To amend section 111.16 and to enact sections 1770.01 to 1770.17, 1770.20 to 1770.46, 1770.50 to 1770.56, 1770.60 to 1770.65, 1770.70 to 1770.72, 1770.80 to 1770.86, and 1770.99 of the Revised Code to authorize the establishment of a new form of cooperative business entity in this state.

Section 1.  That section 111.16 be amended and sections 1770.01, 1770.02, 1770.03, 1770.04, 1770.05, 1770.06, 1770.07, 1770.08, 1770.09, 1770.10, 1770.11, 1770.12, 1770.13, 1770.14, 1770.15, 1770.16, 1770.17, 1770.20, 1770.21, 1770.22, 1770.23, 1770.24, 1770.25, 1770.26, 1770.27, 1770.28, 1770.29, 1770.30, 1770.31, 1770.32, 1770.33, 1770.34, 1770.35, 1770.36, 1770.37, 1770.38, 1770.39, 1770.40, 1770.41, 1770.42, 1770.43, 1770.44, 1770.45, 1770.46, 1770.50, 1770.51, 1770.52, 1770.53, 1770.54, 1770.55, 1770.56, 1770.60, 1770.61, 1770.62, 1770.63, 1770.64, 1770.65, 1770.70, 1770.71, 1770.72, 1770.80, 1770.81, 1770.82, 1770.83, 1770.84, 1770.85, 1770.86, and 1770.99 of the Revised Code be enacted to read as follows:

Sec. 111.16.  The secretary of state shall charge and collect, for the benefit of the state, the following fees:

(A) For filing and recording articles of incorporation of a domestic corporation, including designation of agent:

(1) Wherein the corporation shall not be authorized to issue any shares of capital stock, one hundred twenty-five dollars;

(2) Wherein the corporation shall be authorized to issue shares of capital stock, with or without par value:

(a) Ten cents for each share authorized up to and including one thousand shares;

(b) Five cents for each share authorized in excess of one thousand shares up to and including ten thousand shares;

(c) Two cents for each share authorized in excess of ten thousand shares up to and including fifty thousand shares;

(d) One cent for each share authorized in excess of fifty thousand shares up to and including one hundred thousand shares;

(e) One-half cent for each share authorized in excess of one hundred thousand shares up to and including five hundred thousand shares;

(f) One-quarter cent for each share authorized in excess of five hundred thousand shares; provided no fee shall be less than one hundred twenty-five dollars or greater than one hundred thousand dollars.

(B) For filing and recording a certificate of amendment to or amended articles of incorporation of a domestic corporation, or for filing and recording a certificate of reorganization, a certificate of dissolution, or an amendment to a foreign license application:

(1) If the domestic corporation is not authorized to issue any shares of capital stock, fifty dollars;

(2) If the domestic corporation is authorized to issue shares of capital stock, fifty dollars, and in case of any increase in the number of shares authorized to be issued, a further sum computed in accordance with the schedule set forth in division (A)(2) of this section less a credit computed in the same manner for the number of shares previously authorized to be issued by the corporation; provided no fee under division (B)(2) of this section shall be greater than one hundred thousand dollars;

(3) If the foreign corporation is not authorized to issue any shares of capital stock, fifty dollars;

(4) If the foreign corporation is authorized to issue shares of capital stock, fifty dollars.

(C) For filing and recording articles of incorporation of a savings and loan association, one hundred twenty-five dollars; and for filing and recording a certificate of amendment to or amended articles of incorporation of a savings and loan association, fifty dollars;

(D) For filing and recording a certificate of conversion, including a designation of agent, a certificate of merger, or a certificate of consolidation, one hundred twenty-five dollars and, in the case of any new corporation resulting from a consolidation or any surviving corporation that has an increased number of shares authorized to be issued resulting from a merger, an additional sum computed in accordance with the schedule set forth in division (A)(2) of this section less a credit computed in the same manner for the number of shares previously authorized to be issued or represented in this state by each of the corporations for which a consolidation or merger is effected by the certificate;

(E) For filing and recording articles of incorporation of a credit union or the American credit union guaranty association, one hundred twenty-five dollars, and for filing and recording a certificate of increase in capital stock or any other amendment of the articles of incorporation of a credit union or the association, fifty dollars;

(F) For filing and recording articles of organization of a limited liability company, for filing and recording an application to become a registered foreign limited liability company, for filing and recording a registration application to become a domestic limited liability partnership, or for filing and recording an application to become a registered foreign limited liability partnership, one hundred twenty-five dollars;

(G) For filing and recording a certificate of limited partnership or an application for registration as a foreign limited partnership, one hundred twenty-five dollars.;

(H) For filing a copy of papers evidencing the incorporation of a municipal corporation or of annexation of territory by a municipal corporation, five dollars, to be paid by the municipal corporation, the petitioners therefor, or their agent;

(I) For filing and recording any of the following:

(1) A license to transact business in this state by a foreign corporation for profit pursuant to section 1703.04 of the Revised Code or a foreign nonprofit corporation pursuant to section 1703.27 of the Revised Code, one hundred twenty-five dollars;

(2) A biennial report or biennial statement pursuant to section 1775.63 or 1785.06 of the Revised Code, twenty-five dollars;

(3) Except as otherwise provided in this section or any other section of the Revised Code, any other certificate or paper that is required to be filed and recorded or is permitted to be filed and recorded by any provision of the Revised Code with the secretary of state, twenty-five dollars.

(J) For filing any certificate or paper not required to be recorded, five dollars;

(K)(1) For making copies of any certificate or other paper filed in the office of the secretary of state, a fee not to exceed one dollar per page, except as otherwise provided in the Revised Code, and for creating and affixing the seal of the office of the secretary of state to any good standing or other certificate, five dollars. For copies of certificates or papers required by state officers for official purpose, no charge shall be made.

(2) For creating and affixing the seal of the office of the secretary of state to the certificates described in division (E) of section 1701.81, division (E) of section 1701.811, division (E) of section 1705.38, division (E) of section 1705.381, division (D) of section 1702.43, division (E) of section 1775.47, division (E) of section 1775.55, division (E) of section 1782.433, or division (E) of section 1782.4310 of the Revised Code, twenty-five dollars.

(L) For a minister's license to solemnize marriages, ten dollars;

(M) For examining documents to be filed at a later date for the purpose of advising as to the acceptability of the proposed filing, fifty dollars;

(N) Fifty dollars for filing and recording any of the following:

(1) A certificate of dissolution and accompanying documents, or a certificate of cancellation, under section 1701.86, 1702.47, 1705.43, or 1782.10 of the Revised Code;

(2) A notice of dissolution of a foreign licensed corporation or a certificate of surrender of license by a foreign licensed corporation under section 1703.17 of the Revised Code;

(3) The withdrawal of registration of a foreign or domestic limited liability partnership under section 1775.61 or 1775.64 of the Revised Code, or the certificate of cancellation of registration of a foreign limited liability company under section 1705.57 of the Revised Code;

(4) The filing of a cancellation of disclaimer of general partner status under Chapter 1782. of the Revised Code.

(O) For filing a statement of continued existence by a nonprofit corporation, twenty-five dollars;

(P) For filing a restatement under section 1705.08 or 1782.09 of the Revised Code, an amendment to a certificate of cancellation under section 1782.10 of the Revised Code, an amendment under section 1705.08 or 1782.09 of the Revised Code, or a correction under section 1705.55, 1775.61, 1775.64, or 1782.52 of the Revised Code, fifty dollars;

(Q) For filing for reinstatement of an entity cancelled by operation of law, by the secretary of state, by order of the department of taxation, or by order of a court, twenty-five dollars;

(R) For filing a change of agent, resignation of agent, or change of agent's address under section 1701.07, 1702.06, 1703.041, 1703.27, 1705.06, 1705.55, 1746.04, 1747.03, or 1782.04 of the Revised Code, twenty-five dollars;

(S) For filing and recording any of the following:

(1) An application for the exclusive right to use a name or an application to reserve a name for future use under section 1701.05, 1702.05, 1703.31, 1705.05, or 1746.06 of the Revised Code, fifty dollars;

(2) A trade name or fictitious name registration or report, fifty dollars;

(3) An application to renew any item covered by division (S)(1) or (2) of this section that is permitted to be renewed, twenty-five dollars;

(4) An assignment of rights for use of a name covered by division (S)(1), (2), or (3) of this section, the cancellation of a name registration or name reservation that is so covered, or notice of a change of address of the registrant of a name that is so covered, twenty-five dollars.

(T) For filing and recording a report to operate a business trust or a real estate investment trust, either foreign or domestic, one hundred twenty-five dollars; and for filing and recording an amendment to a report or associated trust instrument, or a surrender of authority, to operate a business trust or real estate investment trust, fifty dollars;

(U)(1) For filing and recording the registration of a trademark, service mark, or mark of ownership, one hundred twenty-five dollars;

(2) For filing and recording the change of address of a registrant, the assignment of rights to a registration, a renewal of a registration, or the cancellation of a registration associated with a trademark, service mark, or mark of ownership, twenty-five dollars.

