Shortly after a cooperative is incorporated, the members adopt a set of bylaws. Bylaws are a written description of the structure of the cooperative. They are more detailed and comprehensive than the articles of incorporation., creating a working plan for how the association should function.

The bylaws are a set of rules that cooperative leaders must follow in conducting the association’s affairs. As these rules are adopted by a vote of the membership and, in most states, can only be amended by a membership vote, they are an important tool for implementing the cooperative principle that the member-user control their cooperative.

Most cooperative incorporation laws empower the members to adopt rules in many areas-who can be a member, the number and method of electing directors, how the cooperative will acquire equity capital, etc.- without dictating how these rules will be written. This gives members considerable flexibility in structuring and operating their cooperative.

Bylaws normally are not filed with the state. But like the articles of incorporation, they are treated in a manner similar to statutes by the courts. Failure of the leadership to follow the bylaws can lead to legal liability.

Numerous provisions are usually found in cooperative bylaws. Some are similar to those included in bylaws of for-profit corporations, others are unique to cooperatives. The more common provisions are outlined below. But the members are free to place virtually any rule on the conduct of their cooperative’s affairs in the bylaws, provided the provision doesn't conflict within applicable law or the articles of incorporation.

While almost any activity can be covered, only broad issues of long-term significance to members are usually the subject of a bylaw. Decisions on everyday operating policy are left to the discretion of the board of directors. For example, whether the cooperative will do business with nonmembers is a general, long-term decision that should be covered in the bylaws. How nonmembers will be charged to ensure that they pay their fair share of cooperative expenses is a short term decision requiring the flexibility possible under a policy statement from the board.

1. Name of the cooperative: .

2. Town where the office will be: .

3. Service(s) the cooperative is to provide ("Purposes," in legalize):

4. Powers the cooperative is to possess: (Usually copied from the State incorporation law)

5. Duration: (Almost always perpetual)

6. Minimum number of directors the members may decide to have:

7. Names and addresses of the persons who will serve as the initial board of directors: (could by any number)

Name                                                     Address

8. Proportion of the (total or voting ) membership required to amend the articles:

10. Persons eligible to become members will be .

11. Membership will be open to all eligible persons or only a limited number of eligible persons .

If limited, the basis will be .

12. Will the owner of a membership be able to transfer that membership to another eligible person without the con-sent of the board of directors? Yes or No .

13. The cost of becoming a member will be $ .

Other financial/capitalization responsibilities will be:

14. Grounds for involuntarily terminating a membership will be

15. If a membership is terminated (voluntarily or involuntarily), will the cooperative refund the fee paid to become a member? Yes or No .

16. If a membership is terminated (voluntarily or involuntarily), will the cooperative redeem other investments the former member has made? Yes or No .

If yes, which one(s) and on what basis?

17. Will the cooperative be authorized to sell nonvoting preferred stock? Yes or No .

If yes, will it be sold only to members , to non-member-patrons , to employees , or to the general public ?

If yes, the annual dividend rate will be ____%.

The dividends will be cumulative or non-cumulative .

BYLAWS

18. Where will the members’ annual meeting be held?

19. When will the members’ annual meeting be held?

20. A special members’ meeting will be called if

21. Notice of a members’ meeting will be provided by

22. Members will vote on the basis of one-member, one-vote or on a proportional basis ?

If proportional voting is used, extra votes will be authorized on this basis

23. Will voting by mail (fax, e-mail) be permissible? Yes or No ?

If yes, under what conditions?

24. Will proxy voting be permissible? Yes or No ?

If yes, under what conditions?

25. If a membership is held by a partnership or corporation, how will the person be designated to vote on behalf of the member?

26. What is the minimum number (or percentage) of the membership that must attend a members’ meeting to conduct business (quorum)?

27. How many directors will the cooperative have?

28. Will all directors have to be cooperative members? Yes or No .

If no, how many will be outside directors?

How will the outside director(s) be selected?

29. How long will a director’s term of office be? . Will terms end at the same time or be staggered ? If staggered, on what basis?

30. Will there be any limits on how long a person can be a director? Yes or No .

If yes, what will the limitations be?

31. Will directors be elected on an at-large basis or by districts ? If by districts, how will district boundaries be determined?

32. What officers will the cooperative have? ; ;...

33. Will all officers be required to be directors? Yes or No ? If no, which ones need not be directors?

34. Under what circumstances can a director be removed from office?

35. What procedures must be followed to remove a director?

36. If a board seat becomes vacant for any reason, how will it be filled?

37. If an office becomes vacant for any reason, how will it be filled?

38. How often will regular board meetings be held?

39. Where will regular board meetings be held?

40. How will special board meetings be called?

41. How will directors be notified of board meetings?

42. What is the minimum number (or percentage) of board members that must attend a board meeting to conduct business (quorum)?

43. Will directors be reimbursed for out-of-pocket expenses directly related to serving on the board? Yes or No .

44. Will directors receive compensation for serving on the board? Yes or No .

If yes, how will the amount of compensation be set?

45. Will the board have an executive committee? Yes or No . If yes, how many members will it have? . What authority will it have?

46. Will the board be authorized to collect per-unit retains? Yes or No .

47. What will the fiscal year be?

48. What type of regular equity redemption program will be established?

Revolving fund , percentage-of-all-equities , or base capital .

49. Will certain equity be given special priority status for redemption? Yes or No ?

If yes, what events will trigger special redemption?

50. Will the cooperative conduct business with nonmembers? Yes or No . If yes, will nonmembers receive patronage refunds? Yes or No . What, if any, limits will be placed on the amount of nonmember business that can be conducted?

51. How will the cooperative handle (allocate) losses?

52. In the event of dissolution, how will any assets remaining after all liabilities have been paid and equity redeemed, be distributed?

53. Will the cooperative indemnify its directors, officers, employees and agents against personal liability for actions taken on behalf of the cooperative? Yes or No .

If yes, under what circumstances and to what extent?

54. Proportion of the (total or voting ) membership required to amend the bylaws: