Dakota Community Market Bylaws

Article I: Organization

Section 1.1. Name: The name of the Co-op is Dakota Community Market (referred to in these bylaws as “the Co-op”). 

Section 1.2. Mission Statement: Dakota Community Market is committed to:  (1) Providing sustainable, local, healthy and fairly traded goods and services; (2) Supporting and nourishing the local economy through programs, partnerships and cooperation; and (3) Engaging the greater community through outreach and education regarding food and nutrition as well as environmental and social responsibility. 

Section 1.3. Vision: Foster a flourishing community hub dedicated to economic, educational, and environmental support of the Brookings area through sustainable and local food access and opportunities for collaborative outreach.

Section 1.4. The Food Co-op Principles: Dakota Community Market adheres to the seven cooperative principles: 

  1. Voluntary and open membership 

  2. Democratic member control

  3. Member economic participation

  4. Autonomy and independence

  5. Education, training, and information

  6. Cooperation among cooperatives

  7. Concern for community

Section 1.5. Nondiscrimination: The Co-op shall not discriminate on the basis of race, creed, age, gender, handicap, sexual preference, marital status or other arbitrary basis.

Section 1.6. Fiscal Year: The fiscal period of the Co-op shall be adopted by the board.

Section 1.7. Location:  The principal office of the Cooperative shall be located in the city of Brookings, South Dakota.

Article II: Ownership

Section 2.1.  Member-Owners: For the purposes of these bylaws, ‘member,’ ‘owner,’ and “member-owner” are understood to be equivalent terms and can be used interchangeably.

When the Articles of Incorporation and/or Bylaws refer to a “member” or “membership,” the reference is exclusively to “voting” members.

Section 2.2 Eligibility: Ownership in the Co-op shall be voluntary and open to any individual who desires to use the services of the Co-op and is willing to accept the responsibilities of ownership. Applicants will be admitted to ownership upon: Any natural person age 18 years or older, or minors with legal guardian signature, will become a member upon:

  1. Approval of a completed member application under a procedure adopted by resolution of the Cooperatives’s Board of Directors;

  2. Purchase of one (1) share of common stock of this Cooperative, at its par value of one hundred and fifty dollars ($150) per share; and

  1. Meeting other ownership criteria as may be established from time to time by the Board.

The Board may make provisions allowing new owners to pay for their shares of common stock in installments over time (so long as new owners pay for their shares within one year) and may allocate a portion of each payment as a non-refundable administrative fee.

If the Board has denied ownership to any natural person, that person my appeal to the membership of the Co-op at the first regular or special owner’s meeting thereafter, and ask that they be admitted to the Co-op as an owner, and the action of the owners on the question of whether to admit such person as an owner shall be final.

When a new owner is admitted, the Co-op will provide the new owner with a copy of the current Bylaws, including an explanation of patronage refunds.

One ownership may be shared by two or more adults sharing a household, and in the case of a shared ownership, the Co-op will record the names and contact information of all adults sharing the ownership in the Cooperative’s records. During voting at any meeting, only one person in a household sharing membership will be allowed to vote. Two or more adults in the same household owning individual memberships are all eligible to vote.

Section 2.2. Admission: Persons may, upon the approval of the Board of Directors of the Co-op, become a member in good standing of the Co-op by entering in a Member Share Purchase Agreement by:

  1. purchasing in full one (1) Class A Unit (“membership share”) of the Co-op;

  2. receiving from the Co-op written acceptance of membership; and

  3. pay an annual retainment fee of twenty-five dollars ($25) (once the Cooperative has opened a business)

Membership is open with no discrimination for anyone who legally enters into a Member Share Purchase Agreement. The Board of Directors may establish one (1) or more classes of non-voting memberships on terms and conditions established by the Board of Directors.

Section 2.3. Owner Rights: Each owner shall be entitled to:

  1. Make purchases from the Cooperative on terms available to all owners;

  2. Vote in elections of the Cooperative’s Directors and on all issues to be decided by the Cooperative’s owners. The right to vote is personal and is not connected to the ownership of stock in the Cooperative. Each owner shall have one and only one vote (as long in good standing and is current on his/her Member Share Purchase Agreement); 

  3. Attend meetings of the Board, except for such portions of meetings that the Board determines to close for discussion (but not decision) on matters of a confidential or sensitive nature; 

  4. Receive adequate and timely notice of and attend owner meetings; 

  5. Approve amendments to these bylaws; and 

  6. Receive reasonably adequate and timely information about the Cooperative’s operations and finances. The Board may limit an owner’s access to information to protect confidential or sensitive information. Any owner’s request for information may be accommodated by means other than direct access to the Cooperative’s records. 