(V) For filing a service of process with the secretary of state, five dollars, except as otherwise provided in any section of the Revised Code;

(W) With respect to cooperatives organized under Chapter 1770. of the Revised Code:

(1) For filing the articles of a cooperative, sixty dollars;

(2) For filing a curative filing of the articles under division (D) of section 1770.08 of the Revised Code, five hundred dollars;

(3) For all other filings required under Chapter 1770. of the Revised Code, thirty-five dollars.

Fees specified in this section may be paid by cash, check, or money order, by credit card in accordance with section 113.40 of the Revised Code, or by an alternative payment program in accordance with division (B) of section 111.18 of the Revised Code. Any credit card number or the expiration date of any credit card is not subject to disclosure under Chapter 149. of the Revised Code.

Sec. 1770.01.  As used in this chapter:

(A) "Address" means mailing address, including a zip code. In the case of a registered address, "address" means the mailing address and the actual office location, which may not be a post office box.

(B) "Alternative ballot" means a method of voting on a candidate or issue prescribed by the board of directors of a cooperative in advance of the vote and may include voting by electronic, telephonic, internet, or other means that reasonably allows members the opportunity to vote.

(C) "Articles" means the articles of organization of a cooperative as originally filed and subsequently amended.

(D) "Association" means an organization conducting business on a cooperative plan under the laws of this state or another state that is chartered to conduct business under other laws of this state or another state.

(E) "Board" means the board of directors of a cooperative.

(F) "Business entity" means a company, limited liability company, limited liability partnership, or other legal entity, whether domestic or foreign, association, or body vested with the power or function of a legal entity.

(G) "Cooperative" means a domestic business entity organized under this chapter conducting business on a cooperative plan as provided under this chapter.

(H) "Domestic business entity" means a business entity organized under the laws of this state.

(I) "Domestic cooperative" means a cooperative organized under this chapter or Chapter 1729. of the Revised Code.

(J) "Foreign business entity" means a business entity that is not a domestic business entity.

(K) "Foreign cooperative" means a foreign business entity organized to conduct business on a cooperative plan consistent with this chapter or Chapter 1729. of the Revised Code.

(L) "Member" means a person or entity reflected on the books of a cooperative as the owner of governance rights of a membership interest of the cooperative and includes patron and nonpatron members.

(M) "Membership interest" means a member's interest in a cooperative consisting of a member's financial rights, a member's right to assign financial rights, a member's governance rights, and a member's right to assign governance rights. "Membership interest" includes patron membership interests and nonpatron membership interests.

(N) "Members' meeting" means a regular or special members' meeting.

(O) "Limited liability company" means a limited liability company governed by Chapter 1705. of the Revised Code.

(P) "Nonpatron membership interest" means a membership interest that does not require the holder to conduct patronage business for or with a cooperative to receive financial rights or distributions.

(Q) "Patron" means a person or entity who conducts patronage business with a cooperative.

(R) "Patronage" means business, transactions, or services done for or with a cooperative as defined by the cooperative.

(S) "Patron member" means a member holding a patron membership interest.

(T) "Patron membership interest" means a membership interest requiring the holder to conduct patronage business for or with a cooperative as specified by the cooperative to receive financial rights or distributions.

(U) "Signed" means that the signature of a person has been written on a document and, with respect to a document required by this chapter to be filed with the secretary of state, means that the document has been signed by a person authorized to do so by this chapter, the articles or bylaws of a cooperative, or a resolution approved by the directors or the members of a cooperative. A signature on a document may be a facsimile affixed, engraved, printed, placed, stamped with indelible ink, transmitted by facsimile or electronically, or in any other manner reproduced on the document.

Sec. 1770.02.  A cooperative may be formed and organized on a cooperative plan for any lawful purpose, including any of the following:

(A) Marketing, processing, or otherwise changing the form or marketability of products, including crops, livestock, and other agricultural products, manufacturing and further processing of those products, other purposes that are necessary or convenient to facilitate the production or marketing of products by patron members and others, and other purposes that are related to the business of the cooperative;

(B) Providing products, supplies, and services to its members;

(C) Any other purposes that cooperatives are authorized to perform by law.

Sec. 1770.03.  (A) A cooperative may be organized by one or more organizers who shall be over eighteen years of age and citizens of the United States and who may act for themselves as individuals or as the agents of other entities. The organizers forming the cooperative need not be members of the cooperative.

(B) If the first board is not named in the articles of organization, the organizers may elect the first board or may act as directors with all of the powers, rights, duties, and liabilities of directors until directors are elected or until a contribution is accepted in accordance with this chapter, whichever occurs first.

(C) After the filing of the articles of organization as required by section 1770.05 of the Revised Code, the organizers or the directors named in the articles of organization shall either hold an organizational meeting at the call of a majority of the organizers or of the directors named in the articles or take written action for the purposes of transacting business and taking actions necessary or appropriate to complete the organization of the cooperative, including, without limitation, amending the articles; electing directors; adopting bylaws; adopting banking resolutions; authorizing or ratifying the purchase, lease, or other acquisition of suitable space, furniture, furnishings, supplies, and materials; adopting a fiscal year for the cooperative; contracting to receive and accept contributions; and making any appropriate tax elections. If a meeting is held, the person or persons calling the meeting shall give at least three days' notice of the meeting to each organizer or director named, stating the date, time, and place of the meeting. Organizers and directors may waive notice of an organizational meeting in the same manner that a director may waive notice of meetings of the board.

Sec. 1770.04.  The name of a cooperative shall distinguish the cooperative on the records of the secretary of state from the name of any other domestic business entity or foreign business entity authorized or registered to do business in this state or from a name the right to which is, at the time of organization of the cooperative, reserved or provided for by law. The cooperative name shall be reserved for the cooperative during its existence.

Sec. 1770.05. (A) The articles of the cooperative shall include all of the following:

(1) The name of the cooperative;

(2) The purpose of the cooperative;

(3) The name and address of each organizer;

(4) The period of duration for the cooperative if the duration is not to be perpetual;

(5) Any other lawful provision.

The articles shall be signed by the organizers. The original articles and a designation of the cooperative's registered office and statutory agent shall be filed with the secretary of state.

(B) When the articles, the registration form required under section 1770.11 of the Revised Code, and the designation of the cooperative's registered office and statutory agent have been filed with the secretary of state and the required fee has been paid to the secretary of state, it shall be presumed that both of the following apply:

(1) All conditions precedent that are required to be performed by the organizers have been complied with.

(2) The organization of the cooperative has been chartered by the state as a separate legal entity.

Sec. 1770.06.  (A) The articles of a cooperative may be amended and, if amended, shall be amended as follows:

(1) The board, by majority vote, shall pass a resolution stating the text of the proposed amendment. The text of the proposed amendment and an attached mail or alternative ballot shall be mailed or otherwise distributed with a regular or special meeting notice to each member. The notice shall designate the time and place of the meeting for the proposed amendment to be considered and voted on.

(2) If a quorum of the members exists as determined in accordance with section 1770.37 of the Revised Code, the proposed amendment is adopted if either of the following applies:

(a) The proposed amendment is approved by a majority of the votes cast.

(b) In the case of a cooperative with articles or bylaws requiring more than majority approval or other conditions for approval, the amendment is approved by a proportion of the votes cast or a number of total members as required by the articles or bylaws and the conditions for approval in the articles or bylaws have been satisfied.

(3) After an amendment has been adopted by the members, the amendment shall be signed by the chair, vice-chair, records officer, or assistant records officer.

(B) A majority of directors may amend the articles if the cooperative does not have any members with voting rights.

(C) Amendments to articles of incorporation, when so adopted, shall be filed in accordance with section 1770.08 of the Revised Code.

Sec. 1770.07.  (A) A cooperative organized under Chapter 1729. of the Revised Code may convert and become subject to this chapter by amending its articles of incorporation to conform to the requirements of this chapter.

(B) A cooperative organized under Chapter 1729. of the Revised Code that becomes subject to this chapter shall provide its members with a disclosure statement of the rights and obligations of the members and the capital structure of the cooperative before becoming subject to this chapter. A cooperative organized under Chapter 1729. of the Revised Code, upon distribution of the disclosure statement required in this division and approval of its members as necessary for amending its articles under Chapter 1729. of the Revised Code, may amend its articles to comply with this chapter.

(C) A cooperative organized under Chapter 1729. of the Revised Code that is converting to be subject to this chapter shall prepare a certificate stating all of the following:

(1) The date on which the entity was first organized;

(2) The name of the cooperative organized under Chapter 1729. of the Revised Code and, if the name is to be changed, the name of the cooperative to be governed under this chapter;

(3) The future effective date and time, which shall be a date and time certain, that the cooperative will be governed by this chapter if the effective date and time are not to be the date and time of filing.

