The Law of Cooperative
Corporations
University of Arkansas
LLM Program, Agricultural Law, 2007
Fayetteville, Arkansas
April, 2007
James R. Baarda
Operations
“Operations”
• How the business entity is organized
• How the business works
Syllabus: Operations
Membership
1.
2.
3.
Members
Organization control
Boards of directors
Operations
1.
2.
3.
4.
5.
Benefits
Member relationships
Marketing agreements
The patronage refund
Current issues
Operations and Law
• “Organic” cooperative law
• Privately created cooperative law
• Laws applied to all cooperatives
• Laws applied to farmer cooperatives
• Laws with peculiar consequences
• The law of business
• Laws affecting all individuals
Law as Framework
• Statutes
• Articles and bylaws
• Contracts
• Policies
• Management
• Practices
Syllabus: Operations
Cooperative Principles
1. The User-Owner Principle
2. The User-Control Principle
3. The User-Benefits Principle
Membership
1.
2.
3.
Members
Organization control
Boards of directors
Syllabus: Operations
1.
Members
Syllabus: Operations, pp. 1 - 15
Member Defined
• Statutes, articles, bylaws
• Reasons
• Producers of agricultural
products
• Relation to cooperative
Syllabus: Operations, pp. 1 - 2
Common statutory provisions
The term “member” shall include actual members
of associations without capital stock and holders
of common stock in associations organized with
common stock.
The term “person” shall include individuals,
firms, partnerships, corporations, and
associations.
Syllabus: Operations, p. 1
Common statutory provisions
Under terms and conditions prescribed in the
bylaws adopted by it, an association may admit as
members, or issue common stock to, persons only
engaged in the production of agricultural
products to be handled by or through the
association, including the lessees and tenants of
land used for the production of such products and
any lessors and landlords who receive as rent all
or part of the crop raised on the leased premises.
Syllabus: Operations, pp. 1-2
A bylaw provision
Any person, firm, partnership, corporation or
association, including both landlord and tenant in
share tenancies, who is a bona fide producer of
agricultural products in the territory in which the
association is engaged in business, and who agrees
to be a patron of the association, signs a
marketing agreement with the association,
purchases one share of common stock, and meets
such other conditions as may be prescribed by the
board of directors, may become a member of the
association.
Syllabus: Operations, p. 2
Expulsion, Withdrawal
• Reasons for termination
- Eligibility
- Patronage
- Behavior
- Preference
Syllabus: Operations, pp. 3 - 4
A common statutory provision
[Bylaws may provide:]
- The method, time and manner of permitting
members to withdraw or the holders of common
stock to transfer their stock.
- The manner of assignment and transfer of the
interest of members and of the shares of common
stock.
Syllabus: Operations, p. 3
A bylaw provision
In the event the board of directors of the
association shall find, following a hearing, that
any of the common stock of this association has
come into the hands of any person who is not
eligible for membership, or that the holder thereof
has ceased to be an eligible member, or that such
holder has not marketed through the association
the products covered by a marketing agreement
with the association, …
Syllabus: Operations, p. 3
A bylaw provision (cont.)
or not otherwise patronized the association for a
period of __ year(s), or otherwise violated the
articles of incorporation, bylaws, or other
agreements made with the association, the
association may suspend such holder’s rights as a
member and terminate the membership.
Syllabus: Operations, p. 3
Expulsion, Withdrawal
• Transfer
• Procedures
• Rights on termination
• Equitable appraisal
• Payment
Syllabus: Operations, pp. 3 - 4
A common statutory provision
[Bylaws may provide:]
-The automatic suspension of the rights of a
member when he ceases to be eligible to
membership in the association.
- The mode, manner and effect of the expulsion of
a member.
Syllabus: Operations, p. 3
A common statutory provision
- The manner of determining the value of a
member’s interest and provision for its purchase
by the association upon the death or withdrawal
of a member or stockholder, or upon the expulsion
of a member or forfeiture of his membership, or,
at the option of the association, the purchase at a
price fixed by conclusive appraisal by the board
of directors
Syllabus: Operations, p. 3
A common statutory provision
In case of the withdrawal or expulsion of a
member, the board of directors shall equitably
and conclusively appraise his property interests in
the association and shall fix the amount thereof in
money, which shall be paid to him within one year
after such expulsion withdrawal.
