the association is occurring or is threatened because of the deadlock;

(B) the directors or those in control of the association have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;

(C) the members are deadlocked in voting power and have failed to elect successors to directors whose terms have expired for 2 consecutive periods during which annual members meetings were held or were to be held; or

(D) the assets of the association are being misapplied or wasted.

Section 1204. Voluntary dissolution before commencement of activity. A majority of the organizers or initial directors of a limited cooperative association that has not yet begun business activity or the conduct of its affairs may dissolve the association.

Section 1205. Voluntary dissolution by the board and members.

(a) Except as otherwise provided in Section 1204, for a limited cooperative association to voluntarily dissolve:

(1) a resolution to dissolve must be approved by a majority vote of the board of directors unless a greater percentage is required by the organic rules;

(2) the board of directors must call a members meeting to consider the resolution, to be held not later than 90 days after adoption of the resolution; and

(3) the board of directors must mail or otherwise transmit or deliver to each member in a record that complies with Section 508:

(A) the resolution required by paragraph (1);

(B) a recommendation that the members vote in favor of the resolution or, if the board determines that because of conflict of interest or other special circumstances it should not make a favorable recommendation, the basis of that determination; and

(C) notice of the members meeting, which must be given in the same manner as notice of a special meeting of members.

(b) Subject to subsection (c), a resolution to dissolve must be approved by:

(1) at least two-thirds of the voting power of members present at a members meeting called under subsection (a)(2); and

(2) if the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage.

(c) The organic rules may require that the percentage of votes under subsection (b)(1) is:

(1) a different percentage that is not less than a majority of members voting at the meeting; or

(2) measured against the voting power of all members; or

(3) a combination of paragraphs (1) and (2).

Section 1206. Winding up.

(a) A dissolved limited cooperative association shall wind up its activities and affairs, and except as provided in Section 1207, the association continues after dissolution only for the purpose of winding up.

(b) In winding up its activities and affairs, the board of directors:

(1) shall discharge the association's debts, obligations, or other liabilities, settle and close the association's activities, and marshal and distribute the assets of the association; and

(2) may:

(A) deliver to the Secretary of State for filing a statement of dissolution stating the name of the association and that the association is dissolved;

(B) preserve the association's activities, affairs and property as a going concern for a reasonable time;

(C) prosecute and defend actions and proceedings, whether civil, criminal, or administrative;

(D) transfer the association's property;

(E) settle disputes by mediation or arbitration;

(F) deliver to the Secretary of State for filing a statement of termination stating the name of the company and that the company is terminated; and

(G) perform other acts necessary or appropriate to the winding up.

(c) After dissolution and upon application of a limited cooperative association, a member, or a holder of financial rights, the circuit court may order judicial supervision of the winding up of the association, including the appointment of a person to wind up the association's activities, if:

(1) after a reasonable time, the association has not wound up its activities; or

(2) the applicant establishes other good cause.

(d) If a person is appointed pursuant to subsection (c) to wind up the activities of a limited cooperative association, the association shall promptly deliver to the Secretary of State for filing an amendment to the articles of organization to reflect the appointment.

Section 1207. Rescinding dissolution.

(a) A limited cooperative association may rescind its dissolution, unless a statement of termination applicable to the association is effective, the circuit court has entered an order under Section 1203 dissolving the association, or the Secretary of State has dissolved the association under Section 1214.

(b) Rescinding dissolution under this Section requires:

(1) the affirmative vote or consent of each member;

(2) if a statement of dissolution applicable to the limited cooperative association has been filed by the Secretary of State but has not become effective, the delivery to the Secretary of State for filing of a statement of withdrawal applicable to the statement of dissolution; and

(3) if a statement of dissolution applicable to the limited cooperative association is effective, the delivery to the Secretary of State for filing of a statement of rescission stating the name of the association and that dissolution has been rescinded under this Section.

(c) If a limited cooperative association rescinds its dissolution:

(1) the association resumes carrying on its activities and affairs as if dissolution had never occurred;

(2) subject to paragraph (3), and any liability incurred by the association after the dissolution and before the rescission is effective is determined as if dissolution had never occurred; and

(3) the rights of a third party arising out of conduct in reliance on the dissolution before the third party knew or had notice of the rescission may not be adversely affected.

Section 1208. Distribution of assets in winding up.

(a) In winding up its activities and affairs, the limited cooperative association shall apply its assets to discharge its obligations to creditors, including members that are creditors. The association shall apply any remaining assets to pay in money the net amount distributable to members in accordance with their right to distributions under subsection (b).

(b) Unless the organic rules otherwise provide, in this subsection "financial interests" means the amounts recorded in the names of members in the records of a limited cooperative association at the time a distribution is made, including amounts paid to become a member, amounts allocated but not distributed to members, and amounts of distributions authorized but not yet paid to members. Unless the organic rules otherwise provide, each member is entitled to a distribution from the association of any remaining assets in the proportion of the member's financial interests to the total financial interests of the members after all other obligations are satisfied.

Section 1209. Known claims against dissolved limited cooperative association.

(a) Except as otherwise provided in subsection (d), a dissolved limited cooperative association may give notice of a known claim under subsection (b), which has the effect provided in subsection (c).

(b) A dissolved limited cooperative association in a record may notify its known claimants of the dissolution. The notice must:

(1) specify the information required to be included in a claim;

(2) state that a claim must be in writing and provide a mailing address to which the claim is to be sent;

(3) state the deadline for receipt of a claim, which may not be less than 120 days after the date the notice is received by the claimant; and

(4) state that the claim will be barred if not received by the deadline.

(c) A claim against a dissolved limited cooperative association is barred if the requirements of subsection (b) are met, and:

(1) the claim is not received by the specified deadline; or

(2) if the claim is timely received but rejected by the association:

(A) the association causes the claimant to receive a notice in a record stating that the claim is rejected and will be barred unless the claimant commences an action against the association to enforce the claim not later than 90 days after the claimant receives the notice; and

(B) the claimant does not commence the required action not later than 90 days after the claimant receives the notice.

(d) This Section does not apply to a claim based on an event occurring after the date of dissolution or a liability that on that date is contingent.

Section 1210. Other claims against dissolved limited cooperative association.

(a) A dissolved limited cooperative association may publish notice of its dissolution and request persons having claims against the association to present them in accordance with the notice.

(b) A notice authorized under subsection (a) must:

(1) be published at least once in a newspaper of general circulation in the county in this State in which the dissolved limited cooperative association's principal office is located or, if the principal office is not located in this State, in the county in which the office of the association's registered agent is or was last located;

(2) describe the information required to be contained in a claim, state that the claim must be in writing, and provide a mailing address to which the claim is to be sent; and

(3) state that a claim against the association is barred unless an action to enforce the claim is commenced not later than 3 years after publication of the notice.

(c) If a dissolved limited cooperative association publishes a notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences an action to enforce the claim against the association not later than 3 years after the publication date of the notice:

(1) a claimant that did not receive notice in a record under Section 1209;

(2) a claimant whose claim was timely sent to the company but not acted on; and

(3) a claimant whose claim is contingent at, or based on an event occurring after, the effective date of dissolution.

(d) A claim not barred under this Section or Section 1209 may be enforced:

(1) against a dissolved limited cooperative association, to the extent of its undistributed assets; and

(2) except as provided in Section 1211, if the assets of the association have been distributed after dissolution, against a member or holder of financial rights to the extent of that person's proportionate share of the claim or the assets distributed to the person after dissolution, whichever is less, but a person's total liability for all claims under this paragraph may not exceed the total amount of assets distributed to the person after dissolution.

Section 1211. Court proceedings.

(a) A dissolved limited cooperative association that has published a notice under Section 1210 may file an application with the circuit court in the county where the association's principal office is located or, if the principal office is not located in this State, where the office of its registered agent is or was last located, for a determination of the amount and form of security to be provided for payment of claims that are reasonably expected to arise after the date of dissolution based on facts known to the association and:

(1) at the time of the application:

(A) are contingent; or

(B) have not been made known to the association; or

(2) are based on an event occurring after the date of dissolution.

(b) Security is not required for a claim that is or is reasonably anticipated to be barred under Section 1210.

(c) Not later than 10 days after filing an application under subsection (a), the dissolved limited cooperative association shall give notice of the proceeding to each claimant holding a contingent claim known to the association.

(d) In a proceeding under this Section, the court may appoint a guardian ad litem to represent all claimants whose identities are unknown. The reasonable fees and expenses of the guardian, including all reasonable expert witness fees, must be paid by the dissolved limited cooperative association.

