CHAPTER 1. AGRICULTURAL COOPERATIVES
IC 15-12
ARTICLE 12. AGRICULTURAL ASSISTANCEORGANIZATIONS AND PROGRAMS
IC 15-12-1
Chapter 1. Agricultural Cooperatives
IC 15-12-1-1
Purpose; legislative declaration
Sec. 1. (a) The following are the purposes of this chapter:
(1) To promote, foster, and encourage the intelligent andorderly production and marketing of agricultural productsthrough cooperation.
(2) To eliminate speculation and waste.
(3) To make the distribution of agricultural products betweenproducer and consumer as direct as can be efficiently done.
(4) To stabilize the marketing of agricultural products.
(5) To provide for the organization and incorporation ofagricultural cooperative associations and societies.
(b) The general assembly recognizes the following:
(1) That agriculture is characterized by individual production incontrast to the group or factory system that characterizes otherforms of industrial production.
(2) That the ordinary form of corporate organization permitsindustrial groups to combine for the purpose of groupproduction and the ensuing group marketing.
(3) That the public has an interest in permitting farmers to bringtheir industry to the high degree of efficiency andmerchandising skill evidenced in the manufacturing industries.
(4) That the public interest demands that the farmer beencouraged to attain a superior and more direct system ofmarketing as an alternative to the blind, unscientific, andspeculative selling of crops.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-2
Application of definitions in IC 23-1
Sec. 2. The definitions in IC 23-1 apply to this chapter to theextent they do not conflict with the definitions in this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-3
"Agricultural products"
Sec. 3. As used in this chapter, "agricultural products" includeshorticultural, viticultural, forestry, dairy, livestock, grain, poultry,bee, and any other farm product.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-4 "Association"
Sec. 4. As used in this chapter, "association" means anycorporation organized under or governed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-5
"Member"
Sec. 5. As used in this chapter, "member" means the following:
(1) With respect to a nonstock membership association, the termmeans those persons admitted in accordance with the bylaws ofthe association.
(2) With respect to an association having capital stock, the termmeans the holders of voting stock of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-6
"Person"
Sec. 6. As used in this chapter, "person" includes the following:
(1) Individuals.
(2) Firms.
(3) Partnerships.
(4) Business trusts.
(5) Limited liability companies.
(6) Corporations.
(7) Executors.
(8) Administrators.
(9) Receivers.
(10) Bodies politic or political subdivisions.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-7
Associations governed as nonprofit corporations
Sec. 7. An association organized under or governed by thischapter is a nonprofit corporation within the meaning of this chapterand for purposes of interpreting Indiana law concerning associationsorganized under or governed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-8
Eligibility to form an association
Sec. 8. The following may form an association under this chapter:
(1) Five (5) or more persons engaged in the production ofagricultural products.
(2) Two (2) or more associations that:
(A) are:
(i) organized under or governed by this chapter; or
(ii) organized under any other Indiana law or under thelaws of any other state or territory of the United States orof the District of Columbia; and
(B) are operated on a cooperative basis for the mutual
benefit of the associations' members, members and patrons,or patrons as producers or associations of producers.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-9
Authorized activities
Sec. 9. An association may be organized to engage in any activityin connection with the following:
(1) Producing, marketing, or selling the agricultural products ofthe association's members and others.
(2) Harvesting, preserving, drying, processing, canning,packing, grading, storing, handling, shipping, or use ofagricultural products of the association's members and others.
(3) Manufacturing or marketing the byproducts of agriculturalproducts of the association's members and others.
(4) Manufacturing, selling, or supplying machinery, equipment,or supplies to the association's members and others.
(5) Financing activities described in subdivisions (1) through(4).
(6) Performing or furnishing services of an economic oreducational nature, on a cooperative basis for persons engagedin agriculture or in any one (1) or more of the activitiesspecified in this section.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-10
Association; powers
Sec. 10. Each association incorporated under this chapter has thefollowing powers:
(1) To engage in any activity in connection with the following:
(A) Producing, marketing, selling, preserving, harvesting,drying, processing, manufacturing, canning, packing,grading, storing, handling, or use of any agriculturalproducts produced or delivered to the association by theassociation's members or others.
(B) Manufacturing or marketing the byproducts ofagricultural products produced or delivered to theassociation by the association's members or others.
(C) Manufacturing, producing, processing, procuring,purchasing, or supplying supplies, machinery, or equipmentto the association's members or others.
(D) Financing any activities described in clauses (A) through(C).
