Proposed Bylaws of Finland Cooperative Company
Proposed June 2017
Article I: Organization
1.1 Name. The name of the cooperative shall be Finland Cooperative Company (the “Cooperative”).
1.2 Ownership and Purpose. The Cooperative shall be owned by its members and shall operate in accord with the International Cooperative Alliance’s Statement on the Cooperative Identity for the mutual benefit of its members (the “member-owners”). The Cooperative is organized with a mission to operate in a profitable manner so as to provide for shareholder return and future capital investment, to greet every customer with a smile and to treat them with kindness and respect, to treat every employee with respect, and to be a store that is a joy to patronize for community members as well as visitors.
Article II: Membership
2.1 Eligibility. Membership in the Cooperative shall be open to any individual or legal entity who is in accord with its purposes and is willing to accept the responsibilities of membership.
2.2 Nondiscrimination. Membership shall be open without regard to any characteristic that does not directly pertain to a person’s eligibility. The Cooperative shall not discriminate on social or political grounds, on the basis of race, creed, age, sex, handicap, sexual preference or marital status.
2.3 Admission. Any eligible person may be admitted to membership upon submitting an application and investing equity in an amount and on such terms as determined by the Board of Directors (the “Board”). A legal entity applying for membership must name a single individual as an authorized representative.
2.4 Rights. Member-owners have the right to elect the Cooperative’s Board, to attend meetings of the Board, to receive notice of and attend membership meetings, to petition as described in these Bylaws, to approve amendments to the articles of incorporation and these Bylaws, and to vote on such other matters as specified in the articles of incorporation, these Bylaws, or by law. Each member-owner shall have one vote and no more on all matters submitted to member-owners. The rights of member-owners shall apply only to active member-owners in good standing. All rights and responsibilities of member-owners are subject to applicable state law, the articles of incorporation and these Bylaws as they may be amended from time to time, and policies and decisions of the Cooperative or the Board.
2.5 Responsibilities.Member-owners shall keep current in equity investments due to the Cooperative, shall keep the Cooperative informed of any changes in name or current address, and shall abide by the articles of incorporation, these Bylaws and the policies and decisions of the Cooperative or the Board. Member-owners shall also patronize the Cooperative. A member-owner who upholds these responsibilities is considered an active member-owner in good standing. References herein to the rights and entitlements of member-owners shall be understood to refer only to member-owners in good standing.
2.6 Inactive Status. A member-owner who (a) fails to patronize the Cooperative for a period of time greater than one (1) year, or such other period of time determined by the Board, or (b) violates such credit policies established by the Board in its reasonable
discretion shall, in each case, be placed into inactive status. His or her participation rights shall then be suspended. A member-owner in inactive status may attain good standing simply by making a purchase at the store or satisfying any outstanding requirements of the Board’s credit policies, as applicable.
2.7 Termination of Membership. A member-owner may terminate his or her membership voluntarily at any time by written notice to the Cooperative. Membership may be terminated involuntarily by the Board upon death or for cause after the member-owner is provided fair notice of the reasons for proposed termination and has an opportunity to respond in person or in writing. Cause may include intentional or repeated violation of any provision of the articles of incorporation, these Bylaws, or the Cooperative’s policies, actions that will impede the Cooperative from accomplishing its purposes, actions or threats that adversely affect the interests of the Cooperative or its member-owners, willful obstruction of any lawful purpose or activity of the Cooperative, breach of any contract with the Cooperative, or failure to patronize the business for more than three (3) years or such other period as may be determined by the Board.
2.8 Return of Equity. Equity may be returned upon termination of membership in the Cooperative, under terms determined by the Board, provided that the Board has determined that the equity is no longer needed by the Cooperative.
2.9 Unclaimed Equity. If a member-owner voluntarily or involuntarily terminates membership in the Cooperative, and fails to inform the Cooperative of his or her mailing address, then the equity and patronage dividend amount allocated to that member-owner will be retained by the Cooperative or donated to a non-profit to the extent authorized by state law.
2.10 Transferability. Stock shall not be transferred except in accordance with the
Articles of Incorporation. Membership rights and member-owner equity may be transferred only with Board approval.
Article III: Member Meetings and Decision Making
3.1 Annual Meeting. A membership meeting shall be held each year at a time and place to be determined by the Board. The purpose of such meetings shall be to hear reports on governance, operations and finances, to review issues that vitally affect the Cooperative, and to transact such other business as may properly come before the meeting.
