CHAPTER 251. COOPERATIVE ASSOCIATIONS

State Codes and Statutes

Back To Homepage

State Codes and Statutes

Statutes > Texas > Business-organizations-code > Title-6-associations > Chapter-251-cooperative-associations

BUSINESS ORGANIZATIONS CODE

TITLE 6. ASSOCIATIONS

CHAPTER 251. COOPERATIVE ASSOCIATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 251.001. DEFINITIONS. In this chapter:

(1) "Cooperative basis" means that net savings, after payment of

any investment dividends or after provision for separate funds

has been made as required or authorized by law, the certificate

of formation, or bylaws, are:

(A) allocated or distributed to a member patron or to each

patron in proportion to patronage; or

(B) retained by the entity for:

(i) actual or potential expansion of the entity's services;

(ii) the reduction of charges to patrons; or

(iii) any other purpose consistent with the entity's nonprofit

character.

(2) "Invested capital" means funds invested in a cooperative

association by an investor with the expectation of receiving an

investment dividend.

(3) "Investment dividend" means the return on invested capital

or on membership capital derived from the net savings of the

cooperative association.

(4) "Membership capital" means the funds of a cooperative

association derived from members of the cooperative association

generally as a requirement of membership or in lieu of patronage

dividends. The term does not include deposits or loans from

members.

(5) "Net savings" means the total income of a cooperative

association less the costs of operation.

(6) "Patronage dividend" means a share of the net savings

distributed among members of the cooperative association on the

basis of patronage, as provided by the certificate of formation.

(7) "Savings returns" means the amount returned by a cooperative

association to patrons of a cooperative association in proportion

to patronage or otherwise.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.002. APPLICABILITY OF NONPROFIT CORPORATION PROVISIONS.

(a) A provision of Title 1 and Chapters 20 and 22 governing

nonprofit corporations applies to a cooperative association.

(b) Notwithstanding Subsection (a), this chapter controls over

any conflicting provision of Title 1 and Chapters 20 and 22

governing nonprofit corporations.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.003. EXEMPTION. This chapter does not apply to a

corporation or association organized on a cooperative basis under

a statute of this state other than this chapter unless that other

statute specifically states that this chapter does apply.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS

Sec. 251.051. ORGANIZATION MEETING. After a cooperative

association's certificate of formation is filed, the cooperative

association shall hold an organization meeting in accordance with

Section 22.104.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.052. AMENDMENT OF CERTIFICATE OF FORMATION. (a) The

board of directors of a cooperative association may propose an

amendment to the cooperative association's certificate of

formation by a two-thirds vote of the board members. The members

of a cooperative association may petition to amend the

certificate of formation as provided by the bylaws.

(b) Not later than the 31st day before the date of the meeting,

the secretary shall:

(1) send notice of a meeting to consider a proposed amendment to

each member of the cooperative association at the member's last

known address; or

(2) post notice of a meeting to consider a proposed amendment in

a conspicuous place in all principal places of activity of the

cooperative association.

text of the proposed amendment and the text of the part of the

certificate of formation to be amended.

(d) To be approved, an amendment must be adopted by the

affirmative vote of two-thirds of the members voting on the

amendment.

(e) Not later than the 30th day after the date an amendment is

adopted by the members of a cooperative association, the

cooperative association shall file a certificate of amendment

with the secretary of state in accordance with Chapter 4. The

certificate of amendment must be:

(1) signed by an authorized officer of the cooperative

association; and

(2) in the form required by Section 3.052.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.053. BYLAWS. (a) Unless the certificate of formation

or bylaws of a cooperative association require a greater

majority, the bylaws may be adopted, amended, or repealed by a

majority vote of the cooperative association's members voting on

the matter.