(E) Performing or furnishing economic, educational, or otherservices.
(F) Any one (1) or more of the activities specified in thissection.
(2) To transact business with and perform services fornonmembers in an amount not greater in value than the totalamount of business transacted with and services performed for
members in the same fiscal year.
(3) To borrow money without limitation as to the amount ofcorporate indebtedness or liability.
(4) To act as the agent or representative of any member ormembers or others in any of the activities described insubdivisions (1) through (3).
(5) To make advances to members and other persons.
(6) To:
(A) purchase or acquire;
(B) hold, own, and exercise all rights of ownership in;
(C) sell, transfer, or pledge; or
(D) guarantee the payment of dividends or interest on or theretirement or redemption of;
shares of the capital stock or bonds of any corporation orassociation engaged in any related activity or in thewarehousing, handling, or marketing of any of the productshandled by the association.
(7) To establish and accumulate reserves and surplus.
(8) To:
(A) buy; or
(B) acquire, hold, and exercise all privileges of ownershipover;
real and personal property as may be necessary, convenient, orincidental to the conduct and operation of the business andactivities of the association.
(9) To:
(A) establish, secure, own, and develop; and
(B) dispose of;
patents, trademarks, and copyrights.
(10) To:
(A) do anything:
(i) necessary or proper for the accomplishment of any one(1) of the purposes or the performance of any one (1) ormore of the activities listed in this section; or
(ii) conducive to or expedient for the interest or benefit ofthe association; and
(B) contract accordingly.
(11) To exercise and possess the following:
(A) All powers, rights, and privileges necessary for orincidental to:
(i) the purposes for which the association is organized; or
(ii) the activities in which the association is engaged.
(B) Any other rights, powers, and privileges granted byIndiana law or to for-profit or nonprofit corporations, exceptas are inconsistent with the express provisions of thischapter.
(12) To recover, after two (2) years, any unclaimed stocks,dividends, capital credits, patronage refunds, utility deposits,membership fees, account balances, or book equities:
(A) for which the owner cannot be found; and (B) that are the result of distributable savings of theassociation returned to the members on a pro rata basis.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-11
Association; membership; issuance of stock
Sec. 11. (a) An association may under the terms and conditionsprescribed in the bylaws adopted by the association admit asmembers or issue common and voting stock to any of the following:
(1) The individuals or political subdivisions of Indiana thatmeet the requirements of subsection (b).
(2) The associations that meet the requirements of subsection(c).
(b) To meet the requirements of this subsection, individuals orpolitical subdivisions must be engaged in the production ofagricultural products. For purposes of this section, a lessor orlandlord of land used for the production of agricultural products orany individual devoting a substantial part of the individual's time toassisting others to produce agricultural products, whether employedby a farmer, an agricultural cooperative corporation, or anassociation, is considered to be engaged in the production ofagricultural products. Except as otherwise provided in this section,the holders of common stock of an association limited by its articlesof incorporation to one (1) or more particular agricultural servicesmust be producers of agricultural products that use the articles orservices to which the activities of the association are limited.
(c) An association:
(1) organized under or governed by this chapter or organizedunder or governed by the agricultural law of another state of theUnited States; or
(2) that complies with 7 U.S.C. 291 and 7 U.S.C. 292, whetherincorporated in or outside the United States, and with actsamendatory or supplementary to 7 U.S.C. 291 and 7 U.S.C. 292;
may become a member or stockholder of any association orassociations organized under this chapter. Any corporation, howeverorganized, that is lawfully engaged in the production of agriculturalproducts, either as owner, lessor, or lessee of land used for theproduction of agricultural products, may become a stockholder ormember in any association that is organized under this chapter andfor which more than one-half (1/2) of the value of the association'sbusiness consists of the patronage of individuals who are directproducers of agricultural products.
(d) A member of an association organized under this chapter thatis not an individual may be represented by any individual authorizedto do so in writing by the member.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-12
Articles of incorporation
Sec. 12. (a) The incorporators of an association to be formed
under this chapter shall execute and file articles of incorporationsetting forth the following:
(1) The name of the proposed association.
(2) The purpose or purposes for which it is formed.
(3) The period during which it is to continue to exist, if theperiod is to be limited.
(4) The post office address of its principal office and the nameand post office address of its resident agents.
(5) If organized without capital stock, whether the propertyrights and interest of the members are equal or unequal. Ifproperty rights and interest of the members are unequal, thearticles of incorporation must set forth the provisions under andby which the property rights and interests of the respectivemembers are to be determined and fixed.
