University of Wisconsin Center for Cooperatives

Bylaws for Cooperatives, including a Sample Outline

From How to Start a Cooperative, Cooperative Information Report 7, United States Department of Agriculture, Rural Business-Cooperative Service, Galen Rapp and Gerald Ely, Revised September 1996

Bylaws state how the cooperative will conduct business and must be consistent with both State statutes and the articles of incorporation.

Bylaws usually have membership requirements and lists rights and responsibilities of members; grounds and procedures for member expulsion; how to call and conduct membership meetings, methods of voting, how directors and officers are elected or removed, and their number duties, terms of office, and compensation; time and place of director meetings; dates of the fiscal year; requirement to conduct business on a cooperative basis; how net margins will be distributed; process for redemption of members' equity; a consent provision that members will include the face value of written notices of allocation and per-unit retain certificates as income in the year they are received; distribution of nonpatronage income; handling of losses; treating nonmember business; dissolution of the cooperative; indemnification of directors; and the process for amending the bylaws.

Also covered is how the board is structured to represent the membership, given geographical distribution and size of the membership and the scope of business and function of the cooperative. Directors may be selected to represent districts based on membership density, to reflect commodities or services to be handled, or some other basis that provides equitable representation. The organizing committee's recommended management structure should include the basis for director representation, voting methods, and board officers, and their terms.

For marketing cooperatives that lack a marketing agreement, the bylaws specify the extent of members' obligation to market through the cooperative. They outline the terms and conditions under which the products will be marketed and accounting procedures.

The committee prepares the articles and bylaws with the help of an attorney so provisions comply with laws of the State in which the cooperative is incorporated. The committee's role also is to assure the bylaw provisions will not conflict with operating procedures.

Sample Bylaws Outline

Article I- Membership

Section 1. Qualifications.
Section 2. Suspension or Termination.

Article II- Meetings of Members
Section 1. Annual Meetings.
Section 2. Special Meetings.
Section 3. Notice of Meetings.
Section 4. Voting.
Section 5. Quorum.
Section 6. Order of Business.

Determination of quorum.

Proof of due notice of meeting.

Reading and disposition of minutes.

Annual reports of officers and committees.

Unfinished business.

New business.

Election of directors.


Article III- Directors and Officers

Section 1. Number and Qualifications of Directors.
Section 2. Election of Directors.
Section 3. Election of Officers.
Section 4. Vacancies.
Section 5. Board Meetings.
Section 6. Special Meetings.
Section 7. Notice of Board Meetings.
Section 8. Compensation.
Section 9. Quorum.

Article IV- Duties of Directors

Section 1. General Powers.
Section 2. Employment of Manager.
Section 3. Bonds and Insurance.
Section 4. Accounting System and Audit.

Article V- Duties of Officers and Manager

Section 1. Duties of President.
Section 2. Duties of Vice President.
Section 3. Duties of Secretary.
Section 4. Duties of Treasurer.
Section 5. Duties of Manager.

Article VI- Executive Committee and Other Committees

Section 1. Powers and Duties.
Section 2. Other Committees.

Article VII- Membership Certificates

If the association is organized with capital stock, the outline might read:

Article VII- Stock Certificates

Section 1. Common Stock.
Section 2. Other Committees.

Article VIII- Operation at Cost and Patrons' Capital

Section 1. Service at Cost.
Section 2. Refunds and Patrons' Capital.
Section 3. Revolving Capital.
Section 4. Transfer.
Section 5. Consent.
Section 6. Consent Notification to Members and Prospective Members.

Article IX- Dissolution and Property Interest of Members

Article X- Unclaimed Money

Article XI- Fiscal Year

Article XII- Miscellaneous Provisions

Section 1. Waiver of Notice
Section 2. Bylaws Printed.
Section 3. Seal.

Article XIII- Amendments

We, the undersigned, being all of the incorporators and members of the _______________ association, do hereby assent to the foregoing bylaws and do adopt the same as the bylaws of said association; and in witness whereof, we have hereunto subscribed our names, this ________ day of ______ , 19___.

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