CORNWALL COMMUNITY COOPERATIVE BYLAWS
ARTICLE I ORGANIZATION:
1.1 Name. The name of the organization is CORNWALL COMMUNITY COOPERATIVE (hereinafter referred to herein as “the Co-op”).
1.2 Purposes. As described more fully in its Articles of Incorporation, the purposes of the Co-op are to operate a food cooperative business so that members can buy their groceries and other personal and household items and to engage in other activities approved by members. The Co-op is organized and shall be operated exclusively on non-profit basis and in a democratic manner and consistent with cooperative principles.
1.3 Business Office. The business office of the Co-op is located at PO Box 493 Cornwall-on-Hudson, NY, 12520.
1.4 Fiscal Year. The fiscal year of the Co-op shall correspond with the calendar year.
ARTICLE 2 MEMBERSHIP:
2.1 Definition of members. Members shall consist of only households, a household being understood to mean an individual or group of individuals, whether or not related by blood or marriage, who live in the same residential unit and prepare meals in common. Each adult member, over 18 years of age, of a member household may make purchases as a member and may serve as a director or member of a committee. All other rights and interests of members shall be exercised by households as units under procedures determined by the Board.
2.2 Eligibility. Membership in the Co-op shall be voluntary and open to any person whose purpose is to patronize the Co-op and to accept the responsibilities of membership. Applicants will be admitted to membership upon submitting required information and purchasing or subscribing to purchase one or more shares at their issuing price as determined by the board of directors, subject to Article 3 below. On or before admission to membership, each member shall be provided a copy of these bylaws, including the appended explanation of the patronage dividend consent provision. On or before admission to membership, each member shall be provided a copy of these bylaws, including the appended explanation of the patronage dividend consent provision, such bylaws indicating the date of their adoption. In the event that any doubts arise concerning eligibility within six months after the date of application, an application for membership shall be subject to approval by the Board.
2.3 Non Discrimination. The Co-op shall not discriminate against individuals or groups on the basis of race, creed, age, gender, class, disability, sexual preference, marital status or other arbitrary basis.
2.4 Membership Rights. Members of the Co-op shall have the right:
(a) to purchase goods from the Co-op store at prices generally available to members and otherwise to benefit from participation in the activities of the Co-op;
(b) to obtain reasonably adequate and timely information as to the organizational and financial affairs of the Co-op;
(c) to be provided other information that is necessitated by and directly related to a proper purpose, subject to such reasonable restrictions or conditions as is determined by the Board to be necessary to protect confidential or sensitive information. Any proper request necessitating information from the Co-op’s records of members shall be accommodated by means other than direct access to such records; and
(d) to participate in the governance of the Co-op as described in these Bylaws.
2.5 Nontransferability. Membership rights and interests, including shares and patronage credits, may not be sold, assigned, or otherwise transferred. Following termination of membership, or at any time as to shares held in excess of the minimum amount, the Co-op will upon request of the member transfer the carrying value of such rights and interests, net of any authorized offsets, to the credit of another person designated by the requesting member, provided that the transfer is gratuitous and that the person so designated is a member or becomes a member of the Co-op. Any attempted transfer contrary to this section shall be wholly void and shall confer no rights on the intended transferee.
2.6 Settlement of Disputes. In any dispute between the Co-op and any of its members or former members which relates to normal membership transactions and which cannot be resolved through informal negotiations, it shall be the policy of the Co-op to prefer the use of mediation whereby an impartial mediator or mediators may facilitate negotiations between the parties and assist them in developing a mutually agreeable settlement. Members are encouraged to cooperate in this process.
2.7 Inactive status. A member who becomes delinquent by three months in meeting his or her share purchase obligation, or who fails to patronize the Co-op for one year, shall, no sooner than thirty days after delivery of written notification, be placed into inactive status. His or her participation rights shall then be suspended. A member in inactive status may attain good standing only upon full payment of all arrearages or reestablishment of a patronage relationship with the Co -op. References herein to the rights and entitlements of members shall be understood to refer only to members in good standing.
2.8 Termination. Membership may be terminated voluntarily by a member at any time upon notice to the Co-op. Membership may be terminated involuntarily by the Board for cause after the member is provided fair notice of the charges and an opportunity to respond in person or in writing. Upon termination of membership, all rights and interests in the Co-op shall cease except for rights to redemption of capital pursuant to Articles 3 and 4 of these bylaws.
