Bill Text: AZ HB2614 | 2016 | Fifty-second Legislature 2nd Regular | Chaptered
Bill Title: Cooperative associations
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2016-05-18 - Chapter 349 [HB2614 Detail]
Download: Arizona-2016-HB2614-Chaptered.html
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Senate Engrossed House Bill |
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State of Arizona House of Representatives Fifty-second Legislature Second Regular Session 2016
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CHAPTER 349
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HOUSE BILL 2614 |
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AN ACT
amending sections 10-2001, 10-2003, 10‑2004, 10-2005, 10-2008, 10-2016, 10‑2018, 10‑2020, 10‑2025 and 10-2026, Arizona Revised Statutes; relating to cooperative associations.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Heading change
The chapter heading of title 10, chapter 19, Arizona Revised Statutes, is changed from "CORPORATIONS AND ASSOCIATIONS NOT FOR PROFIT" to "NOT FOR PROFIT CORPORATIONS AND ASSOCIATIONS, COOPERATIVES AND FRATERNAL AND BENEVOLENT SOCIETIES".
Sec. 2. Section 10-2001, Arizona Revised Statutes, is amended to read:
10-2001. Definitions
In this article, unless the context otherwise requires:
1. "Active member" is a member growing a product, producing, manufacturing, marketing, distributing or selling products or services handled by the association at the time of the membership meeting, or who during the previous year, delivered products or services to the association.
2. "Agricultural products" includes horticultural, viticultural, forestry, dairy, livestock, poultry, bee and any farm products.
3. "Association" means a corporation organized under the provisions of this article.
4. "Marketing agreement" or "marketing contract" means any agreement entered into between an association organized under this article and its members, by the terms of which a subscribing grower, producer, manufacturer, marketer, distributor or seller and all other growers, producers, manufacturers, marketers, distributors or sellers signing similar agreements, agree to sell their agricultural products or services, goods for import or export purposes to or through such association.
5. "Member" includes members of associations.
Sec. 3. Section 10-2003, Arizona Revised Statutes, is amended to read:
10-2003. Requirements for formation; association profits
A. Five or more persons engaged in the production of agricultural products The following may form a nonprofit, cooperative association with or without capital stock under the provisions of this article: .
1. Five or more persons engaged in the production of products or services.
2. Five or more small businesses, individuals or entities engaged in the marketing and distribution of manufactured goods for import and export purposes.
B. Associations organized under this article shall not may make profits for themselves or for their members, but only for their members as producers.
Sec. 4. Section 10-2004, Arizona Revised Statutes, is amended to read:
10-2004. Articles of incorporation; amendments
A. Articles of incorporation shall be filed setting forth:
1. The name of the association.
2. The purposes for which it is formed.
3. The place where its principal business will be transacted.
4. The term for which it is to exist.
5. The number of directors thereof, which shall not be less than five, and their term of office.
6. A statement indicating whether the association will be a for-profit association or a nonprofit association.
7. If the association will be a for-profit association and will have capital stock, a statement indicating the number of shares that the association is authorized to issue.
B. The articles shall be subscribed and filed in accordance with the provisions of general corporation law.
C. The articles of incorporation may be altered or
amended at a regular meeting, or at a special meeting called for that purpose,
by the affirmative vote of a majority of the active members of the association,
and on at least thirty days days' notice in writing of
the proposed alteration or amendment. Amendments to the articles
when adopted shall be filed as required by law.
Sec. 5. Section 10-2005, Arizona Revised Statutes, is amended to read:
10-2005. Powers of association
An association incorporated under this article may:
1. Engage in any activity in connection with the manufacturing, marketing, harvesting, processing, storing, handling or utilization of agricultural products or their by‑products delivered to it services, or the providing of labor, or in connection with the purchase, hiring or use by its patrons of supplies, machinery or equipment, or in the financing of any such activities, but the associations shall not deal in the products of nonmembers to an amount greater in value than that of products handled for members.
2. Borrow money and make advances on products delivered.
3. Act as the agent or representative of any member or patron in such activities.
4. Acquire, hold, own and exercise all rights of ownership in, and sell, transfer or pledge shares of the capital stock or bonds, or become a member or a stockholder of any corporation or association engaged in a related activity or in the handling, marketing or financing of any products handled by the association, but stocks, bonds or other securities owned by a subsidiary may not be pledged, sold or otherwise disposed of until thirty days notice has been given to all members of the association in the manner provided by its bylaws. Such stock, bonds and other securities of a subsidiary may be placed with the state treasurer for safe keeping, and he shall not surrender them until proof of notice as required by this article has been given.
5. Establish reserves and invest the funds thereof in stocks and bonds of any corporation or association engaged in a related activity, or in the handling, marketing, processing or financing of the products handled by the association, or in such other property as the board of directors of the association deems satisfactory.
6. Do any act necessary to carry out the specific powers conferred by this article, and do such acts within or without the state.
7. Possess the powers, rights and privileges of corporations organized under the general law of the state, unless inconsistent with this article.
8. Engage in any activity in connection with the marketing or distribution of manufactured goods for import and export purposes or the providing of labor, in connection with the purchase, hiring or use by the association's patrons of supplies, machinery or equipment, or in connection with the financing of any such activities, but the association may not deal in the products of nonmembers to an amount greater in value than that of products handled for members.