Syllabus: Operations, p. 3
A bylaw provision
When a membership is terminated, the
association shall repurchase the member’s share
of common stock for par value. The holder shall
return to the association the certificate evidencing
the holder’s share of stock. If such holder fails to
deliver the certificate, the association may cancel
such certificate on its books and records, and the
certificate is then null and void.
Syllabus: Operations, p. 4
A bylaw provision
A suspended or terminated member shall have no
rights or privileges on account of any stock held,
nor vote or voice in the management of the affairs
of the association other than the right to
participate in accordance with law in case of
dissolution.
Syllabus: Operations, p. 4
Coercion
• Ag. Fair Practices Act, 1967
• Prohibited practices
- Membership §2303(a)
- Refusal to deal §2303(a)
- Discrimination §2303(b)
- Contract §2303(c)
Syllabus: Operations, pp. 4 - 6
Coercion
• Prohibited practices (cont.)
- Bribery §2303(d)
- False reports §2303(e)
- Conspiracy §2303(f)
• Disclaimer §2304
• Enforcement §2305
Syllabus: Operations, pp. 4 - 6
Coercion
• Michigan Law
- Provisions
• Michigan Canners & Freezers
- “Handler” definition
- Effect of Michigan Act
- Pre-emption
• Impact of AFPA
Syllabus: Operations, pp. 6 - 15
2.
Organization control
Syllabus: Operations, pp. 15 - 17
Voting Powers, Procedure
• One member, one vote
• Proportional voting
• Proxy, mail
• Subject matter of votes
- Directors
- Cooperative issues
Syllabus: Operations, pp. 15 - 17
A common statutory provision
No member or stockholder shall be entitled to
more than one vote, regardless of the number of
shares of common stock owned by him.
Syllabus: Operations, p. 15
An articles of incorporation provision
Each member shall hold only one share of
common stock and each eligible holder of
common stock shall be entitled to only one vote in
any meeting of the stockholders upon each matter
submitted to vote at a meeting of the stockholders.
Syllabus: Operations, p. 16
A bylaw provision
Each member shall be entitled to only one vote.
Voting by mail shall not be permitted. Proxy
voting shall be allowed. Each proxy shall be in
writing, and no member shall vote more than one
proxy. Cumulative voting is not permitted.
Syllabus: Operations, p. 16
A common statutory provision
No member in any association without capital
stock shall be entitled to more than one vote, but
the bylaws may provide that such members or the
holders of common stock in an association with
capital stock, may vote upon any or all questions
on a patronage basis.
Syllabus: Operations, p. 17
Voting Powers, Procedure
• Membership meetings
- Regular, special
- Quorum
- Conduct
• Special topics
Syllabus: Operations, p. 17
A common statutory provision
In its bylaws, each association shall provide for
one or more regular meetings annually. The
board of directors shall have the right to call a
special meeting at any time; and ten percent of the
members or stockholders may file a petition
stating the specific business to be brought before
the association and demand a special meeting at
any time. Such meeting must thereupon be called
by the directors.
Syllabus: Operations, p. 17
3.
Boards of directors
Syllabus: Operations, pp. 17 - 42
Mandate
“The affairs of the association shall be managed by
a board of directors … elected by the members
or stockholders from their own number.”
Syllabus: Operations, p. 17
Qualifications
• Cooperative member
• Additional requirements
Syllabus: Operations, pp. 17, 18
Bylaw provisions
Each director shall be a member of this
association in good standing.
No person shall be eligible to be a director if that
person is in competition with, or is affiliated with
any enterprise that is in competition with, the
association.
Syllabus: Operations, pp. 17, 18
Qualifications
• Cooperative member
• Additional requirements
• Public directors
Syllabus: Operations, pp. 17, 18
A common statutory provision
The bylaws may provide that one or more
directors may be appointed by any public official
or commissioner or by the other directors selected
by the members or their delegates. Such directors
shall represent primarily the interest of the
general public in such associations. The director
or directors so appointed need not be members or
stockholders of the association; but shall have the
same powers and rights as other directors.
Syllabus: Operations, pp. 17, 18
Qualifications
• Cooperative member
• Additional requirements
• Public directors
• “Outside” directors
Syllabus: Operations, pp. 17, 18
Structure
• Number on board
• Terms
• Staggered terms
• Term limits
• Board structure
Syllabus: Operations, pp. 17, 18
A bylaw provision
No director after having served for __ consecutive
terms shall be eligible to succeed himself or
herself, but after a lapse of __ years shall again
be eligible.