ARTICLE 3 CAPITAL SHARES
3.1 Issuance and terms. To evidence capital funds provided by members, the Co-op shall issue shares. Shares may be issued only to persons eligible for and admitted to membership in the Co -op. Shares shall be issued only upon full payment of no less than their issuing price which, as authorized by the Board, may be paid in property, labor, or services actually provided. Members shall be obligated to provide such further funds as may be necessary to meet the reasonable capital needs of the Co-op as determined by the Board. Shares shall be entitled to no dividend or other monetary return on contributed capital.
3.2 Certificates. Every holder of fully paid shares shall be entitled to receive a certificate evidencing such holding. All certificates shall be signed by the President or Vice President and the Secretary or Assistant Secretary and shall be numbered, recorded and maintained by the Co-op. The Co-op may issue a replacement certificate for any certificate alleged to have been lost, stolen or destroyed without requiring the giving of a bond or other security against related losses.
3.3 Redemption. Upon request following termination of membership, shares shall be redeemed when replacement capital is provided by other members. Shares shall be redeemable at the lesser of their carrying value on the books of the Co-op or their net book value less a reasonable processing fee, if any, as determined by the Board. Redemption proceeds shall be subject to offset by amounts due and payable to the Co-op by the member. No redemption shall be made when such payment would impair the ability of the Co-op to meet its other obligations as they become due or would impair the claims of instruments having a higher priority than shares. Reapplications for membership after full or partial redemption shall be subject to full repayment of redemption proceeds.
ARTICLE 4 PATRONAGE DIVIDENDS:
4.1 Distribution of net earnings. The realized net earnings of the Co-op, to the extent attributable to the patronage of members, shall be allocated and distributed among members in proportion to their patronage and in such a manner and at such a time as to constitute patronage dividends within the meaning of federal income tax law. Such obligation shall commence only upon the Co-op having the ability to electronically track the patronage of members. In determining and allocating adjusted net savings the Co-op shall use a single allocation unit.
4.2 Exceptions. Net earnings may be reduced by such reasonable reserves for necessary business purposes as is determined by the Board. Any allocations of such a nominal amount as not to justify the expenses of distribution may, as determined by the Board, be excluded from distribution provided that they are not then or later distributed to other members. Members shall retain the right to waive in whole or in part, by action at a meeting of members, any patronage dividends to which they may be entitled.
4.3 Consent of members. By obtaining or retaining membership in the Co-op, each member shall thereby consent to take into account, in the manner and to the extent required by Section 1385 of the Internal Revenue Code, the stated dollar amount of any qualified written notice of allocation in the taxable year in which such notice is received.
4.4 Deferred amounts. Payment of a portion of patronage dividends, not to exceed eighty percent of the allocation, may be deferred for the reasonable capital needs of the Co-op, as determined by the Board. Such amounts shall be credited to revolving capital accounts in the names of recipient members and shall accrue no dividend or other monetary return on contributed capital. They shall be redeemed when determined by the Board to be no longer needed for capital purposes. At that time they shall be redeemed in the order of the oldest outstanding amounts and on a pro rata basis among such Amounts, except that redemptions shall be made payable only to members who are then in good standing or become so within a six-month period of time. Deferred amounts may also be redeemed under compelling circumstances as determined by the Board. They shall be subject at all times to being offset by amounts otherwise due and payable to the Co-op.
4.5 Allocation of net losses. In the event the Co-op shall incur a net loss in any fiscal year, the patronage portion of such loss shall be carried forward to offset patronage-sourced income of subsequent years, and the nonpatronage portion of such loss shall be carried back and forward to offset nonpatronage-sourced income of other years as required or permitted under federal income tax law.
ARTICLE 5 MEETINGS OF MEMBERS:
5.1 Annual Meeting. An annual meeting of members shall be held within four months after the close of the fiscal year at a time and place determined by the Board of directors. The purpose of the annual meeting shall be to report to members on the operations and finances of the Co-op. and to conduct voting for directors and on other issues properly submitted to a vote of members.
5.2 Special Meetings. Special meetings of members may be called by the Board of Directors or by the president, and shall be called by the Board of Directors upon receipt of a member initiative.