9. Engage in any activity involving the harvesting, processing, storing, handling or use of products for the production, manufacturing and sale of products or services or the providing of labor, in connection with the purchase, hiring or use by the association's patrons of supplies, machinery or equipment, or in connection with the financing of any such activities, but the association may not deal in the products of nonmembers to an amount greater in value than that of products handled for members.
10. Raise equity from nonprofit investors and patron members.
Sec. 6. Section 10-2008, Arizona Revised Statutes, is amended to read:
10-2008. Eligibility for membership
Under the terms and conditions prescribed in its by‑laws bylaws, an association may admit as members persons engaged in production of the agricultural products or services to be handled by or through the association, including lessees and tenants of land used for production of such products, lessors and landlords who receive as rent part of the crop raised or products created on the leased premises and persons or corporations regularly engaged in financing such production of the agricultural commodities.
Sec. 7. Section 10-2016, Arizona Revised Statutes, is amended to read:
10-2016. Marketing contracts; remedies for breach
A. The association and its members may make and execute marketing contracts requiring the members to sell, for any period of time not over ten years, all or any specified part of their agricultural products, or their specified commodities, or their manufactured goods exclusively to or through the association or its facilities.
B. The membership contract may provide for membership for a longer period than ten years but not exceeding thirty years, if the contract provides opportunity to the members for withdrawal at least once each year.
C. The contract may provide that the association may sell the products of its members, with or without taking title thereto, and pay to its members the average sale price based on grade and quantity, after deducting all necessary selling, overhead and other costs and expenses.
D. When provided in the by‑laws bylaws, the marketing contract may fix, as liquidated damages, specific sums to be paid by the members to the association upon the breach by him of any provision of the marketing contract regarding the sale or delivery or withholding of products, and that the member will pay all costs, premiums for bonds, expenses and fees if an action is brought upon the contract by the association, and such provision shall be valid and enforceable in the courts.
E. In event of a breach, or threatened breach, of the marketing contract by a member, the association may apply for an injunction to prevent the further breach of the contract, and to enforce specific performance thereof.
Sec. 8. Section 10-2018, Arizona Revised Statutes, is amended to read:
10-2018. Investments; limitation; disposition of profits
A. An association may organize, form, operate, own, control, have an interest in, own stock of or be a member of any other corporation, with or without capital stock, engaged in processing, handling, utilizing, manufacturing, marketing, financing or selling agricultural products or services handled by the association, or the by‑products thereof.
B. Profits or income received from the investments provided for in subsection A may be added to the reserves of the association to be distributed or handled according to the discretion of the board of directors.
C. An association may enter into agreements and arrangements with another cooperative corporation or association formed in this or any other state for the cooperative and more economical carrying on of its business, or any part thereof. Any two or more associations may by agreement unite in employing and using the same methods, means and agencies for conducting their businesses.
Sec. 9. Section 10-2020, Arizona Revised Statutes, is amended to read:
10-2020. License and other fees; tax exemption
Each association shall pay a nonrefundable annual license fee of ten dollars, but . A nonprofit agricultural products association formed pursuant to this article shall be exempt from all franchise or license taxes imposed on its income. Each association shall pay a nonrefundable fee of ten dollars for filing articles of incorporation and a nonrefundable fee of two dollars fifty cents for filing an amendment to the articles. All other for-profit association filing, service and copying fees are determined pursuant to section 10-122 and all other nonprofit association filing, service and copying fees are determined pursuant to section 10‑3122.
Sec. 10. Section 10-2025, Arizona Revised Statutes, is amended to read:
10-2025. Security law; applicability
Title 44, chapter 12 does not apply to the issuance of membership certificates or other evidence of member interest, equity or contribution by any association organized pursuant to this article. applies only to a COOPERATIVE association that is formed under this article if either:
1. The cooperative association is formed with capital stock.
2. The cooperative association exercises its powers pursuant to section 10-2005, paragraph 10.
Sec. 11. Section 10-2026, Arizona Revised Statutes, is amended to read:
10-2026. Merger, interest exchange, conversion, domestication or division; definitions
A. A domestic cooperative marketing association may be a party to or otherwise undertake a merger, an interest exchange, a conversion, a domestication or a division by complying with chapter 34 of this title and title 29, chapter 6.
B. If a domestic cooperative marketing association is to be created in a merger, a conversion, a domestication or a division, the initial members of the association must consist of any of the following:
1. Five or more persons engaged in the production of agricultural products in accordance with pursuant to section 10‑2003, subsection A.
2. Five or more small businesses, individuals or entities engaged in the marketing and distribution of manufactured goods for import and export purposes.
3. Five or more persons for the purpose of producing, manufacturing and selling goods or services.
C. For the purposes of this section, references in chapter 34 of this title to a "corporation" are deemed references to a domestic cooperative marketing association.
D. For the purposes of this section:
1. "Conversion" means a transaction authorized by title 29, chapter 6, article 4.
2. "Division" means a transaction authorized by title 29, chapter 6, article 6.
3. "Domestication" means a transaction authorized by title 29, chapter 6, article 5.
4. "Interest exchange" means a transaction authorized by title 29, chapter 6, article 3.
5. "Merger" means a transaction authorized by title 29, chapter 6, article 2.
APPROVED BY THE GOVERNOR MAY 18, 2016.
FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 18, 2016.