(e) A dissolved limited cooperative association that provides security in the amount and form ordered by the court under subsection (a) satisfies the association's obligations with respect to claims that are contingent, have not been made known to the association, or are based on an event occurring after the effective date of dissolution. Such claims may not be enforced against a member or holder of financial rights on account of assets received in liquidation.

Section 1212. Statement of dissolution.

(a) A limited cooperative association that has dissolved or is about to dissolve may deliver to the Secretary of State for filing a statement of dissolution that states:

(1) the name of the association;

(2) the date the association dissolved or will dissolve; and

(3) any other information the association considers relevant.

(b) A person has notice of a limited cooperative association's dissolution on the later of:

(1) 90 days after a statement of dissolution is filed; or

(2) the effective date stated in the statement of dissolution.

Section 1213. Statement of termination.

(a) A dissolved limited cooperative association that has completed winding up may deliver to the Secretary of State for filing a statement of termination that states:

(1) the name of the association;

(2) the date of filing of its initial articles of organization; and

(3) that the association is terminated.

(b) The filing of a statement of termination does not itself terminate the limited cooperative association.

Section 1214. Administrative dissolution.

(a) The Secretary of State may commence a proceeding under subsection (b) to dissolve a limited cooperative association administratively if the association does not:

(1) pay any fee, tax, interest, or penalty required to be paid to the Secretary of State not later than 6 months after it is due;

(2) deliver an annual report to the Secretary of State not later than 6 months after it is due; or

(3) have a registered agent in this State for 60 consecutive days.

(b) If the Secretary of State determines that one or more grounds exist for administratively dissolving a limited cooperative association, the Secretary of State shall serve the association with notice in a record of the Secretary of State's determination.

(c) If a limited cooperative association, not later than 60 days after service of the notice under subsection (b), does not cure or demonstrate to the satisfaction of the Secretary of State the nonexistence of each ground determined by the Secretary of State, the Secretary of State shall administratively dissolve the association by signing a statement of administrative dissolution that recites the grounds for dissolution and the effective date of dissolution. The Secretary of State shall file the statement and serve a copy on the association pursuant to Section 122.

(d) A limited cooperative association that is administratively dissolved continues in existence as an entity but may not carry on any activities except as necessary to wind up its activities and affairs and liquidate its assets under Sections 1206 and 1208 through 1213, or to apply for reinstatement under Section 1215.

(e) The administrative dissolution of a limited cooperative association does not terminate the authority of its registered agent.

Section 1215. Reinstatement.

(a) A limited cooperative association that is administratively dissolved under Section 1214 may apply to the Secretary of State for reinstatement not later than 2 years after the effective date of dissolution. The application must state:

(1) the name of the association at the time of its administrative dissolution and, if needed, a different name that satisfies Section 115;

(2) the address of the principal office of the association and the name and street and mailing addresses of its registered agent;

(3) the effective date of the association's administrative dissolution; and

(4) that the grounds for dissolution did not exist or have been cured.

(b) To be reinstated, a limited cooperative association must pay all fees, taxes, interest, and penalties that were due to the Secretary of State at the time of the association's administrative dissolution and all fees, taxes, interest, and penalties that would have been due to the Secretary of State while the association was administratively dissolved.

(c) If the Secretary of State determines that an application under subsection (a) contains the required information, is satisfied that the information is correct, and determines that all payments required to be made to the Secretary of State by subsection (b) have been made, the Secretary of State shall

(1) cancel the statement of administrative dissolution and prepare a statement of reinstatement that states the Secretary of State's determination and the effective date of reinstatement; and

(2) file the statement of reinstatement and serve a copy on the limited cooperative association.

(d) When reinstatement under this Section is effective the following rules apply:

(1) The restatement relates back to and takes effect as of the effective date of the administrative dissolution.

(2) The limited cooperative association resumes carrying on its activities and affairs as if the administrative dissolution had not occurred.

(3) The rights of a person arising out of an act or omission in reliance on the dissolution before the person knew or had notice of the reinstatement are not affected.

Section 1216. Judicial review of denial of reinstatement.

(a) If the Secretary of State denies a limited liability cooperative association's application for reinstatement following administrative dissolution, the Secretary of State shall serve the association with a notice in a record that explains the reasons for the denial.

(b) A limited cooperative association may seek judicial review of denial of reinstatement in the circuit court not later than 30 days after service of the notice of denial.

Article 13. ACTIONS BY MEMBERS

Section 1301. Direct action by member.

(a) Subject to subsection (b), a member may maintain a direct action against another member, director, or the limited cooperative association to enforce the member's rights and protect the member's interests, including rights and interests under the organic rules or this Act or arising independently of the membership relationship.

(b) A member maintaining a direct action under this Section must plead and prove an actual or threatened injury that is not solely the result of an injury suffered or threatened to be suffered by the limited cooperative association.

Section 1302. Derivative action. A member may maintain a derivative action to enforce a right of a limited cooperative association if:

(1) the member first makes a demand on the directors requesting that they cause the association to bring an action to enforce the right and the directors do not bring the action within a reasonable time; or

(2) a demand under paragraph (1) would be futile.

Section 1303. Proper plaintiff. A derivative action to enforce a right of a limited cooperative association may be maintained only by a person that is a member at the time the action is commenced and:

(1) was a member when the conduct giving rise to the action occurred; or

(2) whose status as a member devolved on the person by operation of law or pursuant to the terms of the organic rules from a person that was a member at the time of the conduct.

Section 1304. Pleading. In a derivative action to enforce a right of a limited cooperative association, the complaint must state with particularity:

(1) the date and content of plaintiff's demand and the response to the demand by the directors; or

(2) why demand should be excused as futile.

Section 1305. Approval for discontinuance or settlement. A derivative action on behalf of a limited cooperative association may not be voluntarily dismissed or settled without the court's approval.

Section 1306. Proceeds and expenses.

(a) Except as otherwise provided in subsection (b):

(1) any proceeds or other benefits of a derivative action, whether by judgment, compromise, or settlement, belong to the limited cooperative association and not to the plaintiff;

(2) if the plaintiff receives any proceeds, the plaintiff shall remit them immediately to the association.

(b) If a derivative action is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney's fees and costs, from the recovery of the limited cooperative association.

Section 1307. Special litigation committee.

(a) If a limited cooperative association is named as or made a party in a derivative proceeding, the association may appoint a special litigation committee to investigate the claims asserted in the proceeding and determine whether pursuing the action is in the best interests of the company. If the association appoints a special litigation committee, on motion by the committee made in the name of the association, except for good cause shown, the court shall stay discovery for the time reasonably necessary to permit the committee to make its investigation. This subsection does not prevent the court from:

(1) enforcing a person's right to information under Section 505; or

(2) granting extraordinary relief in the form of a temporary restraining order or preliminary injunction.

(b) A special litigation committee must be composed of one or more disinterested and independent individuals, who may be members.

(c) A special litigation committee may be appointed:

(1) by a majority of the directors not named as parties in the proceeding; or

(2) if all directors are named as parties in the proceeding, by a majority of the directors named as defendants.

(d) After appropriate investigation, a special litigation committee may determine that it is in the best interests of the limited cooperative association that the proceeding:

(1) continue under the control of the plaintiff;

(2) continue under the control of the committee;

(3) be settled on terms approved by the committee; or

(4) be dismissed.

(e) After making a determination under subsection (d), a special litigation committee shall file with the court a statement of its determination and its report supporting its determination and shall serve each party with a copy of the determination and report. The court shall determine whether the members of the committee were disinterested and independent and whether the committee conducted its investigation and made its recommendation in good faith, independently, and with reasonable care, with the committee having the burden of proof. If the court finds that the members of the committee were disinterested and independent and that the committee acted in good faith, independently, and with reasonable care, the court shall enforce the determination of the committee. Otherwise, the court shall dissolve the stay of discovery entered under subsection (a) and allow the action to continue under the control of the plaintiff.

Article 14. DISPOSITION OF ASSETS

Section 1401. Disposition of assets not requiring member approval. Unless the articles of organization otherwise provide, member approval under Section 1402 is not required for a limited cooperative association to:

(1) sell, lease, exchange, license, or otherwise dispose of all or any part of the assets of the association in the usual and regular course of business; or

(2) mortgage, pledge, dedicate to the repayment of indebtedness, or encumber in any way all or any part of the assets of the association whether or not in the usual and regular course of business.

Section 1402. Member approval of other disposition of assets. A sale, lease, exchange, license, or other disposition of assets of a limited cooperative association, other than a disposition described in Section 1401, requires approval of the association's members under Sections 1403 and 1404 if the disposition leaves the association without significant continuing business activity.