5.3 Balloting. A meeting of the members may be conducted in whole or in part by written ballots as determined by the Board of Directors.
5.4 Notice. Written notice of the time, place and purpose of any meeting of members shall be delivered to each member not less than ten (10) nor more than thirty (30) days before the date of the meeting. In the event of voting by mail the notice shall include necessary ballots And materials which impartially describe the candidates for election or issues for decision.
5.5 Quorum. The presence in person of five (5.00) percent of all members shall constitute a quorum at a meeting held to consider the adoption of a proposal that the New York Cooperative Corporations Law requires be Adopted by a two-thirds vote of members. The presence in person of two hundred members or eight (8.00) percent of all members, whichever is lesser shall be necessary and sufficient for the transaction of business at any other meeting of members.
5.6 Voting. Each member shall have one vote on any matter submitted to a vote of members. Proxy voting is not permitted. All issues shall be decided by a majority of members voting except where a higher percentage is required by law or by these By-laws. A decision on any issue which
was not included in the notice of the meeting shall be of an advisory nature only.
5.7 Member initiative. An Annual or special meeting of members shall include a vote on any issue submitted by a member initiative. A member initiative shall be in writing and signed by at least sixty (60) members or four (4.0) percent of all members, whichever is lesser. A member initiative must specify the issues for decision which may concern any matter appropriate for a vote of members. A member initiative must be submitted to the Co-op at least two months prior to the date of the meeting at which the issue is to be decided.
ARTICLE 6 BOARD OF DIRECTORS:
6.1 Powers. The business and affairs of the Co-op shall be directed and controlled in the interests of members by a Board of Directors (sometimes referred to herein as “the Board.”) The Board shall consist of at least five (5) persons, elected by the members. Staff membership on the Board of Directors shall be limited to one-third (1/3rd) of the total membership of the Board. No other person shall serve as a director.
6.2 Duties. The duties of the Board shall include, but not be limited to, overseeing the operations and finances of the Co-op, establishing policies to govern operational decisions, engaging a general manager And monitoring and evaluating his or her performance, and assuring that the purposes of the Co-op are properly carried out.
6.3 Standards of conduct. Directors shall be responsible at all times for discharging their duties in good faith, in a manner that they reasonably believe to be in the best interests of the Co-op and with the care that an ordinarily prudent person in a like position would use under similar circumstances.
6.4 Nominations. Nominations for at least five (5) directors elected by members shall be made by the Board of Directors or a committee empowered by it or by petition of members. A member petition must be signed by at least twenty-five (25) members or one (1.0) percent of the membership eligible to vote in the previous year’s election, whichever is greater, and must be submitted to the business office of the Co-op at least ten (10) days prior to the issuance of the notice of the annual meeting. Nominees shall be stated in the notice of the meeting of members. All directors must be members in good standing of the Co-op.
6.5 Election. Voting for directors shall be conducted in a manner which encourages maximum member participation. Each member shall have one vote for each vacancy to be filled on the Board of Directors.
6.6 Terms of office. At the first annual meeting of members and periodically thereafter as may be necessary, directors shall be elected for specific one, two or three year terms in order to assure that approximately one-third of All terms expire in each year. At other times directors shall be elected for terms of three years. Directors shall hold office until their successors are elected or until their offices are sooner terminated in accordance with these bylaws.
6.7 Conflicts of Interest. Directors shall be under an affirmative duty to disclose their actual or potential conflicts of interest in any matter under consideration by the Board unless otherwise determined by the Board. A director having a conflict of interest in any matter may not participate in the discussion or decision of an issue involving that matter.
6.8 Referendum. At the request of one-third or more of directors, a decision of the board shall be referred to a meeting of members. A decision referred to members will stand until annulled or modified by members. Modification by members shall not impair rights previously acquired by third parties.
6.9 Termination. The term of office of a director may be terminated prior to its expiration in any of the following ways: (i) voluntarily by a director upon notice to the President; (ii) automatically upon termination of membership in the Co-op; (iii) for cause by members in Accordance with New York law; and (iv) for cause by a three-fourths vote of the Board under procedures that are no less stringent than those applying to removal by members. A director who is absent from two meetings in a fiscal year without excuse considered sufficient by the Board shall be presumed to have resigned.