Rights of owners shall be personal rights and not property rights.

Section 2.4 Owner Responsibilities:  Owners Shall:

  1. Remain current in equity investments due to the Cooperative.

  2. Keep current in payment of the Member share Purchase Agreement described in Section 2.1

  3. Inform the Cooperative of any changes in name or current address

  4. Abide by these bylaws and the policies of the Cooperative and the Board.

  5. Make a purchase with the Cooperative (once the Cooperative has opened a business) at least once (1) in every twelve (12) month period.

  6. Pay the retainment fee of twenty-five dollars ($25) per year (once the Cooperative has opened a business)

Section 2.5. Inactive Status:  An owner who becomes delinquent by one month in meeting the share purchase requirement, or who fails to patronize the Co-op for a 12 month period (after the Cooperative has opened a business) shall be placed into Inactive Status.  His/her participation rights, including the right to vote, shall then be suspended.  An owner in inactive status may attain good standing upon fulfilling the duties of ownership, by recommencing current payment of financial obligations and/or reestablishing a patronage relationship with the Cooperative.  References in these bylaws to the rights and entitlements of owners shall be understood to refer only to owners in good standing.

Section 2.6. Transferability: Membership (and the membership share associated with such membership) shall be non-transferable, except as in accordance with these bylaws.

Section 2.7.  Voluntary Termination of Ownership:  A member may terminate his or her ownership voluntarily at any time by written notice to the Cooperative. The member's right to vote in the affairs of the Cooperative will terminate immediately. Within sixty (60) days of receiving a notice of voluntary termination, the Board shall pay any amounts due to the owner for redemption of the owner’s shares under any policies adopted by the Board to govern share redemption. 

Section 2.8. Involuntary Termination of Ownership: Membership in the Co-op may be terminated by the Board of Directors at their discretion if the Board of Directors determines that a member has:

1. Become ineligible for membership for any reason; or

2. The Board of Directors by resolution finds that a member has:

a. Intentionally or repeatedly violated any provision of the Articles, the Bylaws, or Board policies of the Co-op;

b. Taken actions that will impede the Co-op from accomplishing its purposes;

c. Taken or threatened actions that adversely affect the interests of the Co-op or its members;

d. Willfully obstructed any lawful purpose or activity of the Co-op; or

e. Breached any contract with the Co-op.

The Board of Directors may terminate the membership of a member only at a meeting of the Board of Directors, having given twenty (20) days prior written notice of which was served upon the last known mailing address of the member alleged to be ineligible by United States Certified Mail. The notice must state with reasonable particularity the grounds upon which the member is alleged to be ineligible and that the member will be entitled to be heard on the matter of termination at the meeting.

Section 2.8 Death of a Member:  In the case of an ownership that is shared by two or more adults in a household, upon the death of any of them, the ownership will be held only by the survivor(s), and the Cooperative will remove the name of the deceased from its member records. The surviving member(s) will be entitled to all equity and payments owned by and due to the ownership. The estate of the deceased shall remain liable for any debts or liabilities to the Cooperative. 

In the event of the death of a member whose ownership was not shared with any other adult, the Cooperative shall interpret the notice of the member's death as a notice of voluntary termination of ownership. The Cooperative shall make any distributions payable to the deceased member's estate. 

Section 2.9. – Consequences of Membership Termination: If the Board of Directors finds that any membership share of the Co-op has come into the hands of any person who is not eligible to own a membership share or who has otherwise become ineligible for membership in the Co-op, the Board of Directors of the Co-op has the right, at its option:

  1. To redeem the membership share at an amount equal to the value of the consideration for which the membership share was issued; or

  2. To convert the membership share into a non-voting certificate of interest or other non-voting equity credit at an amount equal to the value of the consideration for which the Membership Units were issued. Upon such redemption or conversion, such ineligible holder of Membership Units will cease to be a member of the Co-op and will cease to have voting rights in the Co-op.