Syllabus: Operations, pp. 17, 18
Selection Process
• Nomination
• Voting
• Districts, delegates
Syllabus: Operations, pp. 17, 18
A common statutory provision
The bylaws may provide that the territory in
which the association has members shall be
divided into district and the directors shall be
elected according to such districts, either directly
or by district delegates elected by the members in
that district.
Syllabus: Operations, pp. 17, 18
Selection Process
• Nomination
• Voting
• Districts, delegates
• Qualification v. quality
Syllabus: Operations, pp. 17, 18
Directors’ Roles
• Collective or individual
• Authority
• Responsibilities
• Assigned tasks
• Performance
• Liabilities and protections
Syllabus: Operations, pp. 17, 18
Authority
Model Business Corporation Act “All corporate powers shall be exercised by or
under the authority of, and the business and
affairs of the corporation managed by or under
the direction of, its board of directors….”
Authority
• Statutes
• Articles and bylaws
• Other guidance
• Ultimate authority – members
Authority
“The Board of Directors”
Board Responsibilities
1. Representation
2. Policies
3. Hire management
4. Preserve assets
5. Cooperative character
6. Performance assessment
7. Information to members
Syllabus: Operations, p. 19 ref.
Seven Responsibilities
Represent Members
Inform Members
Assess Performance
Establish Policies
Engage Management
Preserve Cooperative
Oversee Assets
Represent Members
• To whom does director owe a duty?
- Individual members
- The cooperative entity
- Is director “representative”?
- Expectations
Represent Members
• Sources of conflict
- Cooperative v. Members
- Member v. Member
- Horizons
- Communication
- Response
Establish Policies
• Subject
- Business
- Detail
- Non-business
• Process
- Formalities
- Implementation
- Oversight
Engage Management
• Choice
- Expertise
- Experience
- Compatibility
- “Philosophy”
Engage Management
• Incentives
- Actual
- Perceived
- Effective
Engage Management
• Bridging the gaps
- Recognizing gaps
- Communication
Engage Management
• Oversight
- Trust
- Duplication of effort
- Independent decisions
- Independent expertise
Engage Management
• Assess performance
- Management
- Cooperative
• Succession
• Replacement
Oversee Assets
• Assets and funds
- Anything of value
- Cooperative’s objectives
- Requirements
- Translation to numbers
- Project analysis
Oversee Assets
• Assets and funds
- Accounting system
- Accountability
- Financial system
- Methods of review
Preserve Cooperative
• What is a cooperative?
- Principles
- Structure
- Operations
- Benefits
- Control
- Finance
Preserve Cooperative
What beliefs make a cooperative?
- Expectations and promises
- Advantages, disadvantages
- Those “little” decisions
- You or your members?
Assess Performance
• What measures?
- Cooperative’s objective
- Multiple objectives
- Objectives re-assessment
Assess Performance
• Implications
- Cooperative v. members
- Member v. member
- Horizons
Inform Members
• Mandates
Inform Members
• Attributes
- Completeness
- Objectivity
- Accuracy
- Accountability
- The Big Picture
- Member education
Seven Responsibilities
Represent Members
Inform Members
Assess Performance
Establish Policies
Engage Management
Preserve Cooperative
Oversee Assets
Assigned Tasks
• American Bar Association, Section
of Business Law, Committee
on Corporate Laws
• American Law Institute
• The Business Roundtable
• National Association of Corporate
Directors
Assigned Tasks
1. Review and monitor performance of the corporation’s
business and its operating, financial and other
corporate plans, strategies and objectives
– and –
change plans and strategies as appropriate.
2. Review and approve the corporation’s financial
objectives, plans, and actions, including significant
capital allocation and expenditures.
Assigned Tasks
3. Review and, where appropriate, approve major changes
in determinations of other major questions of choice
respecting the appropriate auditing principles and
practices to be used in the preparation of the
corporation’s financial statements.
4. Recognize and approve material transactions not in the
ordinary course of business.
Assigned Tasks
5. Adopt policies of ethical conduct and monitor compliance
with those policies and with applicable laws and
regulations.
6. Choose, set goals for, regularly evaluate and establish the
compensation of the CEO and the most senior
executives, and make changes in senior management
when appropriate.
Assigned Tasks
7. Develop, approve, and implement succession plans for the
CEO and the most senior executives.
8. Understand the risk profile of the corporation and review
and oversee risk management programs.
9. Understand the corporation’s financial statements and
monitor the adequacy of its financial and other
internal controls as well as its disclosure controls and
procedures.