Section 1403. Notice and action by board of directors on disposition of assets requiring member approval. For a limited cooperative association to dispose of assets under Section 1402:

(1) a majority of the board of directors, or a greater percentage if required by the organic rules, must approve the proposed disposition; and

(2) the board of directors must call a members meeting to consider the proposed disposition, hold the meeting not later than 90 days after approval of the proposed disposition by the board, and mail or otherwise transmit or deliver in a record to each member:

(A) the terms of the proposed disposition;

(B) a recommendation that the members approve the disposition, or if the board determines that because of conflict of interest or other special circumstances it should not make a favorable recommendation, the basis for that determination;

(C) a statement of any condition of the board's submission of the proposed disposition to the members; and

(D) notice of the meeting at which the proposed disposition will be considered, which must be given in the same manner as notice of a special meeting of members.

Section 1404. Member action on disposition of assets.

(a) Subject to subsection (b), a disposition of assets under Section 1402 must be approved by:

(1) at least two-thirds of the voting power of members present at a members meeting called under Section 1403(2); and

(2) if the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage vote by patron members.

(b) The organic rules may require that the percentage of votes under subsection (a)(1) is:

(1) a different percentage that is not less than a majority of members voting at the meeting;

(2) measured against the voting power of all members; or

(3) a combination of paragraphs (1) and(2).

(c) Subject to any contractual obligations, after a disposition of assets is approved and at any time before the consummation of the disposition, a limited cooperative association may approve an amendment to the contract for disposition or the resolution authorizing the disposition or approve abandonment of the disposition:

(1) as provided in the contract or the resolution; and

(2) except as prohibited by the resolution, with the same affirmative vote of the board of directors and of the members as was required to approve the disposition.

(d) The voting requirements for districts, classes, or voting groups under Section 404 apply to approval of a disposition of assets under this Article.

Article 15. FOREIGN COOPERATIVES

Section 1501. Governing law.

(a) The law of the jurisdiction of formation of a foreign cooperative governs:

(1) the internal affairs of the cooperative; and

(2) the liability that a person has as a member or director for a debt, obligation, or liability of the cooperative.

(b) A foreign cooperative is not precluded from registering to do business in this State because of any difference between the law of its jurisdiction of formation and the law of this State.

(c) Registration of a foreign cooperative to do business in this State does not authorize a the foreign cooperative to engage in any activities and affairs or exercise any power that a limited cooperative association may not engage in or exercise in this State.

Section 1502. Registration to do business in this State.

(a) A foreign cooperative may not do business in this State until it registers with the Secretary of State under this Article.

(b) A foreign cooperative doing business in this State may not maintain an action or proceeding in this State unless it is registered to do business in this State.

(c) The failure of a foreign cooperative to register to do business in this State does not impair the validity of a contract or act of the foreign cooperative or preclude it from defending an action or proceeding in this State.

(d) A limitation on the liability of a member or director of a foreign cooperative is not waived solely because the foreign cooperative does business in this State without registering to do business in this State.

(e) Section 1501(a) and (b) applies even if a foreign cooperative fails to register under this Article.

Section 1503. Foreign registration statement. To register to do business in this State, a foreign cooperative must deliver a foreign registration statement to the Secretary of State for filing. The statement must state:

(1) the name of the cooperative and, if the name does not comply with Section 115, an alternate name adopted pursuant to Section 1506;

(2) that the cooperative is a foreign cooperative;

(3) the cooperative's jurisdiction of formation;

(4) the street and mailing addresses of the cooperative's principal office and, if the law of the cooperative's jurisdiction of formation requires the cooperative to maintain an office in that jurisdiction, the street and mailing addresses of the required office; and

(5) the name and street and mailing addresses of the cooperative's registered agent in this State.

Section 1504. Amendment of foreign registration statement.

A registered foreign cooperative shall deliver to the Secretary of State for filing an amendment to its foreign registration statement if there is a change in:

(1) the name of the cooperative;

(2) the cooperative's jurisdiction of formation;

(3) an address required by Section 1503(4); or

(4) the information required by Section 1503(5).

Section 1505. Activities not constituting doing business.

(a) activities of a foreign cooperative which do not constitute doing business in this State under this Article include:

(1) maintaining, defending, mediating, arbitrating, or settling an action or proceeding;

(2) carrying on any activity concerning its internal affairs, including holding meetings of its members or directors;

(3) maintaining accounts in financial institutions;

(4) maintaining offices or agencies for the transfer, exchange, and registration of securities of the cooperative or maintaining trustees or depositories with respect to those securities;

(5) selling through independent contractors;

(6) soliciting or obtaining orders by any means if the orders require acceptance outside this State before they become contracts;

(7) creating or acquiring indebtedness, mortgages, or security interests in property;

(8) securing or collecting debts or enforcing mortgages or security interests in property securing the debts, and holding, protecting, or maintaining property;

(9) conducting an isolated transaction that is not in the course of similar transactions;

(10) owning, without more, property; and

(11) doing business in interstate commerce.

(b) A person does not do business in this State solely by being a member or director of a foreign cooperative that does business in this State.

(c) This Section does not apply in determining the contacts or activities that may subject a foreign cooperative to service of process, taxation, or regulation under law of this State other than this Act.

Section 1506. Noncomplying name of foreign cooperative.

(a) A foreign cooperative whose name does not comply with Section 111 may not register to do business in this State until it adopts, for the purpose of doing business in this State, an alternate name that complies with Section 115. A cooperative that registers under an alternate name under this subsection need not comply with the Assumed Business Name Act. After registering to do business in this State with an alternate name, a cooperative shall do business in this State under:

(1) the alternate name;

(2) the cooperative's name, with the addition of its jurisdiction of formation; or

(3) a name the cooperative is authorized to use under the Assumed Business Name Act.

(b) If a registered foreign cooperative changes its name to one that does not comply with Section 115, it may not do business in this State until it complies with subsection (a) by amending its registration to adopt an alternate name that complies with Section 115.

Section 1507. Withdrawal of registration of registered foreign cooperative.

(a) A registered foreign cooperative may withdraw its registration by delivering a statement of withdrawal to the Secretary of State for filing. The statement of withdrawal must state:

(1) the name of the cooperative and its jurisdiction of formation;

(2) that the cooperative is not doing business in this State and that it withdraws its registration to do business in this State;

(3) that the cooperative revokes the authority of its registered agent to accept service on its behalf in this State; and

(4) an address to which service of process may be made under subsection (b).

(b) After the withdrawal of the registration of a foreign cooperative, service of process in any action or proceeding based on a cause of action arising during the time the cooperative was registered to do business in this State may be made pursuant to Section 122.

Section 1508. Withdrawal deemed on conversion to domestic filing entity or domestic limited liability partnership. A registered foreign cooperative that converts to a domestic limited liability partnership or to a domestic entity whose formation requires delivery of a record to the Secretary of State for filing is deemed to have withdrawn its registration on the effective date of the conversion.

Section 1509. Withdrawal on dissolution or conversion to nonfiling entity other than limited liability partnership.

(a) A registered foreign cooperative that has dissolved and completed winding up or has converted to a domestic or foreign entity whose formation does not require the public filing of a record, other than a limited liability partnership, shall deliver a statement of withdrawal to the Secretary of State for filing. The statement must be signed by the dissolved or converted foreign cooperative and state:

(1) in the case of a cooperative that has completed winding up:

(A) its name and jurisdiction of formation; and

(B) that the cooperative surrenders its registration to do business in this State; and

(2) in the case of a cooperative that has converted:

(A) the name of the converting cooperative and its jurisdiction of formation;

(B) the type of entity to which the cooperative has converted and its jurisdiction of formation;

(C) that the converted entity surrenders the converting cooperative's registration to do business in this State and revokes the authority of the converting cooperative's registered agent to act as registered agent in this State on behalf of the cooperative or the converted entity; and

(D) a mailing address to which service of process may be made under subsection (b).

(b) After a withdrawal under this Section is effective, service of process in any action or proceeding based on a cause of action arising during the time the foreign cooperative was registered to do business in this State may be made pursuant to Section 122.

Section 1510. Transfer of registration.

