17-10-222. Membership interests.

(a) The authorized amount and divisions of patron membership interests and nonpatron membership interests may be increased or decreased or established or altered, in accordance with the restrictions in this article by amending the articles at a regular members' meeting or at a special members' meeting called for the purpose of the amendment.

(b) Authorized membership interests may be issued on terms and conditions prescribed in the articles, bylaws, or as determined by the board. The cooperative shall disclose to any person or entity acquiring membership interests to be issued by the cooperative, the organization, capital structure and business prospects and risks of the cooperative, the nature of the governance and financial rights of the membership interest being acquired and of other classes of membership and membership interests. The cooperative shall notify all members of the membership interests being offered by the cooperative. A membership interest may not be issued until the subscription price of the membership interest has been paid for in cash or a cash equivalent or property with the agreed upon value of the property to be contributed.

(c) The patron membership interests collectively shall have not less than fifteen percent (15%) of the cooperative's financial rights to profit allocations and distributions.

(d) After issuance by the cooperative, membership interests in a cooperative may only be sold or transferred with the approval of the board.

(e) The cooperative may solicit and issue nonpatron membership interests on terms and conditions determined by the board and disclosed in the articles, bylaws or by separate disclosure to the members. Each member acquiring nonpatron membership interests shall sign a member control agreement which shall describe the rights and obligations of the member as it relates to the nonpatron membership interests, the financial and governance rights, the transferability of the nonpatron membership interests, the division and allocations of profits and losses among the membership interests and membership classes, and financial rights upon liquidation. If the bylaws do not otherwise provide for the allocation of the profits and losses between patron membership interests and nonpatron membership interests, then the allocation of profits and losses among nonpatron membership interests individually and patron membership interests collectively shall be allocated on the basis of the value of contributions to capital made according to the patron membership interests collectively and the nonpatron membership interests individually to the extent the contributions have been accepted by the cooperative. Distributions of cash or other assets of the cooperative shall be allocated among the membership interests as provided in the articles and bylaws, subject to the provisions of this article. If not otherwise provided, distributions shall be made on the basis of value of the capital contributions of the patron membership interests collectively and the nonpatron membership interests to the extent the contributions have been accepted by the cooperative.

(f) The bylaws may provide that the cooperative or the patron members, individually or collectively, have the first privilege of purchasing the membership interests of any class of patron member's membership interests offered for sale. The first privilege to purchase patron membership interests may be satisfied by notice to other patron members that the patron membership interests are for sale and a procedure by which patron members may proceed to attempt to purchase and acquire the patron membership interests. A patron membership interest acquired by the cooperative may be held to be reissued or may be retired and cancelled.

(g) Subject to the provisions in the bylaws, a member may dissent from and obtain payment for the fair value of the member's nonpatron membership interests in the cooperative if the articles or bylaws are amended in a manner that materially and adversely affects the rights and preferences of the nonpatron membership interests of the dissenting member. The dissenting member shall file a notice of intent to demand fair value of the membership interest with the records officer of the cooperative within thirty (30) days after the amendment of the bylaws and notice of the amendment to members, otherwise the right of the dissenting member to demand payment of fair value for the membership interest is deemed to be waived. If a proposed amendment of the articles or bylaws shall be approved by the members, a member who is entitled to dissent and who wishes to exercise dissenter's rights shall file a notice to demand fair value of the membership interest with the records officer of the cooperative before the vote on the proposed action and shall not vote in favor of the proposed action, otherwise the right to demand fair value for the membership interest by the dissenting member is deemed waived. After receipt of the dissenting member's demand notice and approval of the amendment, the cooperative has sixty (60) days to rescind the amendment or otherwise the cooperative shall remit the fair value for the one (1) member's interest to the dissenting member by one hundred eighty (180) days after receipt of the notice. Upon receipt of the fair value for the membership interest, the member has no further member rights in the cooperative.