Bill Text: IL SB2147 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: 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.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Failed) 2021-01-13 - Session Sine Die [SB2147 Detail]

Download: Illinois-2019-SB2147-Introduced.html

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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.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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

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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

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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.

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(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.

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(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

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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.

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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

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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.

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(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)

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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;

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(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

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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,

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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

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(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;

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(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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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;

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(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

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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

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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

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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.

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(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,

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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,

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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:

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(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

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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

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(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

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(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

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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

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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

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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

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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

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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.

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(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

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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

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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

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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

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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;

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(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

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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

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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:

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(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

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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

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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).

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(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

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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

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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

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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.

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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

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(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.

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(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

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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.

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(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

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(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.

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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.

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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

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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.

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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),

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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

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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:

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(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.

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(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

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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.

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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

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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.

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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.

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(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

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(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

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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.

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(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

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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

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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

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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

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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.

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(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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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;

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(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

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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

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(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;

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(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

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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;

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(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:

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(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;

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(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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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;

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(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.

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(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,

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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.

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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.

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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

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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

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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

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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;

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(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.

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(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

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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

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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

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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

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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.

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(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.

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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.

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(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

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(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,

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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

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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;

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(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.

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(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

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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

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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.

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(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

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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

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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.

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(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

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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

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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

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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.

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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

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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.

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(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:

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(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

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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

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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

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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

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(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.

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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

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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.

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(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,

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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,

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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,

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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

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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

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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

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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

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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

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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.