17-1613.   Certificate of membership; stock and stockholders.(a) When a member of an association established without capital stock has paidsuch member's membership fee in full, such member shall receive a certificateof membership. No association shall issue stock to a member until such stockhas been fully paid for; promissory notes of the members may be accepted by theassociation as full or partial payment. The association shall hold the stock assecurity for the payment of the note, but such retention as security shall notaffect the member's right to vote. Except for debts lawfully contracted betweenthe member and the association, no member shall be liable for the debts of theassociation to an amount exceeding the sum remaining unpaid on such member'smembership fee or such member's subscription to the capital stock. Nostockholder of a cooperative association, except another cooperativeassociation shall own more than 20% of the common stock of the association. Anassociation in its bylaws may limit the amount of common stock which one membermay own to any amount less than 20% of the common stock.

      (b)   The articles of incorporation or the bylaws may provide that no memberor stockholder shall be entitled to more than one vote and may also provide forvoting based on patronage or patronage equity or both. In the event voting isbased on patronage or patronage equity or both, no member shall have more than5% of the total vote unless the member is another cooperative association. Ifvoting based on patronage or patronage equity, or both, is used, the provisionsof this act referring to a majority or similar percentage vote by members,shareholders or shares shall refer to such majority or other proportion of thevoting power of the members, stockholders or shares. Any association organizedwith stock, under this act, may issue preferred stock with or without the rightto vote, or with such restrictions on its voting power as the articles ofincorporation may prescribe; such stock may be redeemed or retired by theassociation upon such terms and conditions as may be provided for in thearticles of incorporation, and printed on the certificate.

      (c)   The bylaws shall prohibit the transfer of the common stock of theassociation to persons not eligible to be a member of the association and suchrestrictions must be printed upon every certificate of stock subject thereto.

      (d)   The association may at any time buy in or purchase its common stock atpar or book value as conclusively determined by the board of directors.

      History:   L. 1921, ch. 148, § 13; R.S. 1923, 17-1613; L. 1931, ch.150, § 6; L. 1992, ch. 227, § 13; July 1.