(D) Upon filing with the secretary of state of the articles for compliance with this chapter and the certificate required under division (C) of this section, a cooperative organized under Chapter 1729. of the Revised Code is converted and governed by this chapter unless a later date and time are specified in the certificate required under division (C) of this section.

(E) With respect to a conversion under this section under which a cooperative becomes governed by this chapter, the rights, property, securities, or interests in the cooperative organized under Chapter 1729. of the Revised Code may be exchanged or converted into rights, property, securities, or interests in the cooperative as governed by this chapter.

(F) The conversion of a cooperative organized under Chapter 1729. of the Revised Code to a cooperative governed by this chapter does not affect any obligations or liabilities of the cooperative before the conversion or the personal liability of any person incurred before the conversion. When the conversion is effective, the rights, privileges, and powers of the cooperative, real and personal property of the cooperative, debts due to the cooperative, and causes of action belonging to the cooperative remain vested in the cooperative and are the property of the cooperative as converted and governed by this chapter. Title to real property vested by deed or otherwise in the cooperative organized under Chapter 1729. of the Revised Code does not revert and is not impaired by reason of the cooperative's being converted and governed by this chapter. Rights of creditors and liens on property of the cooperative under Chapter 1729. of the Revised Code are preserved unimpaired. Debts, liabilities, and duties of the cooperative remain attached to the cooperative as converted and governed by this chapter and may be enforced against the cooperative to the same extent as if the debts, liabilities, and duties had originally been incurred or contracted by the cooperative as organized under this chapter. The rights, privileges, powers, and interests in property of the cooperative under Chapter 1729. of the Revised Code as well as the debts, liabilities, and duties of the cooperative are not deemed, as a consequence of the conversion, to have been transferred for any purpose of the laws of this state.

Sec. 1770.08.  (A) For filing articles of a cooperative or amendment of the articles or a certificate of merger, consolidation, conversion, division, or dissolution, a cooperative shall pay to the secretary of state the fees imposed by section 111.16 of the Revised Code.

(B) When the articles or amendment of the articles or a certificate of merger, consolidation, conversion, division, or dissolution is filed with the secretary of state, the secretary of state, if the articles, amendment, or certificate complies with this chapter, shall endorse approval thereon, the date of filing, and a file number, and make a legible copy thereof by any authorized method. The original or a copy of the articles, amendment, or certificate, certified by the secretary of state, shall be returned to the person filing the articles, amendment, or certificate.

(C) All persons shall have the opportunity to acquire a copy of the articles, amendments, and certificates filed and recorded in the office of the secretary of state, but no person dealing with the cooperative shall be charged with constructive notice of the contents of any such articles, amendments, or certificates by reason of the filing or recording.

(D) If the secretary of state determines that a filing has been made in error by a cooperative, the secretary of state may revoke and expunge the erroneous filing and authorize a curative document to be filed.

Sec. 1770.09.  The existence of a cooperative shall commence when the articles are filed with the secretary of state. A cooperative shall have a perpetual duration unless the cooperative provides for a limited period of duration in the articles.

Sec. 1770.10. (A) A cooperative shall establish and continuously maintain in this state both of the following:

(1) A registered office that may be, but need not be, the same as its place of business;

(2) A registered statutory agent who may be either an individual resident of this state whose business office is identical with the registered office, or a domestic business entity or a foreign business entity authorized to transact business in this state having an office identical with the registered office.

(B) A cooperative may designate or change its registered office or statutory agent, or both, upon filing with the secretary of state a statement setting forth all of the following:

(1) The name of the cooperative;

(2) The address of its then registered office;

(3) If the address of its registered office is to be changed, the address to which the registered office is to be changed;

(4) The name of its then registered statutory agent;

(5) If its registered statutory agent is to be changed, the name of its successor registered statutory agent;

(6) That the address of its registered office and the address of the business office of its registered statutory agent, as changed, will be identical;

(7) That the change was authorized by affirmative vote of a majority of the board of the cooperative.

(C) If the secretary of state finds that the statement required by division (B) of this section complies with this section, the secretary of state shall file the statement, and upon filing the change of address of the registered office or the appointment of a new registered statutory agent or both, as applicable, is effective.

(D) A registered statutory agent of a cooperative may resign as statutory agent upon filing one original and one exact or conformed copy of a signed written notice of resignation with the secretary of state, who shall mail a copy to the cooperative at its principal mailing address as defined and prescribed by the secretary of state. The appointment of the statutory agent shall terminate upon the expiration of thirty days after receipt of notice by the secretary of state.

(E) If the address or name of a registered statutory agent changes, the statutory agent shall change the address of the registered office or the name of the registered statutory agent by filing with the secretary of state the statement required by division (B) of this section. The statutory agent shall mail a copy of the statement to the cooperative at its principal mailing address.

Sec. 1770.11.  (A) In each odd-numbered year, a cooperative governed by this chapter shall file a biennial registration with the secretary of state. The secretary of state shall establish procedures for the biennial registration, which shall include a requirement that the secretary of state mail by first class mail a registration form to the registered office of each cooperative as shown in the records of the secretary of state or, if no such address is in the records, to the location of the principal place of business shown in the records of the secretary of state. The form shall include the following statement:

"NOTICE: Failure to file this form by December 31 of this year will result in the dissolution of this cooperative without further notice from the Secretary of State under section 1770.11 of the Revised Code."

(B) The registration required by this section shall include all of the following:

(1) The name of the cooperative;

(2) The address of its registered office;

(3) The address of its principal place of business if different from the registered office address;

(4) The name and business address of the chief executive officer or other person exercising the principal functions of the chief executive officer of the cooperative.

(C) A cooperative that has failed to file a registration under this section shall be dissolved by the secretary of state. To effectuate the dissolution, the secretary of state shall issue a certificate of involuntary dissolution, which shall be filed with the secretary of state. The secretary of state annually shall inform the attorney general and the tax commissioner in writing of the methods by which the names of cooperatives dissolved under this section during the preceding year may be determined. The secretary of state also shall make available in an electronic format the names of the dissolved cooperatives.

(D) A cooperative may retroactively reinstate its existence by filing a biennial registration. Filing the biennial registration with the secretary of state does all of the following:

(1) Returns the cooperative to active status as of the date of the dissolution;

(2) Validates contracts or other acts within the authority of the articles and retains the cooperative's liability for those contracts or acts;

(3) Restores to the cooperative all assets and rights of the cooperative and its shareholders or members to the extent they were held by the cooperative and its shareholders or members before the dissolution occurred, except to the extent that assets or rights were affected by acts occurring after the dissolution or sold or otherwise distributed after that time.

Sec. 1770.12.  (A) A cooperative shall have bylaws governing the cooperative's business affairs, its structure, the qualifications, classification, rights, and obligations of members, and the classifications, allocations, and distributions of membership interests that are not otherwise provided in the articles or by this chapter.

(B) If not stated in the articles, the bylaws shall state all of the following:

(1) The purpose of the cooperative;

(2) The capital structure of the cooperative, including a statement of the classes and relative rights, preferences, and restrictions granted to or imposed on each class of member interests, the rights to share in profits or distributions of the cooperative, and the authority to issue membership interests, which may be designated to be determined by the board;

(3) A provision designating the voting and governance rights, including which membership interests have voting power and any limitations or restrictions on the voting power, which shall be in accordance with this chapter;

(4) A statement that patron membership interests with voting power shall be restricted to one vote for each member regardless of the amount of patron membership interests held in the affairs of the cooperative or a statement describing the allocation of voting power allocated as prescribed in this chapter;

(5) A statement that membership interests held by a member are transferable only with the approval of the board or as provided in the bylaws;

(6) If nonpatron membership interests are authorized, a statement as to how profits and losses will be allocated and cash will be distributed between patron membership interests collectively, a statement that net income allocated to a patron membership interest as determined by the board in excess of dividends and additions to reserves shall be distributed on the basis of patronage, and a statement that the records of the cooperative shall include patron membership interests and, if authorized, nonpatron membership interests, which may be further described in the bylaws.

(C) The bylaws may contain any provision relating to the management or regulation of the affairs of the cooperative that are not inconsistent with this chapter, any other provision of the Revised Code, or the articles and shall include all of the following:

(1) The number of directors and the qualifications, manner of election, powers, duties, and compensation, if any, of directors;

(2) The qualifications of members and any limitations on their number;

(3) The manner of admission, withdrawal, suspension, and expulsion of members;

(4) Generally, the governance rights, financial rights, assignability of governance and financial rights, and other rights, privileges, and obligations of members and their membership interests, which may be further described in member control agreements;

(5) Any provisions required by the articles to be in the bylaws.