(b) Except as provided by this code, the bylaws may contain:

(1) requirements for admission to membership;

(2) requirements for disposal of a member's interest on

cessation of membership;

(3) the time, place, and manner of calling and conducting

meetings;

(4) the number or percentage of the members constituting a

quorum;

(5) the number, qualifications, powers, duties, and term of

directors and officers;

(6) the method of electing, removing, and filling a vacancy of

directors and officers;

(7) the division or classification, if any, of directors to

provide for staggered terms;

(8) the compensation, if any, of the directors;

(9) the number of directors necessary to constitute a quorum;

(10) the method for distributing the net savings;

(11) a requirement that each officer or employee of the

cooperative association who handles funds or securities be

bonded;

(12) other discretionary provisions of this chapter, Title 1,

and Chapters 20 and 22; and

(13) any other provision incident to a purpose or activity of

the cooperative association.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.054. RESTATED CERTIFICATE OF FORMATION. (a) The board

of directors of a cooperative association may adopt a restated

certificate of formation as provided by Subchapter B, Chapter 3,

by following the procedure to amend the association's certificate

of formation provided by Section 251.052, except that member

approval is required if the restated certificate of formation

contains an amendment.

(b) A person shall file a restated certificate of formation as

provided by Chapter 4, and the restated certificate of formation

takes effect as provided by Subchapter B, Chapter 3.

Added by Acts 2005, 79th Leg., Ch.

64, Sec. 96, eff. January 1, 2006.

SUBCHAPTER C. MANAGEMENT

Sec. 251.101. BOARD OF DIRECTORS. (a) Except as provided by

Subsections (b) and (c), a cooperative association is managed by

a board of directors in accordance with Chapter 22.

(b) The board shall contain at least five directors elected by

and from the cooperative association's members. A director:

(1) serves a term not to exceed three years as provided by the

bylaws; and

(2) holds office until the director is removed or the director's

successor is elected.

(1) apportion the number of directors among the units into which

the cooperative association may be divided; and

(2) provide for the election of the directors by the respective

units to which the directors are apportioned.

(d) An executive committee of the board of directors may be

elected in the manner and with the powers and duties specified by

the certificate of formation or bylaws.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.102. OFFICERS. (a) The directors of a cooperative

association shall annually elect, unless otherwise provided by

the bylaws, the following officers for the cooperative

association:

(1) a president;

(2) one or more vice presidents; and

(3) a secretary and treasurer or a secretary-treasurer.

(b) Any two or more offices, other than the offices of president

and secretary, may be held by the same person.

by other titles as provided by the certificate of formation or

the bylaws of the cooperative association.

(d) A committee duly designated by the board of directors may

perform the functions of any office, and the functions of any two

or more officers may be performed by a single committee,

including the functions of both president and secretary.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.103. REMOVAL OF DIRECTORS AND OFFICERS. (a) A

director or officer of a cooperative association may be removed

from office in the manner provided by the certificate of

formation or bylaws of the cooperative association.

(b) If the certificate of formation or bylaws do not provide for

the person's removal, a director or officer may be removed with

cause by a vote of a majority of the members voting at a regular

or special meeting. The director or officer who is to be removed

is entitled to be heard at the meeting.

bylaws, a vacancy on the board of directors caused by removal

shall be filled by a director elected in the same manner provided

by the bylaws for the election of directors.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.104. REFERENDUM. (a) The certificate of formation or

bylaws of a cooperative association may provide for a referendum

on any action undertaken by the cooperative association's board

of directors if the referendum is:

(1) requested by petition of 10 percent or more of all of the

members of the cooperative association; or

(2) requested and approved by the vote of at least a majority of

the directors of the cooperative association.

(b) The proposition to be voted on in a referendum authorized

under Subsection (a) must be submitted to the members of the

cooperative association for consideration within the time

specified in the document authorizing the referendum.

the action and the time of the referendum is not impaired by the

referendum results.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER D. MEMBERSHIP

Sec. 251.151. ELIGIBILITY AND ADMISSION. A person, an

unincorporated group or other person organized on a cooperative

basis, or a nonprofit group may be admitted to membership in a

cooperative association only if the person meets the

qualifications for eligibility stated in the certificate of

formation or bylaws of the cooperative association.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.152. EXPULSION. (a) A member of a cooperative

association may be expelled by the vote of a majority of the

cooperative association's members voting at a regular or special

meeting.