6.10 Vacancies. Any vacancy occurring between annual meetings by reason of the death or resignation of a Director or removal by the Board or members may be filled by the Board of Directors for the duration of the vacated term.
ARTICLE 7 MEETINGS OF THE BOARD:
7.1 Regular Meetings. The Board of Directors shall meet no less frequently than once every other month.
7.2 Special Meetings. Special meetings of the Board of Directors may be called by the Board president, and shall be called on request of any three directors. Written or personal notice of all special meetings shall be provided to each director. Written notice shall be mailed not less than ten (10) days and personal notice shall be given not less than three (3) days before the date of the meeting.
7.3 Quorum and Decision Making. A majority of directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. The Board shall strive to make all decisions by consensus, attempting to reconcile differing points of view based upon the purposes and mission of the co-op. If in the opinion of a two-thirds (2/3rds) majority of directors present, consensus cannot be reached within a reasonable period of time, particularly on an issue requiring immediate action, then a majority of directors present may decide such issue.
7.4 Open Meetings. Meetings of the Board of Directors shall be open to observation and limited participation by members of the Co-op. The Board may, however, conduct a closed session when necessary to protect the vital interests of the Co-op.
7.5 Action by Consent. Decisions of the Board of Directors may be made without a meeting if consent to such decision is made in writing, stating the action to be taken, is signed by all of the directors and filed with the minutes of meetings.
7.6 Notice to members. Notice of meetings of the Board of Directors shall be posted in the Co-op store, but the inability or inadvertent failure to do so shall not affect the validity of the meeting.
ARTICLE 8 COMMITTEES:
8.1 Executive Committee. The Board of Directors may designate an Executive Committee to exercise interim or other stated authority of the Board except as to matters involving long-range policies or unusually large expenditures. The committee shall consist of at least three Directors, and shall include the officers of the Board of Directors and one “at large” board member. Any action by the Executive Committee shall require the affirmative vote of at least three (3) of its members and must be reported to and ratified by the Board of Directors at the next following meeting of the Board of Directors. The Executive Committee shall not operate to relieve the Board of general supervisory responsibilities in the management of the Co-op.
8.2 Committees Generally. Other committees may be designated and their members appointed, removed or replaced at any time by the Board of Directors. All such committees shall function to advise the Board and develop proposals for its consideration. Committees may take action only as empowered by the Board of Directors in which case they shall require actual notice of meetings to all of their members and a quorum of at least three committee members including the chairperson.
ARTICLE 9 OFFICERS:
9.1 Designation. The officers of the Co-op shall consist of President, Vice President, Secretary and Treasurer. Any two offices may be held by the same person except those of President and Secretary. The offices of President and Treasurer shall not be held by the staff director.
9.2 Selection and Removal. The Board of Directors shall select the officers of the Co-op no later than at its first regular meeting after the annual meeting. Terms of officers shall be for one (1) year or until their successors are selected. Officers may be removed and replaced, with or without cause, at any time by the Board of Directors.
9.3 Powers and Duties. The officers shall have the following powers and duties together with other powers and duties described in the Board policies or determined by the Board:
(a) the President shall be responsible for coordinating the activities of the Board, assuring the orderly conduct of all meetings, and executing authorized documents on behalf of the Co-op, and shall present a report of operations at the annual meeting of members.
(b) the Vice-President shall perform the duties of the President whenever the President is unable to do so, and as requested by the President shall assist the President in the performance of his or her duties; and
(c) the Secretary shall supervise the maintenance of membership records and oversee issuing notices for, and keeping minutes of all meetings of members and the Board of Directors; and
(d) the Treasurer shall oversee the financial affairs of the Co-op, the maintenance of financial records, the control of receipts and disbursements, and the filing of required tax returns and corporate reports.
ARTICLE 10 OTHER PERSONNEL PROVISIONS:
10.1 General Manager. The Board of Directors shall employ a General Manager to manage the business of the Co-op under the direction and control of the Board. The general manager is expected to attend all meetings of the Board of Directors.
10.2 Bonding. The Treasurer, General Manager and other employees disbursing funds of the Co-op of more than $1,000 per year shall be covered by an adequate bond to be approved by the board of directors.
