Bill Text: IA SSB3124 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to multiple housing cooperatives, including by providing for the conversion to a cooperative under the Iowa cooperative associations Act and merger with a limited liability company.(See SF 2310.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2022-02-16 - Committee report approving bill, renumbered as SF 2310. [SSB3124 Detail]
Download: Iowa-2021-SSB3124-Introduced.html
Senate
Study
Bill
3124
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
SCHULTZ)
A
BILL
FOR
An
Act
relating
to
multiple
housing
cooperatives,
including
1
by
providing
for
the
conversion
to
a
cooperative
under
the
2
Iowa
cooperative
associations
Act
and
merger
with
a
limited
3
liability
company.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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Section
1.
Section
489.102,
subsection
6,
Code
2022,
is
1
amended
to
read
as
follows:
2
6.
“Domestic
cooperative”
means
an
entity
organized
on
a
3
cooperative
basis
under
chapter
497
,
498
,
or
499
,
a
cooperative
4
organized
under
chapter
499A,
or
a
cooperative
organized
under
5
chapter
501
or
501A
.
6
Sec.
2.
Section
501A.102,
subsections
10
and
26,
Code
2022,
7
are
amended
to
read
as
follows:
8
10.
“Domestic
cooperative”
means
a
cooperative
association
9
or
other
cooperative
organized
under
this
chapter
or
chapter
10
497
,
498
,
499
,
499A,
or
501
.
11
26.
“Traditional
cooperative”
means
a
cooperative
or
12
cooperative
association
organized
under
chapter
497
,
498
,
499
,
13
499A,
or
501
.
14
EXPLANATION
15
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
16
the
explanation’s
substance
by
the
members
of
the
general
assembly.
17
BACKGROUND.
This
bill
amends
provisions
in
the
Iowa
18
cooperative
associations
Act
(ICAA)
(Code
chapter
501A)
that
19
allows
a
cooperative
association
organized
under
that
Code
20
chapter
(501A
cooperative)
to
operate
as
a
hybrid
between
an
21
entity
organized
on
a
cooperative
basis
and
a
limited
liability
22
company
(LLC)
that
operates
on
principles
of
investment
and
the
23
return
of
profits
(distributions)
to
investor-owners
(members)
24
under
the
revised
uniform
limited
partnership
Act
(RULPA)
(Code
25
section
489.102(24)).
A
501A
cooperative
is
organized
to
26
produce,
store,
process,
and
market
agricultural
commodities
27
(Code
section
501A.501).
28
Under
general
principles
of
agricultural
cooperative
law,
29
shares
of
common
stock
(memberships)
must
be
held
by
patrons,
30
and
specifically
persons
who
meet
certain
requirements:
31
(1)
producing
a
product
marketed
by
the
association,
(2)
32
customarily
consuming
or
using
the
supplies
or
commodities
33
that
the
association
handles,
or
(3)
using
the
services
that
34
the
association
renders.
Savings
(margins)
generated
from
35
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these
arrangements
(patronage)
are
refunded
to
members
or
used
1
to
provide
capital
for
the
cooperative’s
operations.
Thus,
2
an
important
restriction
is
based
on
a
principle
of
member
3
participation,
control,
and
benefits
which
also
restricts
4
outside
investment.
Under
the
ICAA,
an
investor
(nonpatron
5
member)
is
allowed
to
hold
a
nonpatron
membership
interest
in
6
the
domestic
cooperative
(Code
section
501A.102)
which
may
7
involve
limited
member
voting
rights
(Code
section
501A.810).
8
The
ICAA
provides
for
traditional
cooperatives
which
9
are
agricultural
cooperatives
organized
under
Code
chapters
10
497,
498,
499,
and
501.
A
domestic
cooperative
includes
a
11
501A
cooperative
as
well
as
a
traditional
cooperative.
The
12
ICAA
allows
a
traditional
cooperative
to
convert
into
a
13
501A
cooperative
and
for
a
501A
cooperative
or
traditional
14
cooperative
to
consolidate
or
merge
with
an
LLC
(Code
section
15
501A.1101).
Code
chapter
489
also
provides
that
a
domestic
16
cooperative
(defined
in
the
same
manner
as
in
Code
chapter
17
501A)
may
merge
with
an
LLC
(Code
section
489.1015).
In
the
18
case
of
a
merger
of
a
domestic
cooperative
with
an
LLC,
the
19
converting
domestic
cooperative
must
comply
with
requirements
20
in
the
ICAA
(Code
section
501A.1101)
and
the
RULPA
(Code
21
sections
489.1002
through
489.1005)
which
includes
the
adoption
22
of
a
plan
of
merger.
23
BILL’S
PROVISIONS.
The
bill
provides
for
a
nonagricultural
24
cooperative
organized
for
purposes
of
owning
multiple
25
housing
residential
properties
under
Code
chapter
499A
(499A
26
cooperative).
The
bill
provides
that
a
499A
cooperative
27
is
defined
as
both
a
traditional
and
domestic
cooperative
28
under
the
ICAA
and
as
a
domestic
cooperative
under
the
RULPA.
29
However,
the
bill
does
not
amend
a
number
of
corresponding
30
provisions
in
the
ICAA
relating
to
domestic
business
entities,
31
foreign
cooperatives,
securities
and
liens
held
in
connection
32
with
a
conversion,
and
a
501A’s
organizational
purposes.
33
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