In exercising its right to redeem or to convert the membership share under the preceding paragraph, the Co-op may cancel the certificate or certificates of such membership share on its books if the holder fails to deliver the certificate or certificates evidencing such membership share to the cooperative. If the Co-op exercises its right to convert the membership share into a non-voting certificate of interest or other non-voting equity credit, the Co-op will have no obligation to redeem such non-voting equity interest, nor shall the holder of such interest have any right to demand the redemption thereof.

Other than as provided herein, the termination of membership or other action taken by the Co-op with respect to a member or the member’s membership share will not modify the obligations and liabilities of any holder thereof to the Co-op under any supply contract, service contract, or other contract between the holder and the Co-op, nor impair the rights of the Co-op under such contracts.

A non-voting membership interest may be terminated without prior notice, and the Board shall have the same options for the financial interest, if any, associated with the non-voting Membership.

Section 2.10.  Return of equity:  Equity shall be returned upon termination of ownership in the Cooperative, under terms determined by the Board, provided that the Board has determined that the equity is no longer necessary for the Cooperative’s business needs.

Section 2.11. Unclaimed property:   If any owner moves and fails to notify the Cooperative of his or her new address, and if the Cooperative cannot contact the owner using reasonable efforts, then the Cooperative has no obligation to redeem the owner’s common stock or to make any other distributions to that owner, and any amount owed to the owner and any balance in the owner’s capital account will be transferred to the Cooperative. 

Section 2.12. Settlement of Disputes: In any dispute between the Co-op and any of its owners or former owners which cannot be resolved through informal negotiation, it shall be the policy of the Co-op to prefer the use of mediation whereby an impartial mediator may facilitate negotiations between the parties and assist them in developing a mutually acceptable settlement. No party with a grievance against the other shall have recourse to litigation until the matter is submitted to mediation and attempted to be resolved in good faith.

Article III. Meetings 

Section 3.1.  Annual Meetings: The Board of Directors will hold an annual meeting of members within four (4) months of the end of the fiscal year. The directors shall present a state of the Co-op report including annual financial information and the meeting shall address all other business that may come so properly before it. 

Section 3.2. Special Meetings: The Board of Directors may call a special meeting with a majority vote of the directors. The secretary will provide notice within fourteen (14) business days of receiving the signed petitions. The petitions must meet the majority vote and state any business that needs to be brought to the meeting. 

Section 3.3. Time and Place: The date, time and place of all meetings of owners shall be determined by the Board or, in the event that the Board fails to so act, by the Secretary. Meetings shall be held at a time and place convenient to owners.

Section 3.4 Waiver of Notice: Any owner may waive his or her right to receive notice of meetings by signing a written notice of such waiver and delivering it or mailing it to the Secretary of this Cooperative. The Cooperative will keep all such waivers signed by current owners in its files. Owners who have waived their right to notice will receive notice of all meetings by email not less than two weeks before the meeting.

Section 3.5. Record Dates: Unless otherwise determined by the Board, only persons who are owners at the close of business on the tenth day immediately preceding the date of distribution of notices shall be entitled to notice of any meeting of owners and to vote at such meeting.

Section 3.6. Quorum: At any annual or special members’ meeting, a quorum necessary for the transaction of business shall be the lesser of ten percent (10%) of total membership or fifty (50) members. In determining a quorum at a meeting, on a question submitted to a vote by mail, members present in person or represented by vote shall be counted.

Section 3.7. Voting: The Board may authorize voting by mail or electronic ballot in conjunction with, or in lieu of, a meeting of members. In such event, the notice of the meeting shall include a copy of the issue to be voted upon, together with a ballot and an online link as an electronic voting option and notification of the date by which ballots must be returned.

Ballots must be returned in a sealed envelope which is authenticated by the member's signature or sent electronically to a verifiable online site. If mail or electronic ballots are used in conjunction with a meeting of members, votes cast by mail shall be counted together with votes cast in person at the meeting. If mail or electronic ballots are used in lieu of a meeting of members, a quorum shall consist of the number of ballots returned. A vote cast by mail or electronic ballot shall be equivalent to presence in person by the member at a meeting of Members.

Section 3.8. Absentee Ballots: Owners may vote by absentee ballots on any issue presented to a meeting of owners, provided that owners have previously been notified in writing of the exact motion or resolution and a copy of the same is attached to the absentee ballot. The Co-op shall make available absentee ballots for this purpose not later than twenty-one days before the date of the meeting. Absentee ballots must be received by the Co-op in person or by mail no later than the day before the date of the meeting. A vote cast by absentee ballot shall be read at the meeting of owners, and shall be equivalent to presence in person by the owner at such a meeting.