(a) When a registered foreign cooperative has merged into a foreign entity that is not registered to do business in this State or has converted to a foreign entity required to register with the Secretary of State to do business in this State, the foreign entity shall deliver to the Secretary of State for filing an application for transfer of registration. The application must state:

(1) the name of the registered foreign cooperative before the merger or conversion;

(2) that before the merger or conversion the registration pertained to a foreign cooperative;

(3) the name of the applicant foreign entity into which the foreign cooperative has merged or to which it has been converted and, if the name does not comply with Section 115, an alternate name adopted pursuant to Section 1506;

(4) the type of entity of the applicant foreign entity and its jurisdiction of formation;

(5) the street and mailing addresses of the principal office of the applicant foreign entity and, if the law of the entity's jurisdiction of formation requires the entity to maintain an office in that jurisdiction, the street and mailing addresses of that office; and

(6) the name and street and mailing addresses of the foreign entity's registered agent in this State.

(b) When an application for transfer of registration takes effect, the registration of the foreign cooperative to do business in this State is transferred without interruption to the foreign entity into which the cooperative has merged or to which it has been converted.

Section 1511. Termination of registration.

(a) The Secretary of State may terminate the registration of a registered foreign cooperative in the manner provided in subsections (b) and (c) if the cooperative does not:

(1) pay, not later than 60 days after the due date, any fee, tax, interest, or penalty required to be paid to the Secretary of State under this Act or law other than this Act;

(2) deliver to the Secretary of State for filing, not later than 60 days after the due date, an annual report required under Section 210;

(3) have a registered agent as required by Section 118; or

(4) deliver to the Secretary of State for filing a statement of change under Section 119 not later than 30 days after a change has occurred in the name or address of the registered agent.

(b) The Secretary of State may terminate the registration of a registered foreign cooperative by:

(1) filing a notice of termination or noting the termination in the records of the Secretary of State; and

(2) delivering a copy of the notice or the information in the notation to the cooperative's registered agent or, if the cooperative does not have a registered agent, to the foreign cooperative's principal office.

(c) The notice must state or the information in the notation must include:

(1) the effective date of the termination, which must be at least 60 days after the date the Secretary of State delivers the copy; and

(2) the grounds for termination under subsection (a).

(d) The authority of a registered foreign cooperative to do business in this State ceases on the effective date of the notice of termination or notation under subsection (b), unless before that date the foreign cooperative cures each ground for termination stated in the notice or notation. If the foreign cooperative cures each ground, the Secretary of State shall file a record so stating.

Section 1512. Action by Attorney General. The Attorney General may maintain an action to enjoin a foreign cooperative from doing business in this State in violation of this Article.

Article 16. MERGER, INTEREST EXCHANGE, CONVERSION

AND DOMESTICATION

Part 1. GENERAL PROVISIONS

Section 1601. Definitions. In this Article:

(1) "Acquired entity" means the entity, all of one or more classes or series of interests of which are acquired in an interest exchange.

(2) "Acquiring entity" means the entity that acquires all of one or more classes or series of interests of the acquired entity in an interest exchange.

(3) "Conversion" means a transaction authorized by Part 4.

(4) "Converted entity" means the converting entity as it continues in existence after a conversion.

(5) "Converting entity" means the domestic entity that approves a plan of conversion pursuant to Section 1643 or the foreign entity that approves a conversion pursuant to the law of its jurisdiction of formation.

(6) "Distributional interest" means the right under an unincorporated entity's organic law and organic rules to receive distributions from the entity.

(7) "Domestic", with respect to an entity, means governed as to its internal affairs by the law of this State.

(8) "Domesticated limited cooperative association" means the domesticating limited cooperative association as it continues in existence after a domestication.

(9) "Domesticating limited cooperative association" means the domestic limited cooperative association that approves a plan of domestication pursuant to Section 1653 or the foreign limited cooperative association that approves a domestication pursuant to the law of its jurisdiction of formation.

(10) "Domestication" means a transaction authorized by Part 5.

(11) "Entity":

(A) means:

(i) a business corporation;

(ii) a nonprofit corporation;

(iii) a general partnership, including a limited liability partnership;

(iv) a limited partnership, including a limited liability limited partnership;

(v) a limited liability company;

(vi) a general cooperative association;

(vii) a limited cooperative association;

(viii) an unincorporated nonprofit association;

(ix) a statutory trust, business trust, or common-law business trust; or

(x) any other person that has:

(I) a legal existence separate from any interest holder of that person;

(II) the power to acquire an interest in real property in its own name;

(B) does not include:

(i) an individual;

(ii) a trust with a predominantly donative purpose or charitable trust;

(iii) an association or relationship that is not an entity listed in subparagraph (A) and is not a partnership under the rules stated in Section 202(c) of the Uniform Partnership Act (1997) or a similar provision of the law of another jurisdiction;

(v) a government or a governmental subdivision, agency, or instrumentality.

(iv) a decedent's estate; or

(12) "Filing entity" means an entity whose formation requires the filing of a public organic record. The term does not include a limited liability partnership.

(13) "Foreign", with respect to an entity, means an entity governed as to its internal affairs by the law of a jurisdiction other than this State.

(14) "Governance interest" means a right under the organic law or organic rules of an unincorporated entity, other than as a governor, agent, assignee, or proxy, to:

(A) receive or demand access to information concerning, or the books and records of, the entity;

(B) vote for or consent to the election of the governors of the entity; or

(C) receive notice of or vote on or consent to an issue involving the internal affairs of the entity.

(15) "Governor" means:

(A) a director of a business corporation;

(B) a director or trustee of a nonprofit corporation;

(C) a general partner of a general partnership;

(D) a general partner of a limited partnership;

(E) a manager of a manager-managed limited liability company;

(F) a member of a member-managed limited liability company;

(G) a director of a general cooperative association;

(H) a director of a limited cooperative association;

(I) a manager of an unincorporated nonprofit association;

(J) a trustee of a statutory trust, business trust, or common-law business trust; or

(K) any other person under whose authority the powers of an entity are exercised and under whose direction the activities and affairs of the entity are managed pursuant to the organic law and organic rules of the entity.

(16) "Interest" means:

(A) a share in a business corporation;

(B) a membership in a nonprofit corporation;

(C) a partnership interest in a general partnership;

(D) a partnership interest in a limited partnership;

(E) a membership interest in a limited liability company;

(F) a share in a general cooperative association;

(G) a member's interest in a limited cooperative association;

(H) a membership in an unincorporated nonprofit association;

(I) a beneficial interest in a statutory trust, business trust, or common-law business trust; or

(J) a governance interest or distributional interest in any other type of unincorporated entity.

(17) "Interest exchange" means a transaction authorized by Part 3.

(18) "Interest holder" means:

(A) a shareholder of a business corporation;

(B) a member of a nonprofit corporation;

(C) a general partner of a general partnership;

(D) a general partner of a limited partnership;

(E) a limited partner of a limited partnership;

(F) a member of a limited liability company;

(G) a shareholder of a general cooperative association;

(H) a member of a limited cooperative association;

(I) a member of an unincorporated nonprofit association;

(J) a beneficiary or beneficial owner of a statutory trust, business trust, or common-law business trust; or

(K) any other direct holder of an interest.

(19) "Interest holder liability" means:

(A) personal liability for a liability of an entity which is imposed on a person:

(i) solely by reason of the status of the person as an interest holder; or

(ii) by the organic rules of the entity which make one or more specified interest holders or categories of interest holders liable in their capacity as interest holders for all or specified liabilities of the entity; or

(B) an obligation of an interest holder under the organic rules of an entity to contribute to the entity.

(20) "Merger" means a transaction authorized by Part 2.

(21) "Merging entity" means an entity that is a party to a merger and exists immediately before the merger becomes effective.

(22) "Organic law" means the law of an entity's jurisdiction of formation governing the internal affairs of the entity.

(23) "Organic rules" means the public organic record and private organic rules of an entity.

(24) "Plan" means a plan of merger, plan of interest exchange, plan of conversion, or plan of domestication.

(25) "Plan of conversion" means a plan under Section 1642.

(26) "Plan of domestication" means a plan under Section 1652.

(27) "Plan of interest exchange" means a plan under Section 1632.

(28) "Plan of merger" means a plan under Section 1622.

(29) "Private organic rules" means the rules, whether or not in a record, that govern the internal affairs of an entity, are binding on all its interest holders, and are not part of its public organic record, if any. The term includes:

(A) the bylaws of a business corporation;

(B) the bylaws of a nonprofit corporation;

(C) the partnership agreement of a general partnership;

(D) the partnership agreement of a limited partnership;

(E) the operating agreement of a limited liability company;

(F) the bylaws of a general cooperative association;

(G) the bylaws of a limited cooperative association;

(H) the governing principles of an unincorporated nonprofit association; and

(I) the trust instrument of a statutory trust or similar rules of a business trust or common-law business trust.