(b) Not later than the 11th day before the date of the meeting,

the cooperative association shall give the member written notice

of the charges. The member is entitled to be heard at the meeting

in person or by counsel.

cooperative association's board of directors shall cause the

cooperative association to purchase the member's capital holdings

at par value if the purchase does not jeopardize the cooperative

association's solvency.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.153. SUBSCRIBERS. (a) A person is a subscriber of a

cooperative association only if the person is:

(1) eligible for membership in the cooperative association under

Section 251.151; and

(2) legally obligated to purchase a share or membership in the

cooperative association.

(b) The certificate of formation or bylaws of a cooperative

association may state whether and the conditions under which

voting rights or other membership rights are granted to a

subscriber of the cooperative association.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.154. LIABILITY. (a) Except as provided by Subsection

(b), a member or subscriber of a cooperative association is not

jointly or severally liable for a debt of the cooperative

association. A subscriber is liable for any unpaid amount on the

subscriber's membership certificates or invested capital

certificates.

(b) A subscriber who assigns the subscriber's interest in

membership certificates or invested capital certificates is

jointly and severally liable with the assignee until the

appropriate certificates are fully paid.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER E. SHARES

Sec. 251.201. SHARE AND MEMBERSHIP CERTIFICATES: ISSUANCE AND

CONTENTS. (a) A cooperative association may not issue a

certificate for membership capital or for invested capital until

any par value of the certificate has been paid in full.

(b) Each certificate for membership capital issued by a

cooperative association must contain a statement of the

requirements of Sections 251.202(a) and (b), 251.254, and

251.255.

cooperative association must contain a statement of the

restrictions on transferability as provided by the cooperative

association's bylaws.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.202. TRANSFER OF SHARES AND MEMBERSHIP; WITHDRAWAL.

(a) A member who decides to withdraw from a cooperative

association shall make a written offer to sell the member's

membership certificates to the cooperative association's board of

directors.

(b) Not later than the 90th day after the date the directors

receive an offer under Subsection (a), the directors may cause

the cooperative association to purchase the holdings by paying

the member the par value of the certificates and the directors

shall cause the cooperative association to reissue or cancel the

shares after purchasing the holdings. The directors shall cause

the cooperative association to purchase the shares if a majority

of the cooperative association's members voting at a regular or

special meeting vote to require the purchase.

or convey the certificates in accordance with the cooperative

association's bylaws. If an investor fails to sell, assign, or

convey investor certificates in accordance with the bylaws, the

cooperative association on written notice to its directors shall

repurchase the certificates by paying the investor the par value

of the certificate plus all accrued investment dividends. The

certificates must be repurchased not later than the 90th day

after the date the cooperative association receives notice of the

failure.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.203. SHARE AND MEMBERSHIP CERTIFICATES; RECALL. (a)

The bylaws of a cooperative association may authorize the

cooperative association's board of directors to recall during a

specified time and in accordance with the bylaws the membership

certificates of a member who fails to patronize the cooperative

association. The board may use the reserve funds to recall, at

par value, the membership certificates of any member in excess of

the amount required for membership.

(b) After the board of directors of a cooperative association

recalls a membership certificate under Subsection (a), membership

in the cooperative association is terminated and the board shall

cause the cooperative association to reissue or cancel the

certificate. The board of directors may not recall membership

certificates if recalling the certificates would jeopardize the

cooperative association's solvency.

and repurchase the investment certificates of an investor at par

value plus any investment dividends due.

(d) The bylaws of a cooperative association may establish

specific procedures, terms, and conditions for recalls and

repurchases of investment certificates.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.204. CERTIFICATES; ATTACHMENT. The minimum amount

necessary for membership in a cooperative association, not to

exceed $50, is exempt from attachment, execution, or garnishment

for the debts of a member of a cooperative association. If a

member's holdings are subject to attachment, execution, or

garnishment, the directors of the cooperative association may

admit the purchaser to membership or may purchase the holdings at

par value.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER F. MEETINGS AND VOTING

Sec. 251.251. MEETINGS. (a) Regular meetings of members of a

cooperative association shall be held at least once a year as

prescribed by the cooperative association's bylaws.