Assigned Tasks
10. Review the process of providing adequate and timely
financial and operational information to the
corporation’s decision makers (including directors)
and shareholders.
11. Establish the composition of the board and its
committees, including choosing director nominees
who will bring appropriate expertise and
perspectives to the board, recognizing the role of
independent directors.
Assigned Tasks
12. Evaluate the procedures, operations, and overall
effectiveness of the board and its committees.
13. Advise management on significant issues facing the
corporation.
Assigned Tasks
Summary of tasks:
1. Make major decisions
2. Monitor company and management performance
3. Advise and counsel management
An Effective Board
Oversight
Monitor
Management
Supervise
Decide
Policy
Mechanics
Decision Focus
Conservative
Progressive
Decision Style
Brief
Detailed
Information Used
Members
Management
Communication
Simple
Complicated
Decision Analysis
Defensive
Offensive
Decision Emphasis
Immediate
Long-term
Decision Horizon
Service
Results Focus
Profit
Minor
Fatal
Decision Implications
Director Performance
•
•
•
•
•
Standards of conduct
Duty of obedience
Duty of care
Duty of loyalty
Business judgment rule
Syllabus: Operations, p. 19 ref.
Standards of Conduct
“Fiduciary” duty
Standards of Conduct
Duty of Care
Duty of Loyalty
Conflicts of Interest
Business Judgment Rule
Duty of Care
A statutory definition
“Care that a person in like position would reasonably
believe appropriate under similar circumstances.”
Duty of Care
• “Good faith”
• Diligence
- Time and attention
- Skills
Duty of Care
• Knowledge and information
- Core competence
- Specific knowledge
Authority
Key Documents
Board minutes
Government filings
Core business
Product lines
Financial matters
Business arrangements
Special issues
Duty of Care
• Knowledge and information
- Reliance on management
- Justification
- Limits
- Generation of information
- Personal responsibility
Duty of Care
• Knowledge and information
- Duty to inquire
- Identifying red flags
• Duty of obedience
- Company violation of law
- Laws, rules, and directors
- Employee behavior
Duty of Care
• Disclosure
• Inaction
• Training and development
• Reliance on legal counsel
Duty of Loyalty
• Best interests of the company
• Duty of “fair dealing”
• Use of company –
- Property
- Position
- Information
• Company opportunities
Duty of Loyalty
• No personal profit
• No personal advantage
Conflicts of Interest
• Sources of conflict
- Private interests
- Personal benefit
- Special information
Conflicts of Interest
• “Safe harbors”?
- Identification, disclosure
- Other director approval
- Member approval
- Establish “fairness”
Business Judgment Rule
• Description
• Rationale
• Focus on “process”
• Prerequisites
- Good faith
- Rational belief in benefit
- No recklessness, indifference
Business Judgment Rule
American Law Institute – Information and Process
1. Importance of business decision
2. Time available for obtaining information
3. Costs of obtaining information
4. Directors’ confidence in those exploring matter
and making presentation
5. State of company’s business at the time
6. Competing demands for board’s attention
Standards of Conduct
Duty of Care
Duty of Loyalty
Conflicts of Interest
Business Judgment Rule
Liabilities
• Personal concerns
• Indemnification
- Statutes
- Cooperative policy
• Insurance
Syllabus: Operations, pp. 19 - 22
Special Cooperative Issues
•
•
•
•
•
Financial matters
Special events
Cooperative performance
Balancing interests
Conflicts of interest
Syllabus: Operations, pp. 19 - 22
Board Operation
•
•
•
•
•
Meeting procedures
Minutes and formalities
Audits and financials
Board-management relations
Role of counsel
Syllabus: Operations, pp. 19 - 22
Director Removal
• Reasons
- Qualification
- Conduct
- Statutes and bylaws
• Process
- Notification
- Replacement
Syllabus: Operations, pp. 19 - 22
A common statutory provision
Any member may bring charges against an officer
or director by filing them in writing with the
secretary of the association, together with a
petition signed by five percent of the members,
requesting the removal of the officer or director in
question.
Syllabus: Operations, pp. 29 - 30
A common statutory provision
The removal shall be voted upon at the next
regular or special meeting of the association and
by a vote of a majority of the members, the
association may revolve the officer or director and
fill the vacancy.
Syllabus: Operations, pp. 29 - 30
A common statutory provision
The director or officer against whom such charges
have been brought, shall be informed in writing of
the charges previous to the meeting and shall have
an opportunity at the meeting to be heard in
person or by counsel and to present witnesses;
and the person or persons bringing the charges
against him shall have the same opportunity.