10.3 Indemnification rights. Subject to limitations in this Article, the Co-op shall indemnify its current and former directors and officers against all losses and expenses, including reasonable attorneys’ fees, to which they may become subject by reason of their positions with the Co-op or their service in its behalf. Such indemnification shall apply whenever such person is a party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative. The Co-op may advance the cost incurred in defending a suit or proceeding. Payment of expenses incurred in defending a suit or proceeding in advance of its final disposition may be made only upon receipt by the Co-op of a contractual undertaking by such person to repay such amounts unless the person shall be determined to be entitled to indemnification under this Article.
10.4 Limitations to indemnification. No indemnification shall be provided in connection with any action by or in the right of the Co-op. No indemnification shall be provided unless the person is determined to have acted in good faith or in the reasonable belief that his or her action was in the best interests of the Co-op or, in regard to criminal actions, that such person had no reasonable cause to believe that his or her action was unlawful. If such determination is not made in a legal proceeding related to the claim, it may be made by a quorum of disinterested directors or by independent legal counsel selected by such quorum. If not made or able to be made by either, the determination shall be made by independent legal counsel at a membership meeting. Indemnification payments shall be made only in such amounts and at such times as will not jeopardize the solvency of the Co-op.
ARTICLE 11 LIQUIDATION
11.1 Liquidation. Upon liquidation and dissolution of the Co-op, 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 deferred patronage dividends, if any, which, if they cannot be paid in full, shall be paid in the order of the oldest outstanding amounts and on a pro rata basis among all amounts for each fiscal year; (iii) by redeeming capital shares at their carrying value on the books of the Co-op which, if they cannot be paid in full, shall be paid on a pro rata basis among all outstanding amounts; and (iv) by distributing any remaining assets among current and former members in proportion to their patronage during the six years immediately preceding the date of dissolution, or, if so determined by a vote of members, to one or more cooperative or nonprofit organizations that may best further the purposes and mission of the Co-op.
ARTICLE 12 NOTICE:
12.1 Notice. Any notice required under these By-laws shall be deemed delivered when deposited in the U.S. first class mail with names and addresses as they appear on file in the records of the Co-op.
12.2 Waiver of Notice. Any notice of a meeting may be waived in writing at any time before or after the meeting. The attendance of any person at a meeting shall constitute a waiver of notice of the meeting except where the person attends for the express purpose of objecting to the transaction of business because the meeting is not lawfully convened.
12.3 Communication by electronic means. Unless otherwise required by these bylaws, any notice, consent, ballot, petition, or other document required or permitted by these bylaws may be delivered by electronic means, provided that, in the case where such communication expressly or impliedly requires the signature of the person submitting the communication, means are in place to reasonably assure the authenticity of the signature.
ARTICLE 13 BYLAWS:
13.1 Interpretation. The Board of Directors shall have the power, with or without advice of legal counsel, to interpret these bylaws, apply them to particular circumstances, and adopt policies in furtherance of them, provided that all such actions are reasonable and consistent with these bylaws.
13.2 Amendment of By-laws. These By-laws may be amended by the Board of Directors; but any amendment adopted by the board shall be reported to the annual meeting of the corporation and, if not affirmatively approved and ratified thereat, shall cease to be in effect. Amendments by the Board of Directors shall take effect, if at all, on the date so ratified. By-laws may be adopted, repealed or amended on the affirmative vote of two-thirds of the members voting thereon at a meeting held after due written notice setting forth the proposed action and the purpose of the meeting.
The above Bylaws are certified to have been adopted by the Board of Directors of the Corporation on the ____ day of February 2009.
______________________________
[name] Secretary
Appendix:
EXPLANATION OF PATRONAGE
DIVIDEND CONSENT PROVISION
The Internal Revenue Code generally requires each person receiving a patronage dividend to include the amount of such distribution in his or her gross income in the taxable year in which it is received. Under bylaw 4.3, mere acceptance or retention of membership in the Co-op constitutes consent to such inclusion in taxable income, including the portion of the patronage dividend that is deferred by the Co-op for its capital needs.
The Co-op has been advised by legal counsel, however, that the general rule for inclusion in income of patronage dividends is subject to an exception that is applicable to consumer co-ops. Under that exception, a patronage dividend is not required to be included in gross income if the member’s purchases from the Co-op related to “personal, living or family items.” The patronage dividend would thus be taxable to a member only if his or her purchases related to the operation of a trade or business or other income-producing activities.