(b) A special meeting of the members of a cooperative

association may be requested by a majority vote of the directors

or by written petition of at least one-tenth of the membership of

the cooperative association. The secretary shall call a special

meeting to be held 30 days after receipt of the request for a

special meeting.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.252. NOTICE OF SPECIAL MEETING. The notice of a

special meeting of the members of a cooperative association shall

state the purpose of the meeting.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.253. MEETINGS BY UNITS OF MEMBERSHIP. (a) The

certificate of formation or bylaws of a cooperative association

may provide for the holding of meetings by units of the

membership of the cooperative association and may provide for:

(1) a method of transmitting the votes cast at unit meetings to

the central meeting;

(2) a method of representation of units of the membership by the

election of delegates to the central meeting; or

(3) a combination of both methods.

(b) Except as otherwise provided by the certificate of formation

or bylaws, a meeting by a unit of the membership shall be called

and held in the same manner as a regular meeting of the members.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.254. ONE MEMBER--ONE VOTE. (a) Except as provided by

Subsection (b), a member of a cooperative association has one

vote.

(b) If a cooperative association includes among its membership

another cooperative association or a group that is organized on a

cooperative basis, the voting rights of the cooperative

association member or group member may be prescribed by the

certificate of formation or bylaws of the cooperative

association.

the one-member-one-vote rule is not enforceable.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.255. NO PROXY. A member is not entitled to vote by

proxy.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.256. VOTING BY MAIL. (a) The certificate of formation

or bylaws of a cooperative association may contain the procedures

in Subsection (b) or (c), or both, for voting by mail.

(b) With notice of a meeting sent to members of the cooperative

association, the secretary may include a copy of a proposal to be

offered at the meeting. If a mail vote is returned to the

cooperative association within the specified number of days, the

mail vote shall be counted with the votes cast at the meeting.

association who is absent from a meeting an exact copy of the

proposal considered at the meeting. If the vote is returned to

the cooperative association within the specified number of days,

the mail vote is counted with the votes cast at the meeting.

(d) The certificate of formation or bylaws may state whether and

to what extent mail votes are counted in computing a quorum.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.257. VOTING BY MAIL OR BY DELEGATES. (a) If a

cooperative association has provided for voting by mail or by

delegates, a provision of this chapter referring to votes cast by

members of the cooperative association applies to votes cast by

mail or by delegates.

(b) A delegate may not vote by mail.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER G. CAPITAL AND NET SAVINGS

Sec. 251.301. LIMITATIONS ON RETURN ON CAPITAL. (a) Except as

otherwise provided by the cooperative association's bylaws, an

investment dividend of a cooperative association may not be

cumulative and may not exceed eight percent of investment

capital.

(b) Total investment dividends distributed for a fiscal year may

not exceed 50 percent of the net savings for the period.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.302. ALLOCATION AND DISTRIBUTION OF NET SAVINGS. (a)

At least once each year the members or directors of a cooperative

association, as provided by the certificate of formation or

bylaws of the cooperative association, shall apportion the net

savings of the cooperative association in the following order:

(1) subject to Section 251.301, investment dividends payable

from the surplus of the total assets over total liabilities may

be paid on invested capital or, if authorized by the bylaws, may

be paid on the membership certificates;

(2) a portion of the remainder, as determined by the certificate

of formation or bylaws, may be allocated to an educational fund

to be used in teaching cooperation;

(3) a portion of the remainder may be allocated to funds for the

general welfare of the members of the cooperative association;

(4) a portion of the remainder may be allocated to retained

earnings; and

(5) the remainder shall be allocated at the same uniform rate to

each patron of the cooperative association in proportion to

individual patronage as follows:

(A) for a member patron, the proportionate amount of savings

return distributed to the member may be any combination of cash,

property, membership certificates, or investment certificates;

and

(B) for a subscriber patron, the patron's proportionate amount

of savings returns as provided by the certificate of formation or

bylaws may be distributed to the subscriber patron or credited to

the subscriber patron's account until the amount of capital

subscribed for has been fully paid.