Section 3.9 – Proxies: Owners who are absent from an owner meeting may vote by electronic or postal mail ballot in any matter submitted to a vote by owners. Ballots, together with the exact text of an issue for decision shall be included in the notice of the meeting at which the vote will be taken. A vote by written proxy must include the exact text of the proposed motion, resolution, or amendment to be acted upon at the meeting; a space for an affirmative vote and a space for a negative vote, one of which must be selected by the owner; and the owner’s signature. An owner’s properly executed proxy vote will be counted as that owner’s vote at the meeting.

Section 3.10. Issues Submitted by Owners: Notices of a meeting of owners shall include any proper issues submitted by petition of five percent of all owners. Petitions must be received by the Co-op not less than sixty days before the date of the meeting at which they are to be presented to a vote of owners.

Section 3.11. Communication by Electronic Means: Unless otherwise required, any notice, consent, ballot, petition, or other document required or permitted by these bylaws may be delivered by electronic means, provided that, in the case where such communication expressly or impliedly requires the signature of the person submitting the communication, means are in place to reasonably assure the authenticity of the signature.

Article IV: Board of Directors

Section 4.1. Powers and Duties: The Board of Directors shall govern the business and

affairs of the Co-op and shall exercise all of the powers of the Co-op, except those powers that are conferred upon or reserved to the members by law, the Articles of Incorporation, or these bylaws. The Board of Directors shall adopt such policies, rules, and regulations and shall take such actions as it may deem advisable, provided that the Board of Directors does not act in a manner inconsistent with law, the Articles of Incorporation, or these Bylaws.

The board shall act for the Co-op and be responsible for:

  1. Engaging a general manager of its business and determining his or her duties and compensation.

  2. Ensuring that the business is conducted in accordance with these bylaws and that the purpose and the principles of the Co-op are carried out.

  3. Overseeing the financial condition of the Co-op.

  4. Securing the soundness of the business of the Co-op by providing that all officers and employees having custody of the funds or goods shall each give sufficient bond consistent with state law.

  5. Providing good conditions of employment in the service of the Co-op, and for requiring efficiency, faithfulness, and diligence on the part of the staff.

  6. Maintaining a direct and vital connection with other cooperative organizations.

  7. Fostering a spirit of enthusiasm for cooperative effort, in the staff and among the members of the Co-op, and for encouraging them to identify themselves with every good feature of cooperative endeavor.

  8. Determining special committees of the Co-op and designating their chairmen, who shall select the additional members of such committees, subject to the approval of the board. Such committees of the Co-op shall serve for one year unless otherwise specified.

Section 4.2. Numbers and Qualifications: The government of this Cooperative and the management of its affairs shall be vested in a Board of twelve (12) and no less than five (5) Directors. To be qualified as a Director, a person must: 

  1. be at least 18 years old;

  2. may not be employed by the Co-op; 

  3. have been an owner for at least six (6) months prior to the commencement of the Director’s term, except for Directors who were also Incorporators of the Cooperative; 

  4. not have any significant conflict of interest with the Cooperative. 

Section 4.3. Nominations, Elections, and Terms: 

Except as otherwise provided herein, all directors shall serve three-year terms and until their successors are duly elected and qualified. Upon opening, board members and/or owners can call a vote to determine Board term limits, as they see fit. See Article 8, Section 13.3.In order to preserve continuity of governance and the harmonious transition of the initial Board of Directors to the elected Board of Directors, the terms of the directors of the initial Board of Directors shall be staggered such that one-third of the directors (or as nearly as possible) shall be elected at the annual members’ meeting following the date on which the Board of Directors determines that the initial membership in the Co-op has been established and at each annual meeting thereafter. The Board of Directors shall adopt a procedure to achieve the desired staggered effect prescribed by the bylaws. Directors shall be elected by ballot at the annual meetings. Nominations for director may be made by the board or by petition signed by at least twenty-five (25) members entitled to vote and submitted to the Secretary at least thirty (30) days before the annual meeting. The nominees receiving the highest number of votes cast shall be elected and shall take office at the adjournment of the annual meeting.

Section 4.4. Compensation: Directors may be compensated only as approved at a meeting of owners. Directors shall be reimbursed for reasonable expenses incurred in connection with the performance of authorized business of the Co-op.