(30) "Protected agreement" means:

(A) a record evidencing indebtedness and any related agreement in effect on the effective date of this Act;

(B) an agreement that is binding on an entity on the effective date of this Act;

(C) the organic rules of an entity in effect on the effective date of this Act; or

(D) an agreement that is binding on any of the governors or interest holders of an entity on the effective date of this Act.

(31) "Public organic record" means the record the filing of which by the Secretary of State is required to form an entity and any amendment to or restatement of that record. The term includes:

(A) the articles of incorporation of a business corporation;

(B) the articles of incorporation of a nonprofit corporation;

(C) the certificate of limited partnership of a limited partnership;

(D) the certificate of organization of a limited liability company;

(E) the articles of incorporation of a general cooperative association;

(F) the articles of organization of a limited cooperative association; and

(G) the certificate of trust of a statutory trust or similar record of a business trust.

(32) "Registered foreign entity" means a foreign entity that is registered to do business in this State pursuant to a record filed by the Secretary of State.

(33) "Statement of conversion" means a statement under Section 1645.

(34) "Statement of domestication" means a statement under Section 1655.

(35) "Statement of interest exchange" means a statement under Section 1635.

(36) "Statement of merger" means a statement under Section 1625.

(37) "Surviving entity" means the entity that continues in existence after or is created by a merger.

(38) "Type of entity" means a generic form of entity:

(A) recognized at common law; or

(B) formed under an organic law, whether or not some entities formed under that organic law are subject to provisions of that law that create different categories of the form of entity.

Section 1602. Relationship of article to other laws.

(a) This Article does not authorize an act prohibited by, and does not affect the application or requirements of, law other than this Article.

(b) A transaction effected under this Article may not create or impair a right, duty, or obligation of a person under the statutory law of this State relating to a change in control, takeover, business combination, control-share acquisition, or similar transaction involving a domestic merging, acquired, converting, or domesticating business corporation unless:

(1) if the corporation does not survive the transaction, the transaction satisfies any requirements of the law; or

(2) if the corporation survives the transaction, the approval of the plan is by a vote of the shareholders or directors which would be sufficient to create or impair the right, duty, or obligation directly under the law.

Section 1603. Required notice or approval.

(a) A domestic or foreign entity that is required to give notice to, or obtain the approval of, a governmental agency or officer of this State to be a party to a merger must give the notice or obtain the approval to be a party to an interest exchange, conversion, or domestication.

(b) Property held for a charitable purpose under the law of this State by a domestic or foreign entity immediately before a transaction under this Article becomes effective may not, as a result of the transaction, be diverted from the objects for which it was donated, granted, devised, or otherwise transferred unless, to the extent required by or pursuant to the law of this State concerning cy pres or other law dealing with nondiversion of charitable assets, the entity obtains an appropriate order of the circuit court specifying the disposition of the property.

(c) A bequest, devise, gift, grant, or promise contained in a will or other instrument of donation, subscription, or conveyance which:

(1) is made to a merging entity that is not the surviving entity; and

(2) takes effect or remains payable after the merger inures to the surviving entity.

(d) A trust obligation that would govern property if transferred to a nonsurviving entity applies to property that is transferred to the surviving entity under this Section.

Section 1604. Nonexclusivity. The fact that a transaction under this Article produces a certain result does not preclude the same result from being accomplished in any other manner permitted by law other than this Article.

Section 1605. Reference to external facts. A plan may refer to facts ascertainable outside the plan if the manner in which the facts will operate upon the plan is specified in the plan. The facts may include the occurrence of an event or a determination or action by a person, whether or not the event, determination, or action is within the control of a party to the transaction.

Section 1606. Appraisal rights. An interest holder of a domestic merging, acquired, converting, or domesticating limited cooperative association is entitled to contractual appraisal rights in connection with a transaction under this Article to the extent provided in the entity's organic rules or the plan.

Section 1621. Merger authorized.

(a) By complying with this Part:

(1) one or more domestic limited cooperative associations may merge with one or more domestic or foreign entities into a domestic or foreign surviving entity; and

(2) two or more foreign entities may merge into a domestic limited cooperative association.

(b) By complying with the provisions of this Part applicable to foreign entities a foreign entity may be a party to a merger under this Part or may be the surviving entity in such a merger if the merger is authorized by the law of the foreign entity's jurisdiction of formation.

Part 2. MERGER

Section 1622. Plan of merger.

(a) A domestic limited cooperative association may become a party to a merger under this Part by approving a plan of merger. The plan must be in a record and contain:

(1) as to each merging entity, its name, jurisdiction of formation, and type of entity;

(2) if the surviving entity is to be created in the merger, a statement to that effect and its name, jurisdiction of formation, and type of entity;

(3) the manner of converting the interests in each party to the merger into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing;

(4) if the surviving entity exists before the merger, any proposed amendments to:

(A) its public organic record, if any; and

(B) its private organic rules that are, or are proposed to be, in a record;

(5) if the surviving entity is to be created in the merger:

(A) its proposed public organic record, if any; and

(B) the full text of its private organic rules that are proposed to be in a record;

(6) the other terms and conditions of the merger; and

(7) any other provision required by the law of a merging entity's jurisdiction of formation or the organic rules of a merging entity.

(b) In addition to the requirements of subsection (a), a plan of merger may contain any other provision not prohibited by law.

Section 1623. Approval of merger.

(a) A plan of merger is not effective unless it has been approved by a domestic merging limited cooperative association as provided in Section 518.

(b) A merger involving a domestic merging entity that is not a limited cooperative association is not effective unless the merger is approved by that entity in accordance with its organic law.

(c) A merger involving a foreign merging entity is not effective unless the merger is approved by the foreign entity in accordance with the law of the foreign entity's jurisdiction of formation.

Section 1624. Amendment or abandonment of plan of merger.

(a) A plan of merger may be amended only with the consent of each party to the plan except as otherwise provided in the plan.

(b) A domestic merging limited cooperative association may approve an amendment to a plan of merger:

(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or

(2) by its directors or members in the manner provided in the plan, but a member that was entitled to vote on or consent to approval of the merger is entitled to vote on or consent to any amendment of the plan that will change:

(A) the amount or kind of interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing, to be received by the members of any party to the plan;

(B) the public organic record, if any, or private organic rules of the surviving entity that will be in effect immediately after the merger becomes effective, except for changes that do not require approval of the interest holders of the surviving entity under its organic law or organic rules; or

(C) any other terms or conditions of the plan, if the change would adversely affect the member in any material respect.

(c) After a plan of merger has been approved and before a statement of merger becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a domestic merging limited cooperative association may abandon the plan in the same manner as the plan was approved.

(d) If a plan of merger is abandoned after a statement of merger has been delivered to the Secretary of State for filing and before the statement becomes effective, a statement of abandonment, signed by a party to the plan, must be delivered to the Secretary of State for filing before the statement of merger becomes effective. The statement of abandonment takes effect on filing, and the merger is abandoned and does not become effective. The statement of abandonment must contain:

(1) the name of each party to the plan of merger;

(2) the date on which the statement of merger was filed by the Secretary of State;

(3) a statement that the merger has been abandoned in accordance with this Section.

Section 1625. Statement of merger; effective date of merger.

(a) A statement of merger must be signed by each merging entity and delivered to the Secretary of State for filing.

(b) A statement of merger must contain:

(1) the name, jurisdiction of formation, and type of entity of each merging entity that is not the surviving entity;

(2) the name, jurisdiction of formation, and type of entity of the surviving entity;

(3) a statement that the merger was approved by each domestic merging entity, if any, in accordance with this Part and by each foreign merging entity, if any, in accordance with the law of its jurisdiction of formation;

(4) if the surviving entity exists before the merger and is a domestic filing entity, any amendment to its public organic record approved as part of the plan of merger;

(5) if the surviving entity is created by the merger and is a domestic filing entity, its public organic record, as an attachment;

(6) if the surviving entity is created by the merger and is a domestic limited liability partnership, its statement of qualification, as an attachment; and

(7) if the surviving entity is a foreign entity that is not a registered foreign entity, a mailing address to which the Secretary of State may send any process served on the Secretary of State pursuant to Section 1626(e).

(c) In addition to the requirements of subsection (b), a statement of merger may contain any other provision not prohibited by law.

(d) If the surviving entity is a domestic entity, its public organic record, if any, must satisfy the requirements of the law of this State, except that the public organic record does not need to be signed.