3.2 Special Meetings. The Board may call special meetings of the membership. The Board shall call a special meeting if presented with a written petition stating a proper purpose and signed by twenty percent (20%) of active member-owners. Notice of special meetings shall be issued to member-owners. In the case of a petition, notice of the special meeting will be issued within ten (10) days after a presentation of the petition to the Board. No business shall be conducted at that special meeting except that specified in the notice of meeting.
3.3 Notice of Meetings. Notice of the date, time, place and purpose of each meeting of the membership shall be posted in a conspicuous place at the Cooperative and communicated to members not less than fifteen (15) days prior to the date of the meeting.
3.4 Voting. Voting on all matters that member-owners are entitled to vote upon will be accomplished through paper or electronic ballots, or both, as authorized by the Board. The secretary shall give notice of regular members’ meetings by: (a) publication in a legal
newspaper published in the county of the principal place of business of the Cooperative;
(b) publication in a magazine, periodical, or other publication of the Cooperative that is
regularly published by or on behalf of the Cooperative and circulated generally among
members; or (c) mailing the regular members’ meeting notice to each member personally at such member’s last known post office address. The regular members’ meeting notice must be published at least two (2) weeks before the date of the meeting or mailed at least fifteen (15) days before the date of the meeting. Unless otherwise stated in the articles of incorporation, or these Bylaws, or required by law, all questions shall be decided by a vote of a majority of the member-owners voting thereon. Proxy voting is not allowed.
3.5 Quorum. At any meeting of the member-owners, or for any vote of the member-owners, a quorum necessary for decision-making shall be ten percent (10%) of the total number of active member-owners or fifty (50) member-owners, whichever is less.
ARTICLE IV: Board of Directors
4.1 Powers and Duties. The Board shall be composed of five (5) to seven (7) Directors. Except for matters for which member-owner voting is required, the Board shall have full power to govern the Cooperative, including, but not limited to, hiring management, establishing compensation, if any, for the Board, and assuring that the mission of the Cooperative is articulated and carried out.
4.2 Eligibility. Directors must be active member-owners of the Cooperative in good standing or the authorized representative of a legal entity that is a member-owner. Employees and spouses or domestic partners of employees may not serve as Directors. A person with a conflict of interest so continuing and pervasive that he or she is unable to effectively fulfill the responsibilities of a director with the Cooperative shall not be qualified to serve as a director. Former employees are eligible to serve on the Board after a period of three (3) years after employment terminates.
4.3 Terms and Elections. Elections shall occur annually, in a manner prescribed by the Board. Directors shall serve a term of three (3) years and shall serve staggered terms so that approximately one-third (1/3) of the Board is elected each year.
4.4 Vacancies. Any vacancy among Directors may be filled by appointment by the Board. A Director so appointed shall be appointed until the next annual election to fulfill the remainder of the pertinent term.
4.5 Removal. A Director may be removed by decision of two-thirds (2/3) of the remaining Directors for conduct contrary to the Cooperative or failure to follow Board policies. A Director may be removed by decision of the member-owners in accordance with the petition and voting provisions of these Bylaws.
4.6 Meetings. The Board shall hold regular and special meetings at such time and place as it shall determine, and all Directors shall be notified in writing of said meeting at least five (5) days in advance, unless the Board agrees to a shorter notice. The Board will provide reasonable notice of all board meetings to member-owners. Attendance at any meeting constitutes waiver of notice of that meeting. Meetings shall be open to all member-owners unless the Board decides to go into executive session regarding confidential or proprietary matters such as: labor relations or personnel issues; negotiation of a contract; discussion of strategic goals or business plans, the disclosure of which would adversely impact the Cooperative’s position in the marketplace; and/or discussion of a matter that may, by law or contract, be considered confidential.
4.7 Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Board may be taken by written action affirmed by all of the Directors. The action is effective when affirmed by all of the Directors, unless a different effective time is provided in the action.
4.8 Quorum. A majority of the current Directors shall constitute a quorum and no decisions shall be made without a quorum.
4.9 Conflicts of Interest. Directors shall be under an obligation to disclose their actual or potential conflicts of interest. Directors having such a conflict shall absent themselves from discussion and decision of any related matter under consideration by the Board unless otherwise determined by the Board. Directors may not do business with the Cooperative except in the same manner as other member-owners generally do business with the Cooperative or under other conditions that are procedurally defined to avoid preferential treatment.
4.10 Officers. The Board will designate officers as necessary for the effective conduct of Board business, consistent with any requirements of state law. The officers of the Cooperative shall, at a minimum, include a president, one or more vice presidents, a secretary and a treasurer, who shall be elected annually by and from the directors. The offices of secretary and treasurer may be combined, and when so combined, the person filling such office shall fulfill the duties of both offices and shall be termed “Secretary-Treasurer”.