(b) This section does not prevent a cooperative association

engaged in rendering services from disposing of the net savings

from the rendering of services in a manner that lowers the fees

charged for services or furthers the common benefit of the

members.

(1) the payment of savings returns that would otherwise be

distributed are deferred for a fixed period; or

(2) the savings returns distributed are partly in cash or partly

in shares, to be retired at a fixed future date, in the order of

the shares' serial numbers or issuance dates.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER H. REPORTS AND RECORDS

Sec. 251.351. RECORDKEEPING. A cooperative association shall

keep books and records relating to the cooperative association's

business operation in accordance with standard accounting

practices.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.352. REPORTS TO MEMBERS. (a) A cooperative

association shall submit a written report to its members at the

annual meeting of the cooperative association. The annual report

must contain:

(1) a balance sheet;

(2) an income and expense statement;

(3) the amount and nature of the cooperative association's

authorized, subscribed, and paid-in capital;

(4) the total number of shareholders;

(5) the number of shareholders who were admitted to or withdrew

from the association during the year;

(6) the par value of the association's shares;

(7) the rate at which any investment dividends have been paid;

and

(8) if the cooperative association does not issue shares:

(A) the total number of members;

(B) the number of members who were admitted to or withdrew from

the association during the year; and

(b) The directors shall appoint a committee composed of members

who are not principal bookkeepers, accountants, or employees of

the cooperative association to review the cooperative

association.

the quality of the annual report required by this section and the

bookkeeping system of the cooperative association at the annual

meeting.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.353. ANNUAL REPORT OF FINANCIAL CONDITION. (a) This

section applies only to a cooperative association that has at

least 100 members or at least $20,000 in annual business.

(b) Not later than the 120th day after the date on which the

association closes its business each year, a cooperative

association shall file in the association's registered office a

report of the association's financial condition stating:

(1) the name of the association;

(2) the address of the association's principal office;

(3) the name, address, occupation, and date of expiration of the

term of office of each officer and director;

(4) any compensation paid by the association to each officer or

director of the association;

(5) the amount and nature of the authorized, subscribed, and

paid-in capital;

(6) the total number of shareholders;

(7) the number of shareholders who were admitted to or withdrew

from the association during the year;

(8) the par value of the association's shares;

(9) the rate at which any investment dividends have been paid;

and

(10) if the association has no shares:

(A) the total number of members;

(B) the number of members who were admitted to or withdrew from

the association during the year; and

(1) include a balance sheet and income and expense statement of

the cooperative association; and

(2) be signed by the president and secretary.

(d) A cooperative association that has at least 3,000 members or

at least $750,000 in annual business shall file a copy of the

report required by this section with the secretary of state.

(e) A person commits an offense if the person signs a report

that is required by this section and contains a materially false

statement that the person knows is false. An offense under this

subsection is a misdemeanor punishable by:

(1) a fine of not less than $25 or more than $200;

(2) confinement in county jail for a term of not less than 30

days or more than one year; or

(3) both the fine and confinement.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.354. FAILURE TO FILE REPORT. (a) If a cooperative

association required by Section 251.353 to file a copy of a

report with the secretary of state does not file the report

within the prescribed time, the secretary of state shall send

written notice of the requirement by registered mail to the

cooperative association. The notice must be sent to the

cooperative association's principal office not later than the

60th day after the date the report becomes due.