(D)(1) Bylaws shall be adopted before any distributions to members, but if the articles or bylaws provide that rights of contributors to a class of membership interest will be determined in the bylaws, the bylaws shall be adopted before the acceptance of any contributions to that class.

(2) Subject to divisions (E) to (G) of this section, the bylaws of a cooperative may be adopted or amended by the directors, or the members may adopt or amend bylaws at a regular or special members' meeting if all of the following apply:

(a) The notice of the regular or special meeting contains a statement that the bylaws or amended bylaws will be voted on and copies are included with the notice, or copies are available upon request from the cooperative, and a summary statement of the proposed bylaws or amendment is included with the notice.

(b) A quorum exists as determined in accordance with section 1770.37 of the Revised Code.

(c) The bylaws or amendment is approved by a majority vote cast, or for a cooperative with articles or bylaws requiring more than majority approval or other conditions for approval, the bylaws or amendment is approved by a proportion of the vote cast or the number of the total members as required by the articles or bylaws and the conditions for approval in the articles or bylaws have been satisfied.

Until the next annual or special members' meeting, the majority of directors may adopt and amend bylaws for the cooperative that are consistent with divisions (E) to (G) of this section, which may be further amended or repealed by the members at an annual or special members' meeting.

(E) The board may amend the bylaws at any time to add, change, or delete a provision unless either of the following applies:

(1) This chapter, the articles, or the bylaws reserve the power exclusively to the members in whole or in part.

(2) A particular bylaw expressly prohibits the board from doing so.

An amendment of the bylaws by the board shall be distributed to the members not later than ten days after adoption, and the notice of the annual meeting of the members shall contain a notice of and a summary of the amendment. The members may amend the bylaws even though the bylaws also may be amended by the board.

(F) The members may amend the bylaws to establish a greater quorum or voting requirement for members, or voting groups of members, than is required under this chapter. In addition, the members may amend the bylaws to subsequently reduce or eliminate a greater quorum or voting requirement for members or voting groups of members. An amendment to the bylaws to establish, reduce, or eliminate a greater quorum or voting requirement for members shall meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be established, whichever are greater.

A bylaw that establishes a greater quorum or voting requirement for members under this division shall not be adopted or amended by the board.

(G) A bylaw that establishes a greater quorum or voting requirement for the board may be amended only if either of the following applies:

(1) If adopted by the members, only by the members;

(2) If adopted by the board, either by the members or by the board.

A bylaw adopted or amended by the members that establishes a greater quorum or voting requirement for the board may provide that it may be amended only by a specified vote of either the members or the board, but if the bylaw is to be amended by a specified vote of the members, the bylaw shall be adopted by the same specified vote of the members.

Action by the board under division (G)(2) of this section shall meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be established, whichever are greater.

(H)(1) Unless otherwise provided in the articles or bylaws, the board may adopt bylaws to be effective only in an emergency. The emergency bylaws, which are subject to amendment or repeal by the members, may include all provisions necessary for managing the cooperative during the emergency, including all of the following:

(a) Procedures for calling a meeting of the board;

(b) Quorum requirements for the meeting;

(c) Designation of additional or substitute directors.

(2) All provisions of the regular bylaws that are consistent with the emergency bylaws shall remain in effect during the emergency. The emergency bylaws shall not be effective after the emergency ends.

(3) With respect to actions taken in good faith in accordance with the emergency bylaws, both of the following apply:

(a) The actions are binding on the cooperative.

(b) The actions may not be the basis for imposition of liability on any director, officer, employee, or statutory agent of the cooperative on the grounds that the action was not authorized cooperative action.

(4) For purposes of division (H) of this section, an emergency exists if a quorum of the directors cannot readily be obtained because of a catastrophic event.

Sec. 1770.13.  (A) A cooperative shall keep as permanent records minutes of all meetings of its members and of the board, a record of all actions taken by the members or the board without a meeting by a written unanimous consent in lieu of a meeting, and a record of all waivers of notices of meetings of the members and of the board.

(B) A cooperative shall maintain appropriate accounting records.

(C) A cooperative shall maintain its records in written form or in another form that is capable of conversion into written form within a reasonable time.

(D) A cooperative shall keep a copy of each of the following records at its principal office:

(1) Its articles and other governing instruments;

(2) Its bylaws or other similar instruments;

(3) A record of the names and addresses of its members in a form that allows preparation of an alphabetical list of members with each member's address;

(4) The minutes of members' meetings, and records of all actions taken by members without a meeting by unanimous written consent in lieu of a meeting, for the preceding three calendar years;

(5) All written communications within the preceding three calendar years to members as a group or to any class of members as a group;

(6) A list of the names and business addresses of its current board members and officers.

(E) Except as otherwise limited by this chapter, the board of a cooperative shall have discretion to determine what records are appropriate for the purposes of the cooperative, the length of time that records are to be retained, and policies relating to the confidentiality, disclosure, inspection, and copying of the records of the cooperative.

Sec. 1770.14. (A) In addition to other powers, a cooperative:

(1) May perform every act necessary or proper to the conduct of the cooperative's business or the accomplishment of the purposes of the cooperative;

(2) Has other rights, powers, or privileges granted by the laws of this state to other cooperatives, except those that are inconsistent with the express provisions of this chapter;

(3) Has the powers given in section 1770.02 of the Revised Code and in this section.

This section does not give a cooperative the power or authority to exercise the powers of a credit union under Chapter 1733. of the Revised Code or a bank, savings and loan association, or savings bank under Title XI of the Revised Code.

(B) A cooperative may buy, sell, or deal in its own products; the products of its individual members, patrons, or nonmembers; the products of another cooperative or an association or of its members or patrons; or the products of another person or entity. A cooperative may negotiate the price at which its products may be sold.

(C) A cooperative may enter into or become a party to a contract or agreement for the cooperative or for the cooperative's individual members or patrons or between the cooperative and its members.

(D) A cooperative may purchase and hold, lease, mortgage, encumber, sell, exchange, and convey as a legal entity real, personal, and intellectual property, including real estate, buildings, personal property, patents, and copyrights as the business of the cooperative may require, including the sale or other disposition of assets required by the business of the cooperative as determined by the board. A cooperative may take, receive, and hold real and personal property, including the principal and interest of money or other funds and rights in a contract, in trust for any purpose not inconsistent with the purposes of the cooperative specified in its articles or bylaws and may exercise fiduciary powers in relation to taking, receiving, and holding the real and personal property. A cooperative may erect buildings or other structures or facilities on the cooperative's owned or leased property or on a right-of-way that is legally acquired by the cooperative.

(E) A cooperative may issue bonds, debentures, or other evidence of indebtedness and may borrow money, may secure any of its obligations by mortgage of or creation of a security interest in or other encumbrances or assignment of all or any of its property, franchises, or income, and may issue guarantees for any legal purpose. A cooperative may form special purpose business entities to secure assets of the cooperative.

(F) A cooperative may make advances to its members or patrons on products delivered by the members or patrons to the cooperative.

(G) A cooperative may accept donations or deposits of money or real or personal property from other cooperatives or associations from which it is constituted.

(H) A cooperative may loan or borrow money to or from individual members, cooperatives, or associations from which it is constituted with security that it considers sufficient. A cooperative may invest and reinvest its funds.

(I) A cooperative may pay pensions, retirement allowances, and compensation for past services to and for the benefit of, and establish, maintain, continue, and carry out, wholly or partially at the expense of the cooperative, employee benefit and incentive plans, trusts, and provisions to or for the benefit of, any or all of its and its related organizations' officers, managers, directors, governors, employees, and statutory agents and, in the case of a related organization that is a cooperative, members who provide services to the cooperative, and any of their families, dependents, and beneficiaries. A cooperative may indemnify and purchase and maintain insurance for and on behalf of a fiduciary of any of those employee benefit and incentive plans, trusts, and provisions.

(J) A cooperative may provide for its benefit life insurance and other insurance with respect to the services of any or all of its members, managers, directors, employees, and statutory agents or on the life of a member for the purpose of acquiring at the death of the member any or all membership interests in the cooperative owned by the member.

(K) A cooperative may purchase, acquire, hold, or dispose of the ownership interests of another business entity or business entities whether organized under the laws of this state or another state or the United States and assume all rights, interests, privileges, responsibilities, and obligations arising out of the ownership interests, including a business entity organized:

(1) As a federation of associations;

(2) For the purpose of forming a district, state, or national marketing sales or service agency;

(3) For the purpose of acquiring marketing facilities at terminal or other markets in this state or other states.

A cooperative may purchase, own, and hold ownership interests, including stock and other equity interests, memberships, interests in nonstock capital, and evidences of indebtedness of any domestic business entity or foreign business entity.

(L) A cooperative may exercise any and all fiduciary powers in relations with members, cooperatives, associations, or business entities from which it is constituted.