Section 4.5. Standards of Conduct: Directors shall be responsible at all times for discharging their duties in good faith, in a manner that they reasonably believe to be in the best interests of the Co-op and with the care that an ordinarily prudent person in a like position would use under similar circumstances.

Section 4.6. Conflicts of Interest: Directors shall be under an affirmative duty to disclose their actual or potential conflicts of interest in any matter under consideration by the Board, and such interest shall be made a matter of record in the minutes of the meeting. Directors having such an interest shall be permitted to make a statement with regard to the matter and shall then be required to leave the meeting room. A transaction in which a director has an interest shall be prohibited unless the transaction is fair to the Co-op and is approved by no less than a two-thirds (2/3rds) majority of all disinterested directors.

Section 4.7. Committees: The Board may appoint special or standing committees to advise the Board or to exercise such authority as the Board shall designate. Such committees shall include at least one director. The appointment of any committee shall not relieve the Board of its responsibilities in the oversight of the Co-op.

Section 4.8. Termination: The term of office of a director may be terminated prior to its expiration in any of the following ways:

  1. Voluntarily by a director upon notice to the Secretary (a director who is absent from three (3) consecutive Board meetings, unless excused by the Board for good cause, shall be presumed to have resigned); or

  2. Automatically upon termination of ownership in the Co-op; or

  3. For cause by a majority of all directors or by vote at a meeting of owners called in whole or part for such purpose, provided the director is accorded fair notice of the charges and an opportunity to respond in person or in writing.

Section 4.9. Vacancies: Any vacancy among Directors may be filled by appointment by the Board. A Director so appointed shall serve until the next annual or special owner meeting at which Directors are to be elected, and at that meeting, the owners shall elect a Director to fill the unexpired term of the vacant Director’s position.

Article V: Meetings of the Board

Section 5.1. Meetings: The Board of Directors may determine the times and places of its meetings, as long as meetings are held not less than once per quarter. Special meetings may be called by the President and shall be called by the Secretary upon request of any three directors.

Section 5.2. Notice: Meetings called by resolution of the Board shall require no notice, it being the responsibility of absent directors to inquire as to the time of further scheduled meetings. Special meetings shall require written or oral notice to all directors. Written notice shall be delivered at least five days before the date of the meeting and oral notices shall be given in person or by a telecommunications device at least forty-eight (48) hours before the time of the meeting. Notices of meetings of the Board shall also be posted in a timely manner and in a conspicuous place in the Co-op's store, but the inadvertent failure to do so shall not affect the validity of the meeting.

Section 5.3. Waiver of Notice: Any notice of a meeting required under these bylaws may be waived in writing at any time before or after the meeting for which notice is required. A person who attends a meeting other than for the sole purpose of objecting to the adequacy of the notice shall be deemed to have waived any objection to the notice.

Section 5.4 Quorum: The presence in person of a majority of directors then in office shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board.

Section 5.5. Decision Making:  Decisions of the Board shall be made by (i) approval of a majority of the Directors present and voting at a duly held meeting, and (ii) shall require a minimum of five (5) Directors voting in agreement. A Director shall abstain from voting when they have a conflict of interest or may abstain if they feel they should not participate in the vote. 

Section 5.5. Action without a Meeting: Any action required or permitted to be taken at a meeting of the Board may be taken without a meeting only if a written consent to the action is signed by all directors and filed with the minutes of meetings.

Section 5.6. Open Meetings: Meetings of the Board and all committees shall be open for observation and comment by owners and employees of the Co-op. Sessions of a meeting may be closed only as to matters of a particularly sensitive nature.

Article VI: Officers

Section 6.1. Officers:  At the first board meeting after the annual meeting, the Board shall elect from its members a President; one or more Vice-Presidents; and a Treasurer and a Secretary, or a Secretary-Treasurer. The Board may designate other officers as the Board deems necessary or helpful. The General Manager is an officer of the Board but is not a Director; the General Manager shall serve in a non-voting advisory role to the Board of Directors. This provision does not add or subtract from the General Manager’s fiduciary duties. The General Manager does not count towards quorum for Board meetings.

6.2 Officers’ Duties. In addition to signing or attesting to formal documents on behalf of the Cooperative as authorized by the Board, officers shall have the following duties: 

  1. The President shall be responsible for ensuring the orderly conduct of all meetings, coordinating the activities of the Board, and maintaining effective communication with the Manager, and shall present a report of operations at the annual meeting of owners.