(b) If a cooperative association is required by Section 251.353

to file a report at its registered office but not with the

secretary of state and fails to file the report within the

prescribed time, the secretary of state or any member of the

cooperative association may send written notice of the

requirement by registered mail to the cooperative association's

principal office.

before the 61st day after the date notice is sent under

Subsection (a) or (b), a member of the cooperative association or

the attorney general may seek a writ of mandamus against the

cooperative association and the appropriate officer or officers

to compel the filing of the report. The court shall require the

cooperative association or the officer who is determined to be at

fault to pay the expenses of the proceeding, including attorney's

fees.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER I. WINDING UP AND TERMINATION

Sec. 251.401. VOLUNTARY WINDING UP AND TERMINATION. (a) A

cooperative association may wind up and terminate its affairs in

accordance with Chapter 11 and Sections 22.301-22.303.

(b) If a cooperative association is directed to wind up and

liquidate its affairs, three members of the cooperative

association elected by a vote of at least a majority of the

members voting shall be designated as trustees on behalf of the

cooperative association to:

(1) pay debts;

(2) liquidate the cooperative association's assets within the

time set in the trustees' designation or any extension of time;

and

(3) distribute the cooperative association's assets in the

manner provided by Section 251.403.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.402. EXECUTION OF CERTIFICATE OF TERMINATION. An

officer of a cooperative association or one or more of the

persons designated as a liquidating trustee under Section 251.401

shall execute the certificate of termination on behalf of the

cooperative association.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.403. DISTRIBUTION OF ASSETS. Subject to Sections

11.052 and 11.053(a), the trustees designated under Section

251.401 shall distribute the cooperative association's assets in

the following order:

(1) by returning the par value of the investors' capital to

investors;

(2) by returning the amounts paid on subscriptions to

subscribers for invested capital;

(3) by returning the amount of patronage dividends credited to

patrons' accounts to the patrons;

(4) by returning to members their membership capital; and

(5) by distributing any surplus in the manner provided by the

certificate of formation:

(A) among the patrons who have been members or subscribers of

the cooperative association during the six years preceding the

date of termination, on the basis of patronage during that

period;

(B) as a gift to any cooperative association or other nonprofit

enterprise designated in the certificate of formation; or

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 133, eff. September 1, 2007.

Sec. 251.404. INVOLUNTARY TERMINATION. A suit for involuntary

termination of a cooperative association organized under this

chapter may be instituted for the causes and prosecuted in the

manner provided by Chapter 11. The assets of a cooperative

association that is involuntarily terminated shall be distributed

in accordance with Section 251.403.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER J. MISCELLANEOUS PROVISIONS

Sec. 251.451. EXEMPTION FROM TAXES. A cooperative association

organized under this chapter is exempt from the franchise tax and

license fees imposed by the state or a political subdivision of

the state, except that a cooperative association is exempt from

the franchise tax imposed by Chapter 171, Tax Code, only if the

cooperative association is exempt under that chapter.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 251.452. USE OF NAME "COOPERATIVE." (a) Only a

cooperative association governed by this chapter, a group

organized on a cooperative basis under another law of this state,

or a foreign entity operating on a cooperative basis and

authorized to do business in this state may use the term

"cooperative" or any abbreviation or derivation of the term

"cooperative" as part of its business name or represent itself,

in advertising or otherwise, as conducting business on a

cooperative basis.

(b) A person commits an offense if the person violates

Subsection (a). An offense under this subsection is a misdemeanor

punishable by:

(1) a fine of not less than $25 or more than $200 for the first

month in which the violation occurs;

(2) a fine of not more than $200 for each month during which a

violation occurs after the first month;

(3) confinement in the county jail for not less than 30 days or

more than one year; or

(4) a combination of those punishments.

section.

(d) If a court renders a judgment that a person who used the

term "cooperative" before September 1, 1975, is not organized on

a cooperative basis but is authorized to continue to use the

term, the business shall place immediately after its name the

words "does not comply with the cooperative association law of

Texas" in the same kind of type and in letters not less than

two-thirds the size of the letters used in the word

"cooperative."

(e) Notwithstanding this section, The University Cooperative

Society, a domestic nonprofit corporation related to The

University of Texas, may continue to use the word "cooperative"

in its name.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!