Sec. 1770.15.  (A) In anticipation of or during an emergency as described in division (D) of this section, a board may modify lines of succession to accommodate the incapacity of any director, officer, employee, or statutory agent, relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.

(B) During an emergency, unless emergency bylaws provide otherwise, both of the following apply:

(1) Notice of a meeting of the board need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication or radio.

(2) One or more officers of the cooperative who are present at a meeting of the board may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.

(C) Cooperative action taken in good faith during an emergency under this section to further the ordinary business affairs of the cooperative binds the cooperative and may not be the basis for the imposition of liability on any director, officer, employee, or statutory agent of the cooperative on the grounds that the action was not an authorized cooperative action.

(D) An emergency exists for purposes of this section if a quorum of the directors cannot readily be obtained because of a catastrophic event.

Sec. 1770.16.  A foreign cooperative may conduct activities in this state upon compliance with the general requirements that are applicable to such a cooperative desiring to do business in this state. All contracts that may be made by a cooperative under this chapter and that are made by or with such a foreign cooperative shall be enforceable in this state with all of the remedies established in this chapter.

Sec. 1770.17. (A) A cooperative and a patron member or patron of the cooperative may make and execute a marketing contract that requires the patron member or patron to sell a specified portion of the patron member's or patron's agricultural product or specified commodity produced from a certain area exclusively to or through the cooperative or a facility established by the cooperative.

If a sale is contracted to the cooperative, the sale shall transfer title to the product absolutely, except for any recorded lien or security interest against the agricultural products of the patron member or patron, to the cooperative on delivery of the product or at another specified time if expressly provided in the contract. However, the contract may allow the cooperative to sell or resell the product of its patron member or patron with or without taking title to the product, and pay the resale price to the patron member or patron, after deducting all necessary selling, overhead, and other costs and expenses, including other proper reserves and interest.

(B) A single term of a marketing contract executed under this section shall not exceed ten years, but a marketing contract may be made self-renewing for periods not exceeding five years each, subject to the right of either party to terminate by giving written notice of the termination during a period of the current term as specified in the contract.

(C) The bylaws of the cooperative or the marketing contract, or both, may set a specific sum as liquidated damages to be paid by the patron member or patron to the cooperative for breach of any provision of the marketing contract entered into under this section and may provide that the patron member or patron shall pay the costs, premiums for bonds, expenses, and fees if an action is brought on the contract by the cooperative. The remedies for breach of contract are valid and enforceable in the courts of this state. The provisions shall be enforced as liquidated damages and are not considered a penalty.

(D) If there is a breach or threatened breach of a marketing contract entered into under this section by a patron member or patron, the cooperative is entitled to an injunction to prevent further breach of the contract and to a decree of specific performance of the contract. Pending the adjudication of the action after filing a complaint showing the breach or threatened breach and filing a sufficient bond, the cooperative is entitled to a temporary restraining order and preliminary injunction against the patron member or patron.

(E) No person shall knowingly induce or attempt to induce a patron member or patron of a cooperative organized under this chapter to breach a marketing contract with the cooperative or knowingly spread false reports about the cooperative's finances or management.

(F) A person may be liable to a cooperative for civil damages for a violation of division (E) of this section. Each violation constitutes a separate offense.

Sec. 1770.20.  (A) A cooperative shall be governed by its board, which shall take all action for and on behalf of the cooperative, except those actions reserved or granted to members. Board action shall be by the affirmative vote of a majority of the directors voting at a duly called meeting unless a greater majority is required by the articles or bylaws of the cooperative. A director individually or collectively with other directors does not have authority to act for or on behalf of the cooperative unless authorized by the board. A director may advocate interests of members or member groups to the board, but the fiduciary duty of a director is to represent the best interests of the cooperative and all members collectively.

(B) The board shall not have fewer than five directors, except that a cooperative with fifty or fewer members may have three or more directors as prescribed in the articles or bylaws.

Sec. 1770.21.  (A) The organizers of a cooperative shall elect the first board to serve until directors are elected by members of the cooperative. Until election by the members, the first board shall appoint directors to fill any vacancies.

(B)(1) Directors shall be elected for the term, at the time, and in the manner provided in this section and the bylaws.

(2) A majority of the directors shall be members and a majority of the directors shall be elected exclusively by the members holding patron membership interests unless otherwise provided in the articles or bylaws.

(3) The voting authority of the directors may be allocated according to allocation units or equity classifications of the cooperative, provided that at least one-half of the voting power on general matters of the cooperative shall be allocated to the directors elected by members holding patron membership interests, or in the alternative, the directors elected by the members holding patron membership interests shall have an equal or shall not have a minority voting power on general matters of the cooperative.

(4) A director shall hold office for the term to which the director was elected and until a successor is elected and has qualified to be a director or until earlier death, resignation, removal, or disqualification of the director.

(5) The expiration of a director's term with or without election of a qualified successor does not make the prior or subsequent acts of the director or the board void or voidable.

(6) Subject to any limitation in the articles or bylaws, the board may set the compensation of directors.

(7) Directors may be divided into or designated and elected by class or other distinction as provided in the articles or bylaws.

(8) A director may resign by giving written notice to the chair of the board or the board. The resignation is effective without acceptance when the notice is given to the chair of the board or the board unless a later effective time is specified in the notice.

(C) Directors shall be elected at the regular members' meeting for the terms of office prescribed in the bylaws. Except for directors elected at district meetings or special meetings to fill a vacancy, all directors shall be elected at the regular members' meeting. There shall be no cumulative voting for directors except as provided in this chapter and the articles or bylaws.

(D) For a cooperative that has districts or other units, members may elect directors on a district or unit basis if provided in the bylaws. The directors may be nominated or elected at district meetings if provided in the bylaws. Directors who are nominated at district meetings shall be elected at the regular members' meeting by vote of the entire membership unless the bylaws provide that directors who are nominated at district meetings are to be elected by vote of the members of the district, at the district meeting, or at the regular members' meeting.

(E) The following shall apply to voting by mail or by alternative ballot:

(1) A member may not vote for a director other than by being present at a meeting or by mail ballot or alternative ballot authorized by the board.

(2) A ballot shall be in a form prescribed by the board.

(3) A member shall mark the ballot for the candidate chosen and mail the ballot to the cooperative in a sealed plain envelope inside another envelope bearing the member's name or shall vote designating the candidate chosen by alternative ballot in the manner prescribed by the board.

(4) If the ballot of the member is received by the cooperative on or before the date of the regular members' meeting or as otherwise prescribed for alternative ballots, the ballot shall be accepted and counted as the vote of the member.

Sec. 1770.22.  (A) If a patron member director's position becomes vacant or a new director position is created for a director that was or is to be elected by patron members, the board, in consultation with the directors elected by patron members, shall appoint a patron member of the cooperative to fill the director's position until the next regular or special members' meeting. If there are no directors elected by patron members on the board at the time of the vacancy, a special patron members' meeting shall be called to fill the patron member director vacancy.

(B) If a vacating director was not elected by the patron members or a new director position is created, unless otherwise provided in the articles or bylaws, the board shall appoint a director to fill the vacant position by majority vote of the remaining or then serving directors even if they constitute less than a quorum. At the next regular or special members' meeting, the members or patron members shall elect a director to fill the unexpired term of the vacant director's position.

Sec. 1770.23.  (A) A director may be removed at any time, with or without cause, if all of the following apply:

(1) The director was named by the board to fill a vacancy.

(2) The members have not elected directors in the interval between the time of the appointment to fill a vacancy and the time of the removal.

(3) A majority of the remaining directors affirmatively vote to remove the director.

(B) Any one or all of the directors may be removed at any time, with or without cause, by the affirmative vote of the holders of a majority of the voting power of membership interests entitled to vote at an election of directors, provided that if a director has been elected solely by the patron members or the holders of a class or series of membership interests as stated in the articles or bylaws, that director may be removed only by the affirmative vote of the holders of a majority of the voting power of the patron members for a director elected by the patron members or of all membership interests of that class or series entitled to vote at an election of that director.

(C) New directors may be elected at a meeting at which directors are removed.

(D) This section applies unless the articles or bylaws of a cooperative establish different requirements and procedures.

Sec. 1770.24.  (A) Meetings of a board may be held from time to time as provided in the articles or bylaws at any place within or without the state that the board may select or by any means described in division (B) of this section. If the board fails to select a place for a meeting, the meeting shall be held at the principal executive office unless the articles or bylaws provide otherwise.

(B)(1) A conference among directors by any means of communication through which the directors may simultaneously hear each other during the conference constitutes a board meeting if the same notice concerning the meeting is given as would be required by division (C) of this section and if the number of directors participating in the conference would be sufficient to constitute a quorum at a meeting. Participation in a meeting by that means constitutes presence in person at the meeting.

(2) A director may participate in a board meeting not described in division (B)(1) of this section by any means of communication through which the director, other directors so participating, and all directors physically present at the meeting may simultaneously hear each other during the meeting. Participation in a meeting by that means constitutes presence in person at the meeting.