(6) The following information, if the association is organizedwith capital stock:
(A) The total number of shares that the association mayissue.
(B) Whether all or part of the shares have a par value.
(C) If all or part of the shares have a par value, the numberand par value of the shares.
(D) Whether all or part of the shares are without a par value.
(E) If all or part of the shares are without a par value, thenumber of shares without a par value.
(F) If the shares are to be divided into classes or kinds:
(i) the number and par value, if any, of the shares of eachclass; and
(ii) subject to the limitations provided in this chapter withrespect to issuance of voting stock, either a statement ofthe relative rights, preferences, limitations, and restrictionsof each class, or a provision expressly vesting authority inthe board of directors to determine the relative rights,preferences, limitations, and restrictions of each class byresolution or resolutions adopted before the issuance ofany shares of the specific class.
(G) If the shares of any class are to be issuable in series:
(i) descriptions of the several series; and
(ii) subject to the limitation provided in this chapter withrespect to the issuance of voting stock, a statement of therelative rights, preferences, limitations, and restrictions ofeach series, or a provision expressly vesting authority inthe board of directors to determine the relative rights,preferences, limitations, and restrictions of each series byresolution or resolutions adopted before the issuance ofany of the shares of the specific series.
(7) The number of directors constituting the initial board ofdirectors of the association.
(8) The names and post office addresses of the first board ofdirectors.
(9) The names and post office addresses of the incorporators. (10) Any other provisions, consistent with Indiana laws, for theregulation of the business and conduct of the affairs of theassociation and for creating, defining, limiting, or regulating thepowers of the following:
(A) The association.
(B) The directors.
(C) The members.
(D) The shareholders of any class or classes of shareholders.
(b) The articles of incorporation must be:
(1) prepared and signed in duplicate by the incorporators;
(2) acknowledged by at least one (1) of the incorporators beforea notary public; and
(3) presented in duplicate to the secretary of state at thesecretary of state's office and accompanied by the feesprescribed by this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-13
Presentation of articles of incorporation
Sec. 13. (a) Upon presentation of articles of incorporation thatcomply with the requirements of this chapter, if the secretary of statefinds that the articles of incorporation conform to law, the secretaryof state shall do the following:
(1) Endorse the secretary of state's approval upon the duplicatecopies of the articles.
(2) When all fees have been paid as required by law:
(A) file one (1) copy of the articles in the secretary of state'soffice; and
(B) issue a certificate of incorporation to the incorporators.
(3) Return the certificate of incorporation, together with theremaining copy of the articles of incorporation bearing theendorsement of the secretary of state's approval, to theincorporators or their representative.
(b) Upon the issuance of the certificate of incorporation by thesecretary of state under subsection (a):
(1) the corporate existence of the association begins;
(2) all subscriptions to membership, subscriptions for shares ofthe association, or subscriptions to membership and for sharesof the association are considered to be accepted by theassociation; and
(3) the subscribers are considered to be members, shareholders,or members and shareholders of the association.
(c) The certificate of incorporation issued by the secretary of stateunder this section is conclusive evidence of the fact that theassociation has been incorporated and of the corporation's right totransact business and to incur indebtedness.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-14
Association; merging, consolidating, or dissolving association;
amending articles of incorporation
Sec. 14. (a) Subject to subsections (b) and (c), an association mayamend the association's articles of incorporation, merge orconsolidate with one (1) or more other associations or corporations,effect special corporate transactions as described in IC 23-1, ordissolve by following the procedures specified in IC 23-1.
(b) An amendment to the articles of incorporation of anassociation organized under or governed by this chapter or anagreement of merger or consolidation to which an associationorganized under or governed by this chapter is a party may beadopted:
(1) by the affirmative votes of the majority of the membersentitled to vote with respect to the amendment or agreement andvoting at the meeting called for that purpose, if the voting rightsof the members are equal; or
(2) by the affirmative votes of the majority of the votes cast bythe members entitled to vote with respect to the amendment oragreement and voting at the meeting called for that purpose, ifthe voting rights of the members are not equal.
(c) A special corporate transaction or dissolution of an associationorganized under or governed by this chapter may be authorized:
(1) by the affirmative votes of three-fourths (3/4) of themembers entitled to vote with respect to the transaction ordissolution and voting at the meeting called for that purpose, ifthe voting rights of the members are equal; or
(2) by the affirmative votes of three-fourths (3/4) of the votescast by the members entitled to vote with respect to thetransaction or dissolution and voting at the meeting called forthat purpose, if the voting rights of the members are not equal.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-15
Bylaws; adoption and amendment; scope
Sec. 15. (a) Each association organized under or governed by thischapter shall, not more than thirty (30) days after the association'sincorporation or after the association's acceptance of therequirements of this chapter, adopt a code of bylaws.