(e) A plan of merger that is signed by all the merging entities and meets all the requirements of subsection (b) may be delivered to the Secretary of State for filing instead of a statement of merger and on filing has the same effect. If a plan of merger is filed as provided in this subsection, references in this Article to a statement of merger refer to the plan of merger filed under this subsection.

(f) If the surviving entity is a domestic limited cooperative association, the merger becomes effective when the statement of merger is effective. In all other cases, the merger becomes effective on the later of:

(1) the date and provided by the organic law of the surviving entity; or

(2) when the statement is effective.

Section 1626. Effect of merger.

(a) When a merger becomes effective:

(1) the surviving entity continues or comes into existence;

(2) each merging entity that is not the surviving entity ceases to exist;

(3) all property of each merging entity vests in the surviving entity without transfer, reversion, or impairment;

(4) all debts, obligations, and other liabilities of each merging entity are debts, obligations, and other liabilities of the surviving entity;

(5) except as otherwise provided by law or the plan of merger, all the rights, privileges, immunities, powers, and purposes of each merging entity vest in the surviving entity;

(6) if the surviving entity exists before the merger:

(A) all its property continues to be vested in it without transfer, reversion, or impairment;

(B) it remains subject to all its debts, obligations, and other liabilities; and

(C) all its rights, privileges, immunities, powers, and purposes continue to be vested in it;

(7) the name of the surviving entity may be substituted for the name of any merging entity that is a party to any pending action or proceeding;

(8) if the surviving entity exists before the merger:

(A) its public organic record, if any, is amended to the extent provided in the statement of merger; and

(B) its private organic rules that are to be in a record, if any, are amended to the extent provided in the plan of merger;

(9) if the surviving entity is created by the merger, its private organic rules are effective; and:

(A) if it is a filing entity, its public organic record is effective; and

(B) if it is a limited liability partnership, its statement of qualification is effective; and

(10) the interests in each merging entity which are to be converted in the merger are converted, and the interest holders of those interests are entitled only to the rights provided to them under the plan of merger and to any appraisal rights they have under Section 1608 and the merging entity's organic law.

(b) Except as otherwise provided in the organic law or organic rules of a merging entity, the merger does not give rise to any rights that an interest holder, governor, or third party would have upon a dissolution, liquidation, or winding up of the merging entity.

(c) When a merger becomes effective, a person that did not have interest holder liability with respect to any of the merging entities and becomes subject to interest holder liability with respect to a domestic entity as a result of the merger has interest holder liability only to the extent provided by the organic law of that entity and only for those debts, obligations, and other liabilities that are incurred after the merger becomes effective.

(d) When a merger becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic merging limited cooperative association with respect to which the person had interest holder liability is subject to the following rules:

(1) The merger does not discharge any interest holder liability under this Act to the extent the interest holder liability was incurred before the merger became effective.

(2) The person does not have interest holder liability under this Act for any debt, obligation, or other liability that is incurred after the merger becomes effective.

(3) This Act continues to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) as if the merger had not occurred.

(4) The person has whatever rights of contribution from any other person as are provided by this Act, law other than this Act, or the organic rules of the domestic merging limited cooperative association with respect to any interest holder liability preserved under paragraph (1) as if the merger had not occurred.

(e) When a merger becomes effective, a foreign entity that is the surviving entity may be served with process in this State for the collection and enforcement of any debts, obligations, or other liabilities of a domestic merging limited cooperative association as provided in Section 122.

(f) When a merger becomes effective, the registration to do business in this State of any foreign merging entity that is not the surviving entity is canceled.

Part 3. INTEREST EXCHANGE

Section 1631. Interest exchange authorized.

(a) By complying with this Part:

(1) a domestic limited cooperative association may acquire all of one or more classes or series of interests of another domestic entity or a foreign entity in exchange for interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing; or

(2) all of one or more classes or series of interests of a domestic limited cooperative association may be acquired by another domestic entity or a foreign entity in exchange for interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing.

(b) By complying with the provisions of this Part applicable to foreign entities, a foreign entity may be the acquiring or acquired entity in an interest exchange under this Part if the interest exchange is authorized by the law of the foreign entity's jurisdiction of formation.

(c) If a protected agreement contains a provision that applies to a merger of a domestic limited cooperative association but does not refer to an interest exchange, the provision applies to an interest exchange in which the domestic limited cooperative association is the acquired entity as if the interest exchange were a merger until the provision is amended after the effective date of this Act.

Section 1632. Plan of interest exchange

(a) A domestic limited cooperative association may be the acquired entity in an interest exchange under this Part by approving a plan of interest exchange. The plan must be in a record and contain:

(1) the name of the acquired entity;

(2) the name, jurisdiction of formation, and type of entity of the acquiring entity;

(3) the manner of converting the interests in the acquired entity into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing;

(4) any proposed amendments to:

(A) the articles of organization of the acquired entity; and

(B) the organic rules of the acquired entity that are, or are proposed to be, in a record;

(5) the other terms and conditions of the interest exchange; and

(6) any other provision required by the law of this State or the organic rules of the acquired entity.

(b) In addition to the requirements of subsection (a), a plan of interest exchange may contain any other provision not prohibited by law.

Section 1633. Approval of interest exchange.

(a) A plan of interest exchange is not effective unless it has been approved by a domestic converting limited cooperative association as provided in Section 518.

(b) An interest exchange involving a domestic acquired entity that is not a limited cooperative association is not effective unless it is approved by the domestic entity in accordance with its organic law.

(c) An interest exchange involving a foreign acquired entity is not effective unless it is approved by the foreign entity in accordance with the law of the foreign entity's jurisdiction of formation.

(d) Except as otherwise provided in its organic law or organic rules, the interest holders of the acquiring entity are not required to approve the interest exchange.

Section 1634. Amendment or abandonment of plan of interest exchange.

(a) A plan of interest exchange may be amended only with the consent of each party to the plan, except as otherwise provided in the plan.

(b) A domestic acquired limited cooperative association may approve an amendment to a plan of interest exchange:

(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or

(2) by its directors or members in the manner provided in the plan, but a member that was entitled to vote on or consent to approval of the interest exchange is entitled to vote on or consent to any amendment of the plan that will change:

(A) the amount or kind of interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing, to be received by any of the members under the plan;

(B) the organic rules of the acquired association that will be in effect immediately after the interest exchange becomes effective, except for changes that do not require approval of the members of the acquired association under this Act or the organic rules; or

(C) any other terms or conditions of the plan, if the change would adversely affect the member in any material respect.

(c) After a plan of interest exchange has been approved and before a statement of interest exchange becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a domestic acquired limited cooperative association may abandon the plan in the same manner as the plan was approved.

(d) If a plan of interest exchange is abandoned after a statement of interest exchange has been delivered to the Secretary of State for filing and before the statement becomes effective, a statement of abandonment, signed by the acquired limited cooperative association, must be delivered to the Secretary of State for filing before the statement of interest exchange becomes effective. The statement of abandonment takes effect on filing, and the interest exchange is abandoned and does not become effective. The statement of abandonment must contain:

(1) the name of the association;

(2) the date on which the statement of interest exchange was filed by the Secretary of State; and

(3) a statement that the interest exchange has been abandoned in accordance with this Section.

Section 1635. Statement of interest exchange; effective date of interest exchange.

(a) A statement of interest exchange must be signed by a domestic acquired limited cooperative association and delivered to the Secretary of State for filing.

(b) A statement of interest exchange must contain:

(1) the name of the acquired limited cooperative association;

(2) the name, jurisdiction of formation, and type of entity of the acquiring entity;

(3) if the statement of interest exchange is not to be effective upon filing, the later date and time on which it will become effective pursuant to Section 1636;

(4) a statement that the plan of interest exchange was approved by the acquired association in accordance with this Part; and

(5) any amendments to the acquired association's articles of organization approved as part of the plan of interest exchange.

(c) In addition to the requirements of subsection (b), a statement of interest exchange may contain any other provision not prohibited by law.

(d) A plan of interest exchange that is signed by a domestic acquired limited cooperative association and meets all the requirements of subsection (b) may be delivered to the Secretary of State for filing instead of a statement of interest exchange and on filing has the same effect. If a plan of interest exchange is filed as provided in this subsection, references in this Article to a statement of interest exchange refer to the plan of interest exchange filed under this subsection.

(e) An interest exchange becomes effective when the statement of interest exchange is effective.

Section 1636. Effect of interest exchange.