(C) Unless the articles or bylaws provide for a different time period, a director may call a board meeting by giving at least ten days' notice or, in the case of organizational meetings, at least three days' notice to all directors of the date, time, and place of the meeting. The notice need not state the purpose of the meeting unless this chapter, the articles, or the bylaws require it.

(D) If the day or date, time, and place of a board meeting have been specified in the articles or bylaws or announced at a previous meeting of the board, no notice is required. Notice of an adjourned meeting need not be given other than by announcement at the meeting at which adjournment occurs.

(E) A director may waive notice of a meeting of the board. A waiver of notice by a director entitled to notice is effective whether given before, at, or after the meeting and whether given in writing, orally, or by attendance. Attendance by a director at a meeting is a waiver of notice of that meeting, except where the director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting after the objection.

(F) If the articles or bylaws so provide, a director may give advance written consent or opposition to a proposal to be acted on at a board meeting. If the director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum. Consent or opposition shall be counted as the vote of a director present at the meeting in favor of or against the proposal and shall be entered in the minutes or other record of action at the meeting if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or objected.

(G) A majority, or a larger or smaller portion or number provided in the articles or bylaws, of the directors currently holding office is a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn a meeting from time to time until a quorum is present. If a quorum is present when a duly called or held meeting is convened, the directors present may continue to transact business until adjournment even though the withdrawal of a number of directors originally present leaves less than the portion or number otherwise required for a quorum.

Sec. 1770.25.  (A) A board shall take action by the affirmative vote of the greater of a majority of directors present at a duly held meeting at the time the action is taken or a majority of the minimum portion or number of directors that would constitute a quorum for the transaction of business at the meeting, except when this chapter, the articles, or the bylaws require the affirmative vote of a larger portion or number. If the articles or bylaws require a larger portion or number than is required by this chapter for a particular action, the articles or bylaws control.

(B) An action that is required or permitted to be taken at a board meeting may be taken by written action signed by all of the directors. If the articles or bylaws so provide, an action, other than an action requiring member approval, may be taken by written action signed by the number of directors that would be required to take the same action at a meeting of the board at which all directors were present. The written action is effective when signed by the required number of directors unless a different effective time is provided in the written action.

(C) When written action is permitted to be taken by fewer than all directors, all directors shall be notified immediately of its text and effective date. Failure to provide the notice does not invalidate the written action. A director who does not sign or consent to the written action has no liability for the action or actions taken by the written action.

Sec. 1770.26.  (A) A board shall establish an audit committee to review the financial information and accounting report of the cooperative. The cooperative shall have the financial information audited for presentation to the members unless the bylaws allow financial statements that are not audited and the financial statements clearly state that they are not audited and state the difference between financial statements that are not audited and financial statements that are audited and prepared according to generally accepted accounting procedures. The directors shall elect members to the audit committee. The audit committee shall ensure an independent review of the cooperative's finances and audit, if any.

(B)(1) A resolution approved by the affirmative vote of a majority of the board may establish committees having the authority of the board in the management of the business of the cooperative only to the extent provided in the resolution. Committees may include a special litigation committee consisting of one or more independent directors or other independent persons to consider legal rights or remedies of the cooperative and whether those rights and remedies should be pursued. Committees other than special litigation committees are subject at all times to the direction and control of the board.

(2) Unless the articles or bylaws provide for a different membership or manner of appointment, a committee shall consist of one or more persons, who need not be directors, appointed by affirmative vote of a majority of the directors present.

(3) The procedures governing meetings of the board apply to committees and members of committees to the same extent as those procedures apply to the board and individual directors.

(4) Minutes, if any, of committee meetings shall be made available upon request to members of the committee and to any director.

(5) The establishment of, delegation of authority to, and action by a committee do not alone constitute compliance by a director with the standard of conduct established in section 1770.27 of the Revised Code.

(6) Committee members are considered to be directors for purposes of sections 1770.27, 1770.28, and 1770.30 of the Revised Code.

Sec. 1770.27.  (A) A director shall discharge the duties of the position of director in good faith, in a manner that the director reasonably believes to be in the best interests of the cooperative, and with the care that an ordinarily prudent person in a like position would exercise under similar circumstances. A person who so performs those duties is not liable by reason of being or having been a director of the cooperative.

(B) A director may rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by any of the following:

(1) One or more officers or employees of the cooperative whom the director reasonably believes to be liable and competent in the matters presented;

(2) Counsel, public accountants, or other persons as to matters that the director reasonably believes are within the person's professional or expert competence;

(3) A committee of the board on which the director does not serve, duly established by the board, as to matters within its designated authority if the director reasonably believes the committee to merit confidence.

Division (B) of this section does not apply to a director who has knowledge concerning the matter in question that makes the reliance otherwise permitted by division (B) of this section unwarranted.

(C) A director who is present at a meeting of the board when an action is approved by the affirmative vote of a majority of the directors present is presumed to have assented to the action approved unless the director does any of the following:

(1) Objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting after the objection, in which case the director is not considered to be present at the meeting for any purpose of this chapter;

(2) Votes against the action at the meeting;

(3) Is prohibited by a conflict of interest from voting on the action.

(D) In discharging the duties of the position of director, a director, in considering the best interests of the cooperative, may consider the interests of the cooperative's employees, customers, suppliers, and creditors, the economy of the state, and long-term as well as short-term interests of the cooperative and its patron members, including the possibility that those interests may be best served by the continued independence of the cooperative.

Sec. 1770.28.  (A) A contract or other transaction between a cooperative and one or more of its directors, or between a cooperative and a business entity in or of which one or more of its directors are governors, directors, managers, officers, or legal representatives or have a material financial interest, is not void or voidable because the director or directors or the other business entities are parties or because the director or directors are present at the meeting of the members or the board or a committee at which the contract or transaction is authorized, approved, or ratified if either of the following applies:

(1) The contract or transaction was, and the person asserting the validity of the contract or transaction sustains the burden of establishing that the contract or transaction was, fair and reasonable as to the cooperative at the time that it was authorized, approved, or ratified and both of the following apply:

(a) The material facts as to the contract or transaction and as to the director's or directors' interest are disclosed or known to the members.

(b) The material facts as to the contract or transaction and as to the director's or directors' interest are fully disclosed or known to the board or a committee, and the board or committee authorizes, approves, or ratifies the contract or transaction in good faith by a majority of the board or committee, but the interested director or directors are not counted in determining the presence of a quorum and do not vote.

(2) The contract or transaction is a distribution, contract, or transaction that is made available to all members or patron members as part of the cooperative's business.

(B) If a committee is elected or appointed to authorize, ratify, or approve a contract or transaction under this section, the members of the committee shall not have a conflict of interest and shall be charged with representing the best interests of the cooperative.

(C) For purposes of this section both of the following apply:

(1) A resolution fixing the compensation of a director or fixing the compensation of another director as a director, officer, employee, or statutory agent of the cooperative is not void or voidable or considered to be a contract or other transaction between a cooperative and one or more of its directors for purposes of this section even though the director receiving the compensation fixed by the resolution is present and voting at the meeting of the board or a committee at which the resolution is authorized, approved, or ratified or even though other directors voting on the resolution are also receiving compensation from the cooperative.

(2) A director has a material financial interest in each organization in which the director or the spouse, parents, children, spouses of children, brothers and sisters, spouses of brothers and sisters, and brothers and sisters of the spouse of the director or any combination of them have a material financial interest. For purposes of this section, a contract or other transaction between a cooperative and the spouse, parents, children, spouses of children, brothers and sisters, spouses of brothers and sisters, and brothers and sisters of the spouse of a director or any combination of them is considered to be a transaction between the cooperative and the director.

Sec. 1770.29.  (A) A director's personal liability to the cooperative or members for monetary damages for breach of fiduciary duty as a director may be eliminated or limited in the articles or bylaws, except as provided in division (B) of this section.

(B) The articles or bylaws may not eliminate or limit the liability of a director for any of the following:

(1) A breach of the director's duty of loyalty to the cooperative or its members;

(2) Acts or omissions that are not in good faith or involve intentional misconduct or a knowing violation of law;

(3) Knowing violations of securities laws or illegal distributions;

(4) A transaction from which the director derived an improper personal benefit;

(5) An act or omission occurring before the date when the provision in the articles or bylaws eliminating or limiting liability becomes effective.

Sec. 1770.30.  (A) As used in this section:

(1) "Cooperative" includes a domestic or foreign cooperative that was the predecessor of the cooperative referred to in this section in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.