(b) The power to adopt, make, alter, amend, or repeal the bylawsis vested in the board of directors, unless specifically provided in thearticles of incorporation.
(c) The bylaws may contain any provisions for the regulation andmanagement of the business and affairs of the association that are notinconsistent with the articles of incorporation and the laws of thisstate, including provisions concerning the following:
(1) The time and place of holding and the manner of calling andconducting meetings of members and directors.
(2) The number of members that constitute a quorum at ameeting of the members.
(3) The number of directors that constitute a quorum at ameeting of the directors. (4) The right of members to vote by proxy, by mail, or bydelegates elected by members in their respective districts, or byany one (1) or more such methods.
(5) The number of directors, their qualifications, the date, time,place, and manner of their election, and the length of their termsof office.
(6) The powers, duties, tenure, and qualifications of officers ofthe association and the date, time, place, and manner of electingthe officers.
(7) The creation and appointment of executive and othercommittees, and the number of members of the committees andtheir powers.
(8) The:
(A) amount of entrance, organization, and membership fees,if any;
(B) manner and method of collection of the fees; and
(C) purposes for which the fees may be used.
(9) The:
(A) amount, if any, that each member is required to payannually or from time to time to carry on the business of theassociation;
(B) charge, if any, to be paid by each member for servicesrendered by the association to the member; and
(C) time of payment and manner of collection of theamounts.
(10) The requirements made or imposed on members to enterinto contracts with the association for the marketing of themembers' products or for the purchasing of the members'supplies, machinery, or equipment, or both.
(11) The following:
(A) Qualifications for membership in the association and theconditions precedent to membership.
(B) The method, time, and manner in which a member canwithdraw from membership.
(C) The conditions upon which and the time when themembership of any member ceases.
(D) The automatic suspension of the voting rights of amember when the member ceases to be eligible formembership in the association.
(E) The method, manner, and effect of the expulsion of amember.
(F) The manner of determining the value of a member'sinterest or shares:
(i) when the member is expelled; or
(ii) upon the member's death or withdrawal frommembership.
(G) The manner in which the interest or shares of a membercan be transferred or assigned.
(H) The time and manner in which a member's interest orshares may be redeemed by the association. (12) Penalties for violation of the bylaws.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-16
Association; meetings; special meetings
Sec. 16. (a) Each association shall provide in the association'sbylaws for one (1) or more regular meetings annually.
(b) The board of directors of an association may call a specialmeeting at any time.
(c) Ten percent (10%) of the members or stockholders of anassociation may file a petition stating the specific business to bebrought before the association and demand a special meeting at anytime. If the requirements of this subsection are satisfied, the directorsof the association shall call the special meeting.
(d) Notice of all meetings, together with a statement of thepurposes of the meeting, shall be mailed to each member at least ten(10) days before the meeting. However, the association's bylaws mayinstead provide that the notice may be given by publication in anewspaper of general circulation, published at the principal place ofbusiness of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-17
Board of directors; management of association
Sec. 17. (a) The business and affairs of an association shall bemanaged by a board of directors of at least five (5) directors. Subjectto this limitation, unless specifically provided in the articles ofincorporation, the number of directors shall be fixed by the bylaws,except as to the number constituting the initial board of directors.The number constituting the initial board of directors shall be fixedby the articles of incorporation.
(b) The number of directors may be increased or decreased fromtime to time by amendment of the bylaws, but a decrease in thenumber of directors may not shorten the term of an incumbentdirector. In the absence of articles of incorporation or bylaws that fixthe number of directors, the number of directors must be the same asstated in the articles of incorporation for the initial board ofdirectors.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-18
Board of directors; election; terms
Sec. 18. Except as otherwise provided in this chapter, thedirectors:
(1) shall be elected by the members at the annual meeting of themembers; and
(2) may, if provided in the bylaws, be elected for terms of officethat expire at different times.
A term of office may not continue for longer than three (3) years. Inthe absence of a provision in the bylaws for terms of office, each
director, except the first board of directors, shall be elected for a termof one (1) year and hold office until the director's successor is electedand qualified. The first board of directors, as named in the articles ofincorporation, shall hold office until the first annual meeting of themembers.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-19
Board of directors; districts; primary elections
Sec. 19. The territory served by an association may be dividedinto districts and the directors elected according to districts. In thiscase, the bylaws must specify:
(1) the number of directors to be elected in each district; and
(2) the manner and method of reapportioning the directors andof redistricting the territory served by the association.