(a) When an interest exchange in which the acquired entity is a domestic limited cooperative association becomes effective:

(1) the interests in the acquired association which are the subject of the interest exchange are converted, and the members holding those interests are entitled only to the rights provided to them under the plan of interest exchange and to any appraisal rights they have under Section 1606;

(2) the acquiring entity becomes the interest holder of the interests in the acquired association stated in the plan of interest exchange to be acquired by the acquiring entity; and

(3) the organic rules of the acquired entity are amended to the extent provided in the statement of interest exchange.

(b) Except as otherwise provided in the organic rules of a domestic acquired limited cooperative association, the interest exchange does not give rise to any rights that a member, director, or third party would have upon a dissolution, liquidation, or winding up of the acquired association.

(c) When an interest exchange becomes effective, a person that did not have interest holder liability with respect to a domestic acquired limited cooperative association and becomes subject to interest holder liability with respect to a domestic entity as a result of the interest exchange has interest holder liability only to the extent provided by the organic law of the entity and only for those debts, obligations, and other liabilities that are incurred after the interest exchange becomes effective.

(d) When an interest exchange becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic acquired limited cooperative association with respect to which the person had interest holder liability is subject to the following rules:

(1) The interest exchange does not discharge any interest holder liability under this Act to the extent the interest holder liability was incurred before the interest exchange became effective.

(2) The person does not have interest holder liability under this Act for any debt, obligation, or other liability that is incurred after the interest exchange becomes effective.

(3) This Act continues to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) as if the interest exchange had not occurred.

(4) The person has whatever rights of contribution from any other person as are provided by this Act, law other than this Act or the organic rules of the acquired association with respect to any interest holder liability preserved under paragraph (1) as if the interest exchange had not occurred.

Part 4. CONVERSION

Section 1641. Conversion authorized.

(a) By complying with this Part, a domestic limited cooperative association may become:

(1) a domestic entity that is a different type of entity; or

(2) a foreign entity that is a different type of entity, if the conversion is authorized by the law of the foreign entity's jurisdiction of formation.

(b) By complying with the provisions of this Part applicable to foreign entities a foreign entity that is not a foreign limited cooperative association may become a domestic limited cooperative association if the conversion is authorized by the law of the foreign entity's jurisdiction of formation.

(c) If a protected agreement contains a provision that applies to a merger of a domestic limited cooperative association but does not refer to a conversion, the provision applies to a conversion of the association as if the conversion were a merger until the provision is amended after the effective date of this Act.

Section 1642. Plan of conversion.

(a) A domestic limited cooperative association may convert to a different type of entity under this Part by approving a plan of conversion. The plan must be in a record and contain:

(1) the name of the converting limited cooperative association;

(2) the name, jurisdiction of formation, and type of entity of the converted entity;

(3) the manner of converting the interests in the converting limited cooperative association into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing;

(4) the proposed public organic record of the converted entity if it will be a filing entity;

(5) the full text of the private organic rules of the converted entity which are proposed to be in a record;

(6) the other terms and conditions of the conversion; and

(7) any other provision required by the law of this State or the organic rules of the converting limited cooperative association.

(b) In addition to the requirements of subsection (a), a plan of conversion may contain any other provision not prohibited by law.

Section 1643. Approval of conversion.

(a) A plan of conversion is not effective unless it has been approved by a domestic converting limited cooperative association as provided in Section 518.

(b) A conversion involving a domestic converting entity that is not a limited cooperative association is not effective unless it is approved by the domestic converting entity in accordance with its organic law.

(c) A conversion of a foreign converting entity is not effective unless it is approved by the foreign entity in accordance with the law of the foreign entity's jurisdiction of formation.

Section 1644. Amendment or abandonment of plan of conversion.

(a) A plan of conversion of a domestic converting limited cooperative association may be amended:

(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or

(2) by its directors or members in the manner provided in the plan, but an interest holder that was entitled to vote on or consent to approval of the conversion is entitled to vote on or consent to any amendment of the plan that will change:

(A) the amount or kind of interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing, to be received by any of the members of the converting association under the plan;

(B) the public organic record, if any, or private organic rules of the converted entity which will be in effect immediately after the conversion becomes effective, except for changes that do not require approval of the interest holders of the converted entity under its organic law or organic rules; or

(C) any other terms or conditions of the plan, if the change would adversely affect the member in any material respect.

(b) After a plan of conversion has been approved by a domestic converting limited cooperative association and before a statement of conversion becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a domestic converting limited cooperative association may abandon the plan in the same manner as the plan was approved.

(c) If a plan of conversion is abandoned after a statement of conversion has been delivered to the Secretary of State for filing and before the statement becomes effective, a statement of abandonment, signed by the entity, must be delivered to the Secretary of State for filing before the statement of conversion becomes effective. The statement of abandonment takes effect on filing, and the conversion is abandoned and does not become effective. The statement of abandonment must contain:

(1) the name of the converting limited cooperative association;

(2) the date on which the statement of conversion was filed by the Secretary of State; and

(3) a statement that the conversion has been abandoned in accordance with this Section.

Section 1645. Statement of conversion; effective date of conversion.

(a) A statement of conversion must be signed by the converting entity and delivered to the Secretary of State for filing.

(b) A statement of conversion must contain:

(1) the name, jurisdiction of formation, and type of entity of the converting entity;

(2) the name, jurisdiction of formation, and type of entity of the converted entity;

(3) if the converting entity is a domestic limited cooperative association, a statement that the plan of conversion was approved in accordance with this Part or, if the converting entity is a foreign entity, a statement that the conversion was approved by the foreign converting entity in accordance with the law of its jurisdiction of formation;

(4) if the converted entity is a domestic filing entity, its public organic record, as an attachment;

(5) if the converted entity is a domestic limited liability partnership, its statement of qualification, as an attachment; and

(6) if the converted entity is a foreign entity, a mailing address to which the Secretary of State may send any process served on the Secretary of State pursuant to Section 1646(e).

(c) In addition to the requirements of subsection (b), a statement of conversion may contain any other provision not prohibited by law.

(d) If the converted entity is a domestic entity, its public organic record, if any, must satisfy the requirements of the law of this State, except that the public organic record does not need to be signed and may omit any provision that is not required to be included in a restatement of the public organic record.

(e) A plan of conversion that is signed by a domestic converting limited cooperative association and meets all the requirements of subsection (b) may be delivered to the Secretary of State for filing instead of a statement of conversion and on filing has the same effect. If a plan of conversion is filed as provided in this subsection, references in this Article to a statement of conversion refer to the plan of conversion filed under this subsection.

(f) If the converted entity is domestic limited cooperative association, the conversion becomes effective when the statement of conversion is effective. In all other cases, the conversion becomes effective on the later of:

(1) the date and time provided by the organic law of the converted entity; or

(2) when the statement is effective.

Section 1646. Effect of conversion.

(a) When a conversion becomes effective:

(1) the converted entity is:

(A) organized under and subject to the organic law of the converted entity; and

(B) the same entity without interruption as the converting entity;

(2) all property of the converting entity continues to be vested in the converted entity without transfer, reversion, or impairment;

(3) all debts, obligations, and other liabilities of the converting entity continue as debts, obligations, and other liabilities of the converted entity;

(4) except as otherwise provided by law or the plan of conversion, all the rights, privileges, immunities, powers, and purposes of the converting entity remain in the converted entity;

(5) the name of the converted entity may be substituted for the name of the converting entity in any pending action or proceeding;

(6) the organic rules of the converted entity are effective; and

(7) the interests in the converting entity are converted, and the interest holders of the converting entity are entitled only to the rights provided to them under the plan of conversion and to any appraisal rights they have under Section 1606.

(b) Except as otherwise provided in the organic rules of a domestic converting limited cooperative association, the conversion does not give rise to any rights that a member, director, or third party would have upon a dissolution, liquidation, or winding up of the converting entity.

(c) When a conversion becomes effective, a person that did not have interest holder liability with respect to the converting entity and becomes subject to interest holder liability with respect to a domestic entity as a result of the conversion has interest holder liability only to the extent provided by the organic law of the entity and only for those debts, obligations, and other liabilities that are incurred after the conversion becomes effective.

(d) When a conversion becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic converting limited cooperative association with respect to which the person had interest holder liability is subject to the following rules:

(1) The conversion does not discharge any interest holder liability under this Act to the extent the interest holder liability was incurred before the conversion became effective.

(2) The person does not have interest holder liability under this Act for any debt, obligation, or other liability that is incurred after the conversion becomes effective;

(3) This Act continues to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) as if the conversion had not occurred.