(2) "Official capacity" means all of the following:

(a) With respect to a director, the position of director in a cooperative;

(b) With respect to a person other than a director, the elective or appointive office or position held by the person, membership on a committee of the board, the employment relationship undertaken by an employee of the cooperative, or the scope of services provided by members of the cooperative to the cooperative;

(c) With respect to a director, chief executive officer, member, or employee of the cooperative who, while holding such an office or position, is or was serving at the request of the cooperative or whose duties in that office or position involve or involved service as a governor, director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, the office or position of that person as a governor, director, manager, officer, member, partner, trustee, employee, or agent, as the case may be, of the other organization or employee benefit plan.

(3) "Proceeding" means a threatened, pending, or completed civil, criminal, administrative, arbitration, or investigative proceeding, including a proceeding by or in the right of the cooperative.

(B) Subject to division (D) of this section, a cooperative shall indemnify a person that is made or threatened to be made a party to a proceeding by reason of the former or present official capacity of the person against judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney's fees and disbursements incurred by the person in connection with the proceeding, if, with respect to the acts or omissions of the person complained of in the proceeding, all of the following apply to the person:

(1) The person has not been indemnified by another organization or employee benefit plan for the same judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney fees and disbursements incurred by the person in connection with the proceeding, with respect to the same acts or omissions.

(2) The person acted in good faith.

(3) The person received no improper personal benefit, and the person has not committed an act for which liability cannot be eliminated or limited under section 1770.29 of the Revised Code.

(4) In the case of a criminal proceeding, the person had no reasonable cause to believe the conduct was unlawful.

(5) In the case of acts or omissions occurring in the person's official capacity, the person reasonably believed that the conduct was in the best interests of the cooperative or that the conduct was not opposed to the best interests of the cooperative. If the person's acts or omissions complained of in the proceeding relate to conduct as a director, officer, trustee, employee, or agent of an employee benefit plan, the conduct is not considered to be opposed to the best interests of the cooperative if the person reasonably believed that the conduct was in the best interests of the participants or beneficiaries of the employee benefit plan.

The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of no contest does not, of itself, establish that the person did not meet the criteria established in this division.

(C) Subject to division (D) of this section, if a person is made or threatened to be made a party to a proceeding, the person is entitled, upon written request to the cooperative, to payment or reimbursement by the cooperative of reasonable expenses, including attorney fees and disbursements incurred by the person in advance of the final disposition of the proceeding, if both of the following apply:

(1) Upon receipt by the cooperative of a written affirmation by the person of a good faith belief that the criteria for indemnification established in division (B) of this section have been satisfied, and a written undertaking by the person to repay all amounts paid or reimbursed by the cooperative if it is ultimately determined that the criteria for indemnification have not been satisfied;

(2) After a determination that the facts then known to those making the determination would not preclude indemnification under this section.

The written undertaking required by division (C)(1) of this section is an unlimited general obligation of the person making it, but need not be secured and shall be accepted without reference to financial ability to make the repayment.

(D) The articles or bylaws either may prohibit indemnification or advances of expenses otherwise required by this section or may impose conditions on indemnification or advances of expenses in addition to the conditions established in divisions (B) and (C) of this section, including, without limitation, monetary limits on indemnification or advances of expenses if the conditions apply equally to all persons or to all persons within a given class. A prohibition or limit on indemnification or advances of expenses may not apply to or affect the right of a person to indemnification or advances of expenses with respect to any acts or omissions of the person occurring before the effective date of a provision in the articles or the date of adoption of a provision in the bylaws establishing the prohibition or limit on indemnification or advances of expenses.

(E) This section does not require or limit the ability of a cooperative to reimburse expenses, including attorney's fees and disbursements, incurred by a person in connection with an appearance as a witness in a proceeding at a time when the person has not been made or threatened to be made a party to a proceeding.

(F) All determinations concerning whether indemnification of a person is required by division (B) of this section and whether a person is entitled to payment or reimbursement of expenses in advance of the final disposition of a proceeding as provided in division (C) of this section shall be made as follows:

(1) By a majority of a quorum of the board if the directors who are, at the time, parties to the proceeding are not counted for determining either a majority or the presence of a quorum;

(2) If a quorum under division (F)(1) of this section cannot be obtained by a majority of a committee of the board consisting solely of two or more directors not at the time parties to the proceeding duly designated to act in the matter, by a majority of the full board, including directors who are parties;

(3) If a determination cannot be made under division (F)(1) or (2) of this section, by the affirmative vote of the members, but the membership interests held by parties to the proceeding shall not be counted in determining the presence of a quorum, and those members are not considered to be present and entitled to vote on the determination.

(G) A cooperative may purchase and maintain insurance on behalf of a person in that person's official capacity against any liability asserted against and incurred by the person in or arising from that capacity whether or not the cooperative would have been required to indemnify the person against the liability under this section.

(H) A cooperative that indemnifies or advances expenses to a person in accordance with this section in connection with a proceeding by or on behalf of the cooperative shall report to the members in writing the amount of the indemnification or advance and to whom and on whose behalf it was paid not later than the next regular members' meeting.

(I) Nothing in this section shall be construed to limit the power of the cooperative to indemnify persons other than a director, chief executive officer, member, employee, or member of a committee of the board of the cooperative by contract or otherwise.

Sec. 1770.31.  (A) A board shall elect both of the following:

(1) A chair;

(2) One or more vice-chairs.

(B) The board shall elect or appoint both of the following:

(1) A records officer;

(2) A financial officer.

(C) The officers, other than the chief executive officer employed under division (G) of this section, shall not have the authority to bind the cooperative except as authorized by the board.

(D) The board may elect or appoint additional officers as the articles or bylaws authorize or require.

(E) The offices of records officer and financial officer may be combined.

(F) The chair and first vice-chair shall be directors and members. The financial officer, records officer, and additional officers need not be directors or members.

(G) The board may employ a chief executive officer to manage the day-to-day affairs and business of the cooperative, and, if a chief executive officer is employed, the chief executive officer shall have the authority to implement the functions, duties, and obligations of the cooperative except as restricted by the board. The chief executive officer shall not exercise authority reserved to the board or the members under this chapter, the articles, or the bylaws.

Sec. 1730.32.  (A) A cooperative shall have one or more members, including one or more patron members. A cooperative may divide members into units, classes, or series as authorized by its articles or bylaws. The board may implement the use of units, classes, or series to elect delegates to members' meetings.

(B) A member who purposely or repeatedly violates a provision of the articles, the bylaws, a member control agreement, or a marketing contract with the cooperative may be required by the board to surrender the member's voting power or the financial rights of membership interest of any class owned by the member, or both. The cooperative shall refund to the member for the surrendered financial rights of membership interest the lesser of the book value or market value of those financial rights payable in not more than seven years from the date of surrender, or the board may transfer all of a patron member's financial rights to a class of financial rights held by members who are not patron members or to a certificate of interest, which carries liquidation rights on par with membership interests and is redeemed within seven years after the transfer as provided in the certificate. Membership interests required to be surrendered may be reissued or be retired and canceled by the board.

Sec. 1770.33.  A member is not personally liable for the acts, debts, liabilities, or obligations of a cooperative. A member is liable for any unpaid subscription for the membership interest, unpaid membership fees, or a debt for which the member has separately contracted with the cooperative.

Sec. 1770.34.  (A) Regular members' meetings shall be held annually at a time determined by the board unless otherwise provided for in the bylaws.

(B) The regular members' meeting shall be held at the principal place of business of the cooperative or at another conveniently located place as determined by the bylaws or the board.

(C) The officers shall submit reports to the members at the regular members' meeting covering the business of the cooperative for the previous fiscal year that show the condition of the cooperative at the close of the fiscal year.

(D) All directors shall be elected at the regular members' meeting for the terms of office prescribed in the bylaws. However, if the members have been divided into units, classes, or series, the bylaws may allow for the election of a director or directors by unit, class, or series of members.

(E)(1) A cooperative shall give notice of regular members' meetings by mailing a notice to each member at the member's last known post office address or by other notification approved by the board and agreed to by the members. The regular members' meeting notice shall be published or otherwise provided by approved method at least two weeks before the date of the meeting or mailed at least fifteen days before the date of the meeting.

(2) The notice shall contain a summary of any bylaw amendments adopted by the board since the last annual meeting.

(F) A member may waive notice of a regular members' meeting. A waiver of notice by a member entitled to notice is effective whether given before, at, or after the meeting and whether given in writing, orally, or by attendance. Attendance by a member at a meeting is a waiver of notice of that meeting, except when the member objects at the beginning of the meeting to the transaction of business because the meeting has not been lawfully called or convened or objects before a vote on an item of business because the item may not lawfully be considered at that meeting and does not participate in the consideration of the item at that meeting.

Sec. 1770.35.  (A) Special members' meetings may be called by either of the following:

(1) A majority vote of a quorum of the board;

(2) A written petition submitted to the chair of the board by at least twenty per cent of the patron members and, if authorized by the bylaws, twenty per cent of the nonpatron members or members representing twenty per cent of the membership interests collectively.