Syllabus: Operations, pp. 29 - 30
Membership
1.
2.
3.
Members
Organization control
Boards of directors
Operations
1.
2.
3.
4.
5.
Benefits
Member relationships
Marketing agreements
The patronage refund
Current issues
Syllabus: Operations, pp. 30 - 61
1.
Benefits
Syllabus: Introduction
Benefits
•
•
•
•
Range of purposes
Prices, services
Value to farming operations
Direct monetary benefits
Syllabus: Introduction
2.
Member relationships
Syllabus: Operations
Member Relationships
• Multiple relationships
• Market, supply, service
• Capturing benefits
- Buy-sell, spot price
- Contracted production
- Integrated production
Syllabus: Operations
Member Relationships
• Formality of relationship
- Transactional
- Membership, bylaws
- Short-term contractual
- Long-term contractual
Syllabus: Operations
3.
Marketing agreements
Syllabus: Operations, pp. 30 - 37
What Every Contract Does
1. Parties
2. Product
3. Compensation
4. Performance
5. Risk
6. Ownership
7. Enforcement
Product Delivery
•
•
•
•
•
Integrated production
Amount
Land
Proportion of crop
Identity preservation
Syllabus: Operations, pp. 31 - 36
Delivery Conditions
•
•
•
•
Time
Place
Mode
Transportation
Syllabus: Operations, pp. 31 - 36
Payment
• Price
- Market
- Percentage of market
• Advance
• Remainder
• Risk management
Syllabus: Operations, pp. 31 - 36
The Product
•
•
•
•
•
Grade
Quality
Adulteration
Genetics
Production conditions
Syllabus: Operations, pp. 31 - 36
Contract Failure
•
•
•
•
•
•
Reasons, justification
Damages, scope & degree
Liquidated damages
Procedures
Statutory provisions
Ag. Fair Practices Act
Syllabus: Operations, pp. 31 - 36
A common statutory provision
The bylaws or the marketing contract may fix, as
liquidated damages … and may further provide
that the member will pay all costs, premiums for
bonds, expenses and fees, …
And such clauses providing for liquidated
damages shall be enforceable as such and shall
not be regarded as penalties.
Syllabus: Operations, p. 36
A common statutory provision
In the event of any such breach or threatened
breach of such marketing contract by a member,
the association shall be entitled to an injunction to
prevent the further breach of the contract and a
decree of specific performance thereof.
Pending [adjudication] … the association shall be
entitled to a temporary restraining order and
preliminary injunction against the member.
Syllabus: Operations, p. 36
A common statutory provision
Misdemeanor to induce breach of marketing
contract; spreading false reports about the
finances or management thereof.
Warehousemen liable for damages for
encouraging or permitting delivery of products in
violation of marketing agreement.
Syllabus: Operations, p. 37
Contract Failure
W.N. Bergeron & Sons
Syllabus: Operations, pp. 38 - 40
Contract Failure
Goshen I
Syllabus: Operations, pp. 40 - 43
Contract Failure
Goshen II
Syllabus: Operations, pp. 43 - 44
4.
The patronage refund
Syllabus: Operations, pp. 44 - 57
Investment
Operations
Finance
Purchases
Current Assets
Administrative Expenses
Investments
Physical Assets
Short-term
Liabilities
Long-term
Liabilities
Financing Expenses
Plant,
Property
Equipment
Equity
Sales
Net Margins
The General Process
1. Gross income
2. Cost of sales
3. Administrative expenses
4. Compensation to capital
5. Net margins
Syllabus: Operations, pp. 49 - 58
Net Margins
Gross income from commodity sales
$100,000
Cost of goods sold
Beginning Inventory
Purchases
$5,000
$81,000
Goods available for sale
Ending inventory
Cost of goods sold
Other expenses
Total costs and expenses
Net margins
$86,000
$6,000
$80,000
$10,000
$90,000
$10,000
Syllabus: Operations, p. 50
Documentation
•
•
•
•
•
•
Statutes
Bylaws
Marketing agreement
Policies
Practices
Flexibility v. certainty
Patronage Refunds
Patron
Sales to
Cooperative
Percentage of
Total
A
$20,000
24.69
B
$10,000
12.35
C
$25,000
30.86
D
$12,000
14.81
E
$14,000
17.28
Syllabus: Operations, p. 50
Patronage Refunds
Patron
Sales to
Cooperative
Percentage of
Total
Patronage
Refund
A
$20,000
24.69
$2,469
B
$10,000
12.35
$1,235
C
$25,000
30.86
$3,086
D
$12,000
14.81
$1,481
E
$14,000
17.28
$1,728
Syllabus: Operations, p. 50
A bylaw provision
The association shall at all times be operated on a
cooperative service-at-cost basis for the mutual
benefit of its member patrons.