The bylaws may provide that primary elections shall be held in eachdistrict to elect the directors apportioned to the district and that theresult of the primary elections may be ratified by the members at thenext annual or special meeting of the members of the association ormay be considered as final.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-20
Board of directors; appointment
Sec. 20. One (1) or more directors may be appointed by anypublic official or commission or by the other directors elected by themembers or their delegates. Directors appointed as provided in thissection:
(1) shall represent primarily the interest of the general public inthe association, but have the same powers and rights as otherdirectors; and
(2) may not total more than one-fifth (1/5) of the entire numberof directors.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-21
Board of directors; payment; restrictions
Sec. 21. (a) An association may provide a fair remuneration for:
(1) the time actually spent by the association's officers anddirectors in the association's service; and
(2) the service of the members of the association's executivecommittee and other committees.
(b) A director may not during the term of the director's office bea party to a contract for profit with the association differing in anyway from the business relations accorded other members or patronsof the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-22
Executive committee; powers Sec. 22. If the association's bylaws provide for an executivecommittee, all of the functions and powers of the board of directorsmay be delegated to the committee, subject to the general directionand control of the board.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-23
Board of directors; vacancies
Sec. 23. When a vacancy on the board of directors occurs, otherthan by expiration of term of office, the remaining members of theboard may fill the vacancy by a majority vote of the remainingmembers, unless the bylaws provide for the election of directors bydistricts. If the bylaws provide for the election of directors bydistricts, the board of directors may call a special meeting of themembers in that district to fill the vacancy or may fill the vacancy asin the case of any other vacancy. A director who is elected orappointed by the board of directors to fill a vacancy on the boardshall serve until the next annual or special meeting of the members.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-24
Board of directors; eligibility
Sec. 24. (a) Each director must during the director's term of officebe a citizen of the United States. Each director, other than a publicdirector, must be engaged in or have a direct interest in theproduction of agricultural products.
(b) An association may provide in the association's bylaws that aperson is not eligible for election as a director unless the person is amember or patron of the association.
(c) An association may provide in the association's bylaws that aperson is not eligible for election as a director unless the person haspaid any indebtedness owed by the person to the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-25
Board of directors; financial report; records
Sec. 25. (a) The board of directors shall require a report to bepresented to the board, at intervals determined by the board but notless often than semiannually, showing:
(1) the amount of indebtedness owed to the association by eachdirector, officer, and employee at the close of the period; and
(2) the amount of stock, membership capital, or credits for thepurchase of stock or membership capital shown on the books ofthe association as belonging to each director, officer, andemployee.
The board of directors shall take action with respect to any individualindebtedness to the association that is larger than permitted by thebylaws as is best for the association in the sound discretion of theboard.
(b) The board of directors shall require a record of attendance to
be kept and the secretary of the board to make a report at the annualmeeting of members detailing the directors' attendance up to andincluding the last directors' meeting before the annual meeting,indicating:
(1) the number of regular and special meetings of the board; and
(2) the number of regular and of special meetings attended byeach member of the board designated by name.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-26
Extension of credit
Sec. 26. (a) An association may provide in the association'sbylaws limits within which the association may extend credit, eitherdirectly or indirectly, to any director, officer, or employee of theassociation.
(b) A person who is a director, officer, or employee of theassociation may not be extended credit on terms that are morefavorable than the terms available to any other customer or memberof the association.
(c) The provisions of this chapter:
(1) concerning the extension of credit to any director, officer,or employee;
(2) requiring the inclusion of information concerning theextension of credit to any director, officer, or employee in theassociation's annual reports to the secretary of state; and
(3) providing penalties for failure to comply with thoseprovisions;
apply only to associations in which more than twenty-five percent(25%) of the gross income arises directly from the purchasing ofsupplies for their members and others. An association with a lesserpercentage of gross income arising from purchasing of supplies mayadopt similar provisions in the association's articles of incorporationas originally filed or later amended. If adopted, the provisions applyin every respect to the association and to the association's directors,officers, and employees.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-27
Election of officers
Sec. 27. (a) The officers of an association must consist of apresident, one (1) or more vice presidents, a secretary, a treasurer,and other officers that may be prescribed by the bylaws. Each officershall be elected or appointed by the board of directors at the time, inthe manner, and for the terms as the bylaws provide, subject to thefollowing conditions:
(1) The president and one (1) vice president must be membersof the board of directors.
