June 25, 2019

SB 11-191: Enacting the Colorado Uniform Limited Cooperative Association Act

Concerning enactment of the “Colorado Uniform Limited Cooperative Association Act.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Colorado Commission on Uniform State Laws. The bill enacts the “Colorado Uniform Limited Cooperative Association Act” with modifications. The act creates the option of a statutorily defined entity that combines traditional cooperative values with modern financing mechanisms by providing two distinct categories of members: Patron members and investor members.

A “cooperative” is defined as an unincorporated association (a “limited cooperative association”) of individuals or businesses that unite to meet their mutual interests by creating and using a jointly owned enterprise. The act contemplates the formation of various types of limited cooperative associations, including marketing, advertising, bargaining, processing, purchasing, real estate, and worker-owned cooperatives. A limited cooperative association under the act can be organized to pursue any lawful purpose.

The act establishes:

  • Operating definitions and an outline of the nature and powers of limited cooperative associations. The act also deals with the effect of bylaws, required record retention, service of process, and business dealings between members and the limited cooperative association;
  • Requirements for records filed with the secretary of state and procedures for signing and filing the records;
  • A statutory formation process for limited cooperative associations, including the required contents of articles and bylaws, and the initial organizing directors;
  • Qualifications for membership in a limited cooperative association, the rights and powers that come with belonging to the organization, and the requirements for annual members meetings and special members meetings;
  • Patron and investor members and creates their interests as personal property interests, consisting of governance rights, financial rights, and the possible right or obligation to do business with the association;
  • Authorization of marketing contracts between the limited cooperative association and third parties;
  • The directors of the limited cooperative association, their qualifications, and their authority and powers;
  • Designation of the governing law for indemnification of individuals who incur liability on behalf of the association and a grant of authority to the association to purchase insurance on these parties’ behalf;
  • Unless otherwise provided by the association’s bylaws, a statutory recognition that member contributions to a limited cooperative association may consist of tangible or intangible personal property or any other benefit to the association, including money, labor, services, promissory notes, agreements to contribute, and contracts to be performed;
  • The right of a member to dissociate and the consequences of dissociation, and dissolution of the limited cooperative association itself, including judicial, voluntary, and administrative dissolution;
  • The statutory right of a member to maintain a derivative action to enforce an association’s right where the association fails or refuses to enforce that right;
  • Permission for foreign cooperatives to apply for and receive a certificate of authority to transact business in Colorado;
  • A statutory process and required filings for conversion of a limited cooperative association to another entity or vice versa, and the effect of conversion on the rights, duties, liabilities, immunities, and debts of the converting entity;
  • A statutory process and required filings for merging of a limited cooperative association into another entity or vice versa, and the effect of merger on the rights, duties, liabilities, immunities, and debts of the merging entity;
  • A statutory process and required filings for dissolving a limited cooperative association; and
  • Member-approved and non-member-approved disposition of the association’s assets.

The bill takes effect April 2, 2012. Assigned to the Judiciary Committee; the bill is scheduled for committee review on Monday, March 21 at 1:30 p.m.. The CBA Legislative Policy Committee has voted to support this legislation.

Since this summary, the bill was amended in committee and referred to the Appropriations Committee.

Summaries of other featured bills can be found here.

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