Syllabus: Operations, p. 49
A bylaw provision
In order to induce patronage and to assure that
this association will operate on a service-at-cost
basis in all its transactions with its members, the
association is obligated to account on a patronage
basis to all member patrons on an annual basis
for all amounts received from business conducted
with members on a patronage basis, over and
above the cost of providing such services, making
reasonable additions to reserves ….
Syllabus: Operations, p. 49
A bylaw provision
Such allocation shall be on the basis of the volume
(or dollar value) of product marketed through
(and/or purchased from) the association.
Syllabus: Operations, p. 49
A bylaw provision
The association is hereby obligated to pay all such
amounts to the patrons in cash or by credits to a
capital account of each member patron.
Syllabus: Operations, p. 49
5.
Current issues
Complications
• Multiple products
• Value added
• Pooling
• Calculations and bookkeeping
Syllabus: Operations, pp. 50 - 56
Losses
Syllabus: Taxation discussion
Net Margins
Gross income from commodity sales
$100,000
Cost of goods sold
Beginning Inventory
Purchases
$5,000
$81,000
Goods available for sale
Ending inventory
Cost of goods sold
Other expenses
Total costs and expenses
Net margins
$86,000
$6,000
$80,000
$10,000
$90,000
$10,000
Syllabus: Operations, p. 49
Net Margins
Gross income from commodity sales
$85,000
Cost of goods sold
Beginning Inventory
Purchases
$5,000
$81,000
Goods available for sale
Ending inventory
Cost of goods sold
Other expenses
Total costs and expenses
Net margins
$86,000
$6,000
$80,000
$10,000
$90,000
$10,000
Net Margins
Gross income from commodity sales
$85,000
Cost of goods sold
Beginning Inventory
Purchases
$5,000
$81,000
Goods available for sale
Ending inventory
Cost of goods sold
Other expenses
Total costs and expenses
Net margins
$86,000
$6,000
$80,000
$10,000
$90,000
$5,000
$5,000
Handling Losses
• Can a cooperative have a loss?
• Losses and principles
• “Overpayment” view
Syllabus: Taxation, pp. 143 - 174
Losses
• “Symmetry”
Net Margins
Gross income from commodity sales
$85,000
Cost of goods sold
Beginning Inventory
Purchases
$5,000
$81,000
Goods available for sale
Ending inventory
Cost of goods sold
Other expenses
Total costs and expenses
Net margins
$86,000
$6,000
$80,000
$10,000
$90,000
$5,000
Losses
• “Symmetry”
• Allocation of losses
• Recouping losses
• The decisions
• Documentation
A bylaw provision
In the event the association suffers a loss during
any year on business conducted with or for
patrons, such loss may be apportioned among the
patrons during the year of loss so that such loss
will, to the extent practicable, be borne by the
patrons of the loss year on an equitable basis.
Syllabus: Operations, p. 57
A bylaw provision
The board shall have full authority to prescribe
the basis on which capital furnished by patrons
may be reduced or such loss otherwise equitably
apportioned among the patrons. In the event of a
patronage loss in one or more departments or
divisions of the operation of this association …
such loss or losses may be prorated against each
of the remaining profitable departments ….
Syllabus: Operations, p. 57
Additional Issues
• Fairness – equitable or equal
• Netting and sharing
• Expectations
• Non-member business
• Non-patronage business
Syllabus: Operations
Additional Issues
• Decision-making process
• Pittman v. Groveowners
Cooperative
• Attorney/counselor roles
Syllabus: Operations, pp. 57 - 61
Operations
1.
2.
3.
4.
5.
Benefits
Member relationships
Marketing agreements
The patronage refund
Current issues
Formation
1.
2.
Process
Counselor roles
Syllabus: Operations, pp. 61 - 79
1.
Process
1. Exploratory meeting(s)
2. Steering committee
3. Surveys, analyses
4. Financial analysis
5. Incorporation
6. Implementation
Syllabus: Operations, pp. 61 - 79
2.
Counselor roles
• Timing
• Organizational alternatives
• Legal issues
• Business questions
• Decision facilitation
• Documentation
• Oversight