(2) A vice president who is not a director may not succeed to orfill the office of president.
(b) Except for the offices of the president and secretary, any two
(2) or more offices may be held by the same individual.
(c) The treasurer may be a bank or depository. If the treasurer isa bank or depository:
(1) the treasurer is considered to be a function of the board ofdirectors but not an officer of the board of directors; and
(2) the secretary shall perform the usual accounting duties ofthe treasurer.
However, the funds of the association must be deposited only as andwhere authorized by the board of directors.
(d) The bylaws may provide for the election of the president andone (1) vice president by the members or their delegates at the annualmeeting of the members.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-28
Membership certificates
Sec. 28. (a) A certificate of membership or a share or shares ofvoting stock may not be issued by an association until themembership fee or consideration for the share of stock has been paidin full. A promissory note may be accepted in full or partial paymentfor a share of stock or membership fee. However, the stock ormembership certificate shall be held as security for the payment ofthe note. The acceptance of a note in full or partial payment of ashare of stock or membership fee does not affect the member's rightto vote if the member is not in default under the terms of the note.
(b) A member is not liable for the debts of the association to anamount exceeding the sum remaining unpaid on the member'smembership fee or on the member's subscription or agreement topurchase a share or shares of stock, including any unpaid balance onany note given in payment.
(c) An association may provide in the association's articles ofincorporation or bylaws that a member may not own more than afixed amount or percentage of the association's membership capitalor a fixed percentage or number of shares of the association'soutstanding voting stock.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-29
Voting stock; votes; transfer
Sec. 29. (a) An association may provide in the association'sarticles of incorporation or bylaws that a member is not entitled tomore than one (1) vote regardless of the amount of capital investedin or number of shares of voting stock owned by the member.
(b) The voting stock of or membership in an association may notbe transferred to persons or associations that are not qualified to bemembers of an association organized under or governed by thischapter, and this restriction must be printed on every membershipcertificate and certificate of voting stock.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-30
Distribution of dividends
Sec. 30. (a) The net earnings or savings of an association from theassociation's marketing activities, purchasing activities, or marketingand purchasing activities that exceed the amounts needed to restorea deficit, to pay dividends on outstanding stock, or to establish orprovide for additions to reserves or surplus, or both, must bedistributed, unless otherwise provided by the bylaws, to the patronsof the association on a patronage basis. If provided in the bylaws, thedistribution of the net earnings or savings from the marketingactivities, purchasing activities, or marketing and purchasingactivities that exceed the amounts needed to restore a deficit, to paydividends on outstanding stock, or to establish or provide foradditions to reserves or surplus, or both, may be made at differentrates for members and nonmembers, or may be restricted only tomembers, or only to members and those patrons with whom theassociation has contracted to pay patronage refunds, but all thedistributions must be made on a patronage basis.
(b) If the reserves or surplus of an association are distributed atany time, the reserves or surplus must be distributed on a patronagebasis as provided by the bylaws of the association.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-31
Redemption of stock
Sec. 31. (a) An association organized with capital stock may, atany time, unless otherwise provided in the association's articles ofincorporation or bylaws, and except when the debts of theassociation exceed fifty percent (50%) of the assets:
(1) redeem, purchase, or acquire the association's outstandingcommon stock at the book value, as conclusively determined bythe association's board of directors, but not to exceed par; and
(2) pay for the stock in cash within one (1) year.
(b) An association organized with capital stock may, at any time,unless otherwise provided in its articles of incorporation or bylaws,redeem, purchase, or acquire the association's outstanding preferredstock. However, an association may not redeem or purchase theassociation's outstanding preferred stock:
(1) when the association is insolvent; or
(2) when the redemption or purchase would render theassociation insolvent or would reduce the net assets of theassociation below the total amount payable to the holders ofstock having prior or equal rights to the assets of the associationupon involuntary dissolution.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-32
Issuance of various classes of stock
Sec. 32. (a) If the board of directors of an association, underauthority expressly vested in the board by the articles of
incorporation, adopts a resolution that determines and states therelative rights, preferences, limitations, or restrictions of any class orclasses of shares, or of any series of any class or classes, theassociation may not issue any of such shares unless the associationfirst presents in duplicate in the office of the secretary of state,accompanied by the fees prescribed by this chapter, a certificatesigned by the secretary or assistant secretary, and verified under oathby the president or a vice president of the association, setting forththe resolution so adopted and the time and manner of its adoption.