  2. The Vice President(s) shall be responsible for performing the duties of the President in his or her absence or disability and assisting the President in the performance of his or her duties.

  3. The Secretary shall be responsible for recording and keeping minutes of all Board and owner meetings; giving notices when required; and authenticating records of the Cooperative.

  4. The Treasurer shall oversee the maintenance of financial records, issuance of financial reports and the filing of all required reports and returns, and shall present quarterly financial reports to the Board, and a financial report at the annual meeting of owners.

  5. The General Manager shall be responsible for administering the day-to-day activities of the Cooperative under the direction and control of the Board.

  6. The Board may assign additional duties to any of the officers.

Unless the Board determines otherwise, the President shall have the authority to execute on behalf of the Co-op, and the Secretary to attest to, documents evidencing transactions authorized by the Board.

6.3 Removal of Officers. The owners may remove an officer (other than the Manager) at an owners' meeting for cause related to the duties of the position, and may choose another Director to fill the resulting vacancy. Any officer (other than the Manager, except through termination of employment) may be removed by the Board of Directors if the Board determines that doing so would serve the best interests of the Cooperative. Any vacancy among the officers caused by such removal shall be filled by the Board of Directors. No election or appointment to an office of this Cooperative shall itself create any contract rights.

Article VII: Membership Shares

Section 7.1. Issuance and Terms: To evidence capital funds provided by owners, the Co-op shall issue membership shares. Shares may be issued only to persons eligible for and admitted to ownership in the Co-op. Shares shall be issued only upon full payment of their par value in money, property or services. Shareholders shall be entitled to no dividend or other monetary return on investment.

Section 7.2. Certificates: Every holder of a fully paid share shall be entitled to receive a certificate evidencing such holding. All certificates shall be signed personally or by facsimile by the President and the Secretary and shall be numbered and recorded in a stock register maintained by the Co-op. Each certificate shall contain a prominent notation that, in accordance with these bylaws, it is transferable only to the Co-op, which shall be obligated to purchase such share or shares, and that the voting rights pertain only to ownership status. The Co-op may issue a replacement certificate for any certificate alleged to have been lost, stolen or destroyed without requiring the giving of a bond or other security against related losses.

Section 7.3. Forfeiture: All subscriptions for purchase of shares shall require full payment within one year of the date of subscription. If an owner fails to make full payment within the one-year (1) period and fails to correct the delinquency within thirty (30) days of the date of mailing of a notice of delinquency, all share purchase payments of such owner shall be irrevocably forfeited to the Co-op.

Section 7.4. Redemption: Upon request following termination of ownership, common shares shall be redeemed when replacement capital is provided by other owners. Shares shall be redeemable at the lesser of their carrying value on the books of the Co-op or their net book value, less a reasonable processing fee, if any, as determined by the Board. Redemption proceeds shall be subject to offset by amounts due and payable to the Co-op by the owner. No redemption shall be made when such payment would impair the ability of the Co-op to meet its other obligations as they become due. Reapplications for ownership after full or partial redemption shall be subject to full repayment of redemption proceeds.

Article VIII: Preferred Stock

Section 8.1. Preferred Stock: Preferred stock of the Co-op may be issued in such amount and for such lawful consideration and at such times as the directors may determine.

Section 8.2. Redemption and Retirement: The Board of Directors may, at any time, redeem in whole or in part the shares of preferred stock at the redemption price per share. The order of priority of retirement of preferred stock in the event of a partial redemption shall, subject to any limitations or restrictions imposed be a matter of uncontrolled discretion of the Board of Directors and may be set in any resolution or plan contemplating such redemption.

Section 8.3. Transfer: No member shall sell, assign, transfer, dispose of or encumber any share of preferred stock except to the Association except (a) by operation of law or (b) with the consent of the Board of Directors.

Section 8.4. Holdings: Preferred stock held by nonmembers shall not exceed the amount held by members.

Article IX: Patronage Dividends

Section 9.1. Distribution of Net Savings: The realized net savings of the Co-op, to the extent attributable to the patronage of owners, shall be received and held by the Co-op for and as the property of its owners, the basis of each owner's interest therein being as set forth in this article. Such net savings shall be allocated and distributed among owners in good standing as patronage dividends in proportion to their patronage and in conformity with income tax law. In determining and allocating adjusted net savings, the Co-op shall use a single allocation unit except to the extent that, subsequent to the adoption of these bylaws, it shall engage in any new and distinct line of business.