(4) The person has whatever rights of contribution from any other person as are provided by this Act, law other than this Act, or the organic rules of the domestic converting limited cooperative association with respect to any interest holder liability preserved under paragraph (1) as if the conversion had not occurred.

(e) When a conversion becomes effective, a foreign entity that is the converted entity may be served with process in this State for the collection and enforcement of any of its debts, obligations, and other liabilities as provided in Section 122.

(f) If the converting entity is a registered foreign entity, its registration to do business in this State is canceled when the conversion becomes effective.

(g) A conversion does not require the entity to wind up its affairs and does not constitute or cause the dissolution of the entity.

Part 5. DOMESTICATION

Section 1651. Domestication authorized.

(a) By complying with this Part, a domestic limited cooperative association may become a foreign limited cooperative association if the domestication is authorized by the law of the foreign jurisdiction.

(b) By complying with the provisions of this Part applicable to foreign limited cooperative associations a foreign limited cooperative association may become a domestic limited cooperative association if the domestication is authorized by the law of the foreign limited cooperative association's jurisdiction of formation.

(c) If a protected agreement contains a provision that applies to a merger of a domestic limited cooperative association but does not refer to a domestication, the provision applies to a domestication of the limited cooperative association as if the domestication were a merger until the provision is amended after the effective date of this Act.

Section 1652. Plan of domestication.

(a) A domestic limited cooperative association may become a foreign limited cooperative association in a domestication by approving a plan of domestication. The plan must be in a record and contain:

(1) the name of the domesticating limited cooperative association;

(2) the name and jurisdiction of formation of the domesticated limited cooperative association;

(3) the manner of converting the interests in the domesticating limited cooperative association into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing;

(4) the proposed organic rules of the domesticated limited cooperative association;

(5) the other terms and conditions of the domestication; and

(6) any other provision required by the law of this State or the organic rules of the domesticating limited cooperative association.

(b) In addition to the requirements of subsection (a), a plan of domestication may contain any other provision not prohibited by law.

Section 1653. Approval of domestication.

(a) A plan of domestication of a domestic domesticating limited cooperative association is not effective unless it has been approved as provided in Section 518.

(b) A domestication of a foreign domesticating limited cooperative association is not effective unless it is approved in accordance with the law of the foreign limited cooperative association's jurisdiction of formation.

Section 1654. Amendment or abandonment of plan of domestication.

(a) A plan of domestication of a domestic domesticating limited cooperative association may be amended:

(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or

(2) by its directors or members in the manner provided in the plan, but a member that was entitled to vote on or consent to approval of the domestication is entitled to vote on or consent to any amendment of the plan that will change:

(A) the amount or kind of interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing, to be received by any of the members of the domesticating limited cooperative association under the plan;

(B) the organic rules of the domesticated limited cooperative association that will be in effect immediately after the domestication becomes effective, except for changes that do not require approval of the members of the domesticated limited cooperative association under its organic rules; or

(C) any other terms or conditions of the plan, if the change would adversely affect the member in any material respect.

(b) After a plan of domestication has been approved by a domestic domesticating limited cooperative association and before a statement of domestication becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a domestic domesticating limited cooperative association may abandon the plan in the same manner as the plan was approved.

(c) If a plan of domestication is abandoned after a statement of domestication has been delivered to the Secretary of State for filing and before the statement becomes effective, a statement of abandonment, signed by the domesticating limited cooperative association, must be delivered to the Secretary of State for filing before the statement of domestication becomes effective. The statement of abandonment takes effect on filing, and the domestication is abandoned and does not become effective. The statement of abandonment must contain:

(1) the name of the domesticating limited cooperative association;

(2) the date on which the statement of domestication was filed by the Secretary of State; and

(3) a statement that the domestication has been abandoned in accordance with this Section.

Section 1655. Statement of domestication; effective date of domestication.

(a) A statement of domestication must be signed by the domesticating limited cooperative association and delivered to the Secretary of State for filing.

(b) A statement of domestication must contain:

(1) the name and jurisdiction of formation of the domesticating limited cooperative association;

(2) the name and jurisdiction of formation of the domesticated limited cooperative association;

(3) if the domesticating limited cooperative association is a domestic limited cooperative association, a statement that the plan of domestication was approved in accordance with this Part or, if the domesticating limited cooperative association is a foreign limited cooperative association, a statement that the domestication was approved in accordance with the law of its jurisdiction of formation;

(4) the articles of organization of the domesticated limited cooperative association, as an attachment; and

(5) if the domesticated entity is a foreign limited cooperative association, a mailing address to which the Secretary of State may send any process served on the Secretary of State pursuant to Section 1656(e).

(c) In addition to the requirements of subsection (b), a statement of domestication may contain any other provision not prohibited by law.

(d) The articles of organization of a domestic domesticated limited cooperative association must satisfy the requirements of this Act, but the articles do not need to be signed.

(e) A plan of domestication that is signed by a domestic domesticating limited cooperative association and meets all the requirements of subsection (b) may be delivered to the Secretary of State for filing instead of a statement of domestication and on filing has the same effect. If a plan of domestication is filed as provided in this subsection, references in this Article to a statement of domestication refer to the plan of domestication filed under this subsection.

(f) If the domesticated entity is a domestic limited cooperative association, the domestication becomes effective when the statement of domestication is effective. In all other cases, the domestication becomes effective on the later of:

(1) the date and time provided in the organic law of the domesticated entity; or

(2) when the statement is effective.

Section 1656. Effect of domestication.

(a) When a domestication becomes effective:

(1) the domesticated entity is:

(A) organized under and subject to the organic law of the domesticated entity; and

(B) the same entity without interruption as the domesticating entity;

(2) all property of the domesticating entity continues to be vested in the domesticated entity without transfer, reversion, or impairment;

(3) all debts, obligations, and other liabilities of the domesticating entity continue as debts, obligations, and other liabilities of the domesticated entity;

(4) except as otherwise provided by law or the plan of domestication, all the rights, privileges, immunities, powers, and purposes of the domesticating entity remain in the domesticated entity;

(5) the name of the domesticated entity may be substituted for the name of the domesticating entity in any pending action or proceeding;

(6) the organic rules of the domesticated entity are effective; and

(7) the interests in the domesticating entity are converted to the extent and as approved in connection with the domestication, and the interest holders of the domesticating entity are entitled only to the rights provided to them under the plan of domestication and to any appraisal rights they have under Section 1606.

(b) Except as otherwise provided in the organic law or organic rules of the domesticating entity, the domestication does not give rise to any rights that an interest holder, director, or third party would have upon a dissolution, liquidation, or winding-up of the domesticating entity.

(c) When a domestication becomes effective, a person that did not have interest holder liability with respect to the domesticating limited cooperative association and becomes subject to interest holder liability with respect to a domestic entity as a result of the domestication has interest holder liability only to the extent provided by this Act and only for those debts, obligations, and other liabilities that are incurred after the domestication becomes effective.

(d) When a domestication becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic domesticating limited cooperative association with respect to which the person had interest holder liability is subject to the following rules:

(1) The domestication does not discharge any interest holder liability under this Act to the extent the interest holder liability was incurred before the domestication became effective.

(2) A person does not have interest holder liability under this Act for any debt, obligation, or other liability that is incurred after the domestication becomes effective.

(3) This Act continues to apply to the release, collection or discharge of any interest holder liability preserved under paragraph (1) as if the domestication had not occurred.

(4) A person has whatever rights of contribution from any other person as are provided by this Act, law other than this Act or the organic rules of a domestic domesticating limited cooperative association with respect to any interest holder liability preserved under paragraph (1) as if the domestication had not occurred.

(e) When a domestication becomes effective, a foreign limited cooperative association that is the domesticated association may be served with process in this State for the collection and enforcement of any of its debts, obligations, and other liabilities as provided in Section 122.

(f) If the domesticating limited cooperative association is a registered entity, the registration of the entity is canceled when the domestication becomes effective.

(g) A domestication does not require a domestic domesticating limited cooperative association to wind up its affairs and does not constitute or cause the dissolution of the association.

Article 17. MISCELLANEOUS PROVISIONS

Section 1701. Uniformity of application and construction. In applying and construing this uniform Act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

Section 1702. Relation to Electronic Signatures in Global and National Commerce Act. This Act modifies, limits, and supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit, or supersede Section 101(c) of that Act, 15 U.S.C. Section 7001(c) or authorize electronic delivery of any of the notices described in Section 103(b) of that Act, 15 U.S.C. Section 7003(b).

Section 1703. Savings clause. This Act does not affect an action commenced, or proceeding brought, or right accrued before the effective date of this Act.