(b) Upon presentation of a certificate under subsection (a), thesecretary of state, if the secretary of state finds that the certificateconforms to law and to the articles of incorporation of theassociation:
(1) shall endorse the secretary of state's approval on each copyof the certificate; and
(2) when all fees have been paid as required by law, shall:
(A) file one (1) copy of the certificate in the secretary ofstate's office;
(B) issue the secretary of state's certificate of approval andfiling; and
(C) forward to the association the secretary of state'scertificate, together with the other copy of the certificate ofthe officers of the association bearing the endorsement of thesecretary of state's approval.
After the secretary of state takes the actions under subdivisions (1)and (2), the association may issue the shares.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-33
Officers and director; charges; removal
Sec. 33. (a) A member of an association may bring chargesagainst an officer or a director by filing the charges in writing withthe secretary of the association, together with a petition that is signedby five percent (5%) of the members and that requests the removalof the officer or director.
(b) The removal of the officer or director shall be voted upon atthe next regular or special meeting of the association. Theassociation may by a vote of a majority of the members of theassociation remove the officer or director and fill the vacancy.
(c) The director or officer against whom the charges have beenbrought must:
(1) be informed in writing of the charges before the meetingdescribed in subsection (b); and
(2) have an opportunity at the meeting to be heard in person orby counsel and to present witnesses.
The person or persons bringing the charges against the director orofficer are entitled to the same opportunity to be heard in person orby counsel and to present witnesses.
(d) If the bylaws provide for the election of directors by districtswith primary elections in each district, a petition for removal of a
director must be signed by twenty percent (20%) of the membersresiding in the district from which the director was elected. Theboard of directors must call a special meeting of the membersresiding in that district to consider the removal of the director. Thedirector in question may be removed from office by a vote of themajority of the members of that district.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-34
Marketing contracts
Sec. 34. (a) An association and its members may make andexecute marketing contracts requiring the members to sell, for anyperiod that is not more than ten (10) years:
(1) all or any specified part of the members' agriculturalproducts; or
(2) specified commodities;
exclusively to or through the association or any facilities to becreated by the association.
(b) If a member contracts a sale to the association, it shall beconclusively held that title to the products passes absolutely andunreservedly, except for recorded liens, to the association:
(1) upon delivery; or
(2) at any other specified time, if expressly and definitelyagreed in the contract.
(c) A contract authorized under this section may provide that theassociation may:
(1) sell or resell the products delivered by the association'smembers, with or without taking title to the products; and
(2) pay over to the association's members the resale price, withor without pooling, actual or proportionate, after deducting allnecessary selling, overhead, and other costs and expenses,including:
(A) interest on preferred stock, not exceeding eight percent(8%) per year;
(B) reserves for retiring the stock, if any;
(C) other proper reserves;
(D) interest not exceeding eight percent (8%) per year oncommon stock; and
(E) any other deductions specified in the contract.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-35
Remedies for breach of contract
Sec. 35. (a) The bylaws or a marketing contract of an associationmay do the following:
(1) Fix, as liquidated damages, specific amounts to be paid bythe members or stockholders to the association upon the breachof any provision of the marketing contract regarding the sale,delivery, or withholding of products.
(2) Provide that the contracting member will pay all costs,
premiums for bonds, expenses, and fees if any action is broughtupon the contract by the association.
A provision described in this subsection is valid and enforceable, anda clause providing for liquidated damages is enforceable and is notregarded as a penalty.
(b) If there is a breach or threatened breach of a marketingcontract regarding the sale, delivery, or withholding of products bya member, the association is entitled to:
(1) an injunction to prevent the further breach of the contract;and
(2) a decree of specific performance of the contract.
(c) Pending the adjudication of an action under subsection (b) andupon:
(1) filing a verified complaint showing the breach or threatenedbreach; and
(2) filing a sufficient bond;
the association is entitled to a temporary restraining order andpreliminary injunction against the member.
(d) Subsections (a), (b), and (c) are applicable to, and the rightsand remedies described in subsections (a), (b), and (c) are availableto, any corporation that is organized under any agriculturalcooperative law of any other state of the United States and isadmitted to do business in Indiana.