Section 9.2. Exceptions: Net savings may be reduced by such reasonable reserves for necessary business purposes as is determined by the Board. Any allocations of such a nominal amount as not to justify the expenses of distribution may, as determined by the Board, be excluded from distribution provided that they are not then or later distributed to other owners. Owners shall retain the right to waive in whole or in part, by action at a meeting of owners, any patronage dividends to which they may be entitled.

Section 9.3. Consent of Owners: By obtaining or retaining ownership in the Co-op, each owner shall thereby consent to take into account, in the manner and to the extent required by Section 1385 of the Internal Revenue Code, the stated dollar amount of any qualified written notice of allocation in the taxable year in which such notice is received.

Section 9.4. Retained Amounts: A portion of patronage dividends may be retained for the reasonable capital needs of the Co-op. Such amounts shall be credited to revolving capital accounts in the names of recipient owners, shall accrue no monetary return on investment, and shall be non transferable. They shall be redeemed when determined by the Board to be no longer needed for capital purposes. At that time they shall be redeemed in the order of the oldest outstanding amounts and on a pro rata basis among such amounts, except that redemptions may be made payable only to owners who are then in good standing or become so within a stated period of time. Retained amounts may also be redeemed under compelling circumstances as determined by the Board. They shall be subject at all times to being offset by amounts otherwise due and payable to the Co-op.

Section 9.5. Allocation of Net Loss: In the event the Co-op shall incur a net loss in any fiscal year, the patronage-sourced portion of such loss shall be carried forward to offset patronage- sourced income in subsequent years, and any remaining loss shall be carried back and forward to offset non-patronage-sourced income in prior and subsequent years in accordance with federal income tax law.

Article X: Abandoned Equity

Section 10.1. Abandoned Equity: Equity may be determined to be abandoned under such conditions as defined by a majority of the directors at such time when the directors deem it necessary.

Article XI: Indemnification and Insurance

Section 11.1. Indemnification: The Co-op shall indemnify each person who is or was a director, officer, manager, employee or agent of the Co-op, and any person serving at the request of the Co-op as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred to the extent to which such directors, officers, managers, employees or agents of the Co-op may be indemnified under the law of the State of South Dakota.

Section 11.2. Insurance: The Co-op shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, manager, employee, or agent of the Co-op against liability asserted against and incurred by the person in the person’s capacity as a director, officer, manager, employee or agent, or arising from the person’s status as a director, officer, manager, employee, or agent of the cooperative.

Article XII: Dissolution

Section 12.1 Asset distribution: The Cooperative may be dissolved upon a decision of the Board and a two-thirds (2/3) vote of the owners who participate in the vote. Upon dissolution of the Cooperative, its assets shall be distributed in the following manner and order: 

(i) by paying or making provision for payment of all liabilities and expenses of liquidation; 

(ii) by redeeming the equity of shareholders in good standing, and if the Cooperative’s assets are not sufficient to redeem all equity in full, the shareholders in good standing will be paid in proportion to the number of shares owned; 

(iii) by distributing any remaining assets in a way that furthers the Cooperative’s mission, as determined by the Board. 

The obligation to distribute shall be construed as a preexisting duty to distribute any patronage-sourced net gain realized in the winding up process to the maximum extent allowable by law.

Article XIII: Interpretation and Amendment of Bylaws

Section 13.1.  Interpretation: The Board of Directors shall have the power to interpret these bylaws, apply them to particular circumstances, and adopt policies in furtherance of them, provided that all such actions are reasonable and consistent with these bylaws. 

Section 13.2.  Severability: In the event that any provision of these bylaws is determined to be invalid or unenforceable under any statute or rule of law, then such provision shall be deemed inoperative to the extent required by law and shall be deemed modified to conform with such statute or rule of law without affecting the validity or enforceability of any other provision of these bylaws. 

Section 13.3.  Amendment: These bylaws may be amended or repealed in whole or in part by a majority of the owners who participate in the vote. An amendment may be proposed by resolution of the Board or by petition of at least five percent (5%) of owners in good standing. The proposed amendment shall be publicized to the ownership not less than four (4) weeks prior to any meeting at which the proposal is to be put to a vote.

Adopted March 10, 2021 / Updated March 10, 2021