4.11 Indemnification. The Cooperative shall indemnify and reimburse each present, past and future Director for any claim or liability (including expenses and attorneys’ fees actually and reasonably incurred in connection therewith) to which such person may become subject by reason of being a Director, to the full extent allowed by law, except to the extent the Director acted in bad faith.
ARTICLE V: Patronage Dividends
5.1 Allocations to Member-owners. The Cooperative shall allocate and distribute to member-owners the net profit from business done with them in such a manner as to qualify them as patronage dividends consistent with cooperative principles, applicable state and federal laws, and generally accepted accounting principles. The Board shall determine when and how such allocations and distributions will be made, including the amount (if any) distributed in cash and the form of any amount distributed as Class B
Stock of the Cooperative or as other forms of equity, whether the allocations will be made in one or more divisions, departments, or allocation units, and whether all or part of the net profits shall be set aside in capital or other necessary reserves. The Board may direct the use of all or a portion of the net profit from patronage business to redeem Class B Stock or any other form of outstanding patronage equity or Class C Stock.
5.2 Reserves. Amounts carried in reserves shall be allocated on the books of the Cooperative on a patronage basis or in lieu thereof the books and records of the Cooperative shall afford a means of doing so at any time so that in the event of distribution each member-owner and eligible patron may receive a pro rata share of such distribution. Amounts carried in reserves or unallocated surplus and not allocated to the member-owners and patrons may be so allocated by the Board at any time.
5.3 Non-member Patrons. The Board may establish policies by which legal entities or persons that are not member-owners but who are aligned with the Cooperative’s purpose may contract with the Cooperative to deal on a patronage basis without voting rights.
5.4 Extraordinary Gains. Margins produced by a transaction (such as income from the lease of premises, investment in securities, or from the sale or exchange of capital assets) which is directly related to the Cooperative’s business will be deemed to be patronage sourced margins and may be distributed to member-owners (and any other patrons with whom the Cooperative has contracted to deal on a patronage basis) in proportion, insofar as is practicable, to their patronage during any period to which such margins are attributable, as determined by the Board.
5.5 Allocation of Losses.
a. Operating Losses. An operating loss will be apportioned among the member-owners and eligible patrons during the year of loss so that the loss will, to the extent practicable, be borne by those member-owners and patrons with respect to the loss year on an equitable basis, including charging the loss against allocated reserves, unallocated surplus, or the patronage equity. Member-owners and patrons may not be directly assessed for any loss. The Board may also direct that all or part of any loss be carried forward or back so long as any carryforward or carryback will not place an inequitable burden upon past or future members.
b. Other Losses. If, in any fiscal year, the Cooperative incurs a loss other than an operating loss, the Board may determine the basis on which patronage capital furnished by the member-owners and eligible patrons may be reduced or such loss is to be otherwise equitably apportioned among the member-owners and eligible patrons.
5.6 Consent of Member-owners. By obtaining or retaining membership in the Cooperative, each member-owner consents to take into account, in the manner and to the extent required by federal and state tax law, any patronage dividend received from the Cooperative. The Board may adopt policies by which member-owners and other eligible patrons are offered the chance to donate all or part of his or her patronage dividend to one or more other organizations aligned with the Cooperative’s purpose, or forfeit all or part of the patronage dividend to the Cooperative or for any other designated purpose that furthers the Cooperative’s mission.
ARTICLE VI: Dissolution and Liquidation
6.1 Asset Distribution. The Cooperative may be dissolved or liquidated upon a decision of the Board and a four-fifths (4/5) vote of the active member-owners. 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 any stock and equity accounts in the order of preference
stated in the Articles of Incorporation, which, if they cannot be paid in the order of the oldest outstanding amounts or in full, shall be paid on a pro-rata basis or on any other
equitable basis as determined by the Board; and (iii) by distributing any remaining assets in a way that furthers the Cooperative’s mission, as determined by the Board.
ARTICLE VII: Bylaws
7.1 Amendments. These Bylaws may be amended or repealed in whole or in part by a majority of the member-owners who participate in the vote (subject to quorum rules in Section 3.5). An amendment may be proposed by decision of the Board or by petition of at least twenty percent (20%) of active member-owners. The proposed amendment shall be publicized to the membership not less than four (4) weeks prior to the voting process, which shall be held at a time and in a manner determined by the Board.