(e) A grower of agricultural products that signs a marketingagreement with a cooperative marketing association organized underthis chapter is permitted to place crop mortgages on the grower'scrops. However, the crop mortgages and other liens are subordinateto the right of the association to take delivery of any such cropscovered by the marketing agreement. In such cases, if the mortgageeor lien holder serves proper notice on the association, theproportionate proceeds due or payable to that grower become subjectto the mortgages or liens instead of the crops originally covered bythe mortgages or liens. If any deficiency remains at the end of theseason, the grower is liable for the deficiency under the presentpractice, and the mortgagee or lienholder has the same rights againstthe grower for the deficiency as the grower possesses.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-36
Purchase of property or stock in another entity
Sec. 36. If an association that is organized under or governed bythis chapter with capital stock purchases:
(1) the stock;
(2) any property; or
(3) any interest in any property;
of any person, firm, corporation, or association, the association maydischarge the obligations incurred in the purchase, wholly or in part,by exchanging for the acquired interest, shares of the association'scapital stock to an amount that at par value would equal the fairmarket value of the stock or interest purchased, as determined by the
board of directors. In that case, the transfer to the association of thestock or interest purchased must be equivalent to payment in cash forthe shares of stock issued.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-37
Biennial report; contents; form; delivery
Sec. 37. (a) During April of every other year, each associationorganized or reorganized under this chapter shall prepare and file abiennial report setting forth the following information:
(1) The name of the association and the state or country underwhose law the association is incorporated.
(2) The address of the association's registered office and thename of the association's registered agent at that office inIndiana.
(3) The address of the association's principal office.
(4) The names and business or residence addresses of theassociation's directors, secretary, and highest executive officer.
(b) The biennial report of each association must be:
(1) made on a form prescribed and furnished by the secretary ofstate;
(2) signed by any current officer of the association or, if theassociation is in the hands of a receiver or a trustee, by thereceiver or trustee;
(3) verified and affirmed subject to the penalties for perjury;and
(4) filed in the office of the secretary of state, accompanied bythe fees prescribed by law.
(c) Information in the biennial report must be current as of thedate the biennial report is executed on behalf of the association.
(d) The first biennial report of the association must be deliveredto the secretary of state in the second year following the calendaryear in which the association was organized. Subsequent biennialreports must be delivered to the secretary of state every second yearfollowing the year in which the last biennial report was filed.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-38
Disclosure of financial condition; offense
Sec. 38. (a) If, upon receipt of a biennial report delivered undersection 37 of this chapter, the secretary of state determines or hasreason to believe that the association filing the report is notdisclosing the association's true financial condition or is violatingthis chapter, the secretary of state may require the association todisclose all material facts by:
(1) submitting a verified audit bearing the certificate under oathof a qualified public accountant approved by the secretary ofstate;
(2) replying to interrogatories; or
(3) reporting under oath on any matters requested by the
secretary of state.
(b) An officer or a director of an association who knowinglydistributes, publishes, or files with the secretary of state a writtenreport, certificate, or statement of the condition or business of theassociation that is false in any material respect commits a Class Dfelony.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-39
Application of other laws
Sec. 39. A law in conflict with this chapter may not be construedto apply to an association provided for in this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-40
Limitation on the use of the term "cooperative"
Sec. 40. A person, or a firm, a limited liability company, acorporation, or an association organized in Indiana after February 23,1925, may not use the word "cooperative" as part of its corporate orother business name or title for cooperative activities of producers ofagricultural products unless it has complied with this chapter.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-41
Membership of association in other corporations or associations
Sec. 41. An association may organize, form, operate, own,control, have an interest in, own stock of, or be a member of anycorporation or corporations, or association or associations, with orwithout capital stock, that are engaged in:
(1) any activity in connection with the producing, marketing,selling, preserving, harvesting, drying, processing,manufacturing, canning, packing, grading, storing,transportation, handling, or use of any:
(A) agricultural products; or
(B) byproducts of any agricultural products;
handled by the association or the association's patrons;
(2) any activity in connection with the manufacturing,assembling, selling, supplying, purchasing, hiring,transportation, or use of supplies, machinery, or equipment thatthe association or the association's patrons use; or
(3) the financing of any activities described in subdivision (1)or (2) or in performing or furnishing economic or educationalservice for persons engaged in agriculture.
As added by P.L.2-2008, SEC.3.
IC 15-12-1-42
Joint activities with other associations
Sec. 42. (a) An association may, upon resolution adopted by theassociation's board of directors:
(1) enter into all necessary and proper contracts and
agreements; and
(2) make all necessary and proper stipulations, agreements, andcontracts and arrangements with any other cooperativecorporation, association, or associations formed in Indiana or inany other state;
for the cooperative and more economical performance of all or anypart of the association's business.
(b) Any two (2) or more as