(B) A cooperative shall give notice of a special members' meeting in the same manner that notice of a regular members' meeting is given under section 1770.34 of the Revised Code, and notice of a special members' meeting may be waived in the same manner that notice may be waived under that section.

Sec. 1770.36.  After mailing regular or special members' meeting notices or otherwise delivering the notices, a cooperative shall create a record containing the date of mailing or delivery of the notices and a statement that the regular or special members' meeting notices were mailed or delivered as prescribed by law. The certificate shall be made a part of the record of the meeting. Failure of a member to receive a regular or special members' meeting notice does not invalidate an action taken by the members at a members' meeting.

Sec. 1770.37.  A quorum at a members' meeting that is necessary to transact business shall be ten per cent of the total number of members for a cooperative with five hundred or fewer members and fifty members for cooperatives with more than five hundred members. Members may vote by mail or by an alternative ballot. In determining if a quorum exists at a meeting, members present in person or represented by mail vote or an alternative ballot shall be counted. A quorum shall be verified by the chair or the records officer of the cooperative and shall be reported in the minutes of the meeting. An action by a cooperative is not valid or legal in the absence of a quorum at the meeting at which the action was taken.

Sec. 1730.38.  To the extent authorized in the articles or bylaws or a member control agreement, a regular or special members' meeting may be held solely by a combination of means of remote communication through which the members may participate in the meeting if notice of the meeting is given to every owner of membership interests entitled to vote as required by this chapter for a meeting and if the membership interests held by the members participating in the meeting would be sufficient to constitute a quorum at a meeting. Participation by a member by means of remote communication constitutes presence at the meeting in person or by proxy if all the other requirements of this chapter for the meeting are met.

Sec. 1770.39. (A) Except when this chapter, the articles or bylaws, or a member control agreement requires otherwise, members shall take action by the affirmative vote of a majority of the voting power of the membership interests that are part of a quorum and entitled to vote on that item of business. The articles or bylaws adopted by the members may provide for a greater quorum or voting requirement for members or a unit, class, or series of members than is provided for by this chapter. An amendment to the articles or bylaws that establishes, reduces, or eliminates a greater quorum or voting requirement shall be adopted in accordance with section 1770.06 or 1770.12 of the Revised Code, as applicable. If the articles or bylaws or a member control agreement requires such a larger proportion for a particular action, the articles, bylaws, or member control agreement controls.

(B) In a case where a unit, class, or series of membership interests is entitled by this chapter, the articles or bylaws, a member control agreement, or the terms of the membership interests to vote as a unit, class, or series, the matter being voted on also shall receive the affirmative vote of the owners of the same proportion of the membership interests present of that unit, class, or series, or of the total outstanding membership interests of that unit, class, or series, as the proportion required under division (A) of this section unless the articles or bylaws or the member control agreement requires a larger proportion. Unless otherwise stated in the articles or bylaws or a member control agreement, in the case of voting as a unit, class, or series, the minimum percentage of the total voting power of membership interests of the unit, class, or series that shall be present is equal to the minimum percentage of all membership interests entitled to vote and required to be present under section 1770.37 of the Revised Code.

Sec. 1770.40.  (A) The bylaws of a cooperative shall require patron members to vote collectively based on the vote of the majority of patron members voting on an issue before the members of the cooperative. In no case shall the bylaws of a cooperative allow the collective vote of patron members to constitute less than fifteen per cent of the total vote of members of the cooperative even if the total patron membership constitutes less than fifteen per cent of the total membership of the cooperative.

(B) A patron member of a cooperative is entitled to only one vote on an issue to be voted on by members holding patron membership interests, except that if authorized in the articles or bylaws, a patron member may be entitled to additional votes in accordance with section 1770.41 of the Revised Code. A nonpatron member has voting rights in accordance with the nonpatron member's membership interests as granted in the bylaws, subject to this chapter.

(C) A cooperative may provide in the articles or bylaws that units, classes, or series of members are entitled to be represented at members' meetings by delegates chosen by the members of the unit, class, or series. The delegates may vote on matters at the members' meeting in the same manner as a member. The delegates may only exercise the voting rights on the basis and with the number of votes prescribed in the articles or bylaws. If the approval of a certain portion of the members is required for adoption of amendments, a dissolution, a merger, a consolidation, or a sale of assets, the votes of delegates shall be counted as votes by the members represented by the delegates.

Sec. 1770.41. (A) A cooperative may authorize in its articles or bylaws patron members to have additional votes concerning any of the following or a combination of them:

(1) A stipulated amount of business transacted between a patron member and the cooperative;

(2) A stipulated number of patron members in the cooperative;

(3) A stipulated amount of equity allocated to or held by a patron member cooperative in the cooperative's central organization.

(B) A cooperative that is organized into units or districts of patron members may authorize in its articles or bylaws the delegates elected by its patron members to have an additional vote for either of the following or a combination of them:

(1) A stipulated amount of business transacted between the patron members in the units or districts and the cooperative;

(2) A stipulated amount of equity allocated to or held by the patron members of the units or districts of the cooperative.

Sec. 1770.42.  (A) A board may fix a date of not more than sixty days prior to the date of a members' meeting as the date for the determination of which owners of membership interests are entitled to notice of and to vote at the meeting. The articles or bylaws may establish a shorter period of time for making such a determination. When a date is so fixed, only members on that date are entitled to notice of and to vote at that meeting.

(B) The articles or bylaws may give or prescribe the manner of giving a creditor, security holder, or other person a right to vote on patron membership interests.

(C) Membership interests that are owned by two or more members may be voted by any one of them unless the cooperative receives written notice from any one of them denying the authority of that person to vote those membership interests.

(D) Except as provided in this division, an owner of a nonpatron membership interest or a patron membership interest with more than one vote that is entitled to vote may vote any portion of the membership interest in any way the member chooses. If a member votes without designating the portion voted in a particular way, the member is considered to have voted all of the membership interest in that way.

Sec. 1770.43.  (A) Membership interests of a cooperative reflected in the records of the cooperative as being owned by another domestic or foreign business entity may be voted by the chair, the chief executive officer, or another legal representative of that entity.

(B) Membership interests of a cooperative in the name of, or under the control of, the cooperative or a subsidiary in a fiduciary capacity are not entitled to be voted on any matter, except to the extent that the settlor or beneficiary possesses and exercises a right to vote or gives the cooperative or, with respect to membership interests in the name of or under control of a subsidiary, the subsidiary binding instructions on how to vote the membership interests.

(C) Subject to section 1770.40 of the Revised Code, membership interests under the control of a person in a capacity as a personal representative, administrator, executor, guardian, conservator, or similar capacity may be voted by the person, either in person or by proxy, without reflecting in the records of the cooperative those membership interests in the name of the person.

(D) Membership interests reflected in the records in the name of a trustee in bankruptcy or a receiver may be voted by the trustee or receiver either in person or by proxy. Membership interests under the control of a trustee in bankruptcy or a receiver may be voted by the trustee or receiver without reflecting in the records of the cooperative the name of the trustee or receiver if authority to do so is contained in an appropriate order of the court by which the trustee or receiver was appointed. The right to vote of trustees in bankruptcy and receivers is subject to section 1770.40 of the Revised Code.

(F) Membership interests reflected in the records of the cooperative in the name of a business entity not described in divisions (A) to (D) of this section may be voted either in person or by proxy by the legal representative of that business entity.

(G) The grant of a security interest in a membership interest does not entitle the holders of the security interest to vote.

Sec. 1770.44.  (A) Patron members may be represented by the proxy of other patron members. Nonpatron members may be represented by proxy if authorized by the bylaws.

(B) A member may cast or authorize the casting of a vote by proxy either by filing a written appointment of a proxy with the board at or before the meeting at which the appointment is to be effective or by telephonic transmission or authenticated electronic communication as authorized by the bylaws.

(C) The appointment of a proxy is valid for eleven months unless a longer period is expressly provided in the appointment. No appointment is irrevocable unless the appointment is coupled with an interest in a membership interest or the cooperative.

(D) An appointment may be terminated at will unless the appointment is coupled with an interest in the cooperative or a membership interest, in which case it shall not be terminated except in accordance with the terms of an agreement, if any, between the parties to the appointment. Termination may be made by filing written notice of the termination of the appointment with the board or by filing a new written appointment of a proxy with the board in accordance with division (B) of this section. Termination in either manner revokes all prior proxy appointments and is effective when filed with the board.

(E) The death or incapacity of a person appointing a proxy does not revoke the authority of the proxy unless written notice of the death or incapacity is received by the board before the proxy exercises the authority under that appointment.

(F) Unless the appointment specifically provides otherwise, if two or more persons are appointed as proxies for a member, both of the following apply:

(1) Any one of them may vote the membership interests on each item of business in accordance with specific instructions contained in the appointment.

(2) If no specific instructions are contained in the appointment with respect to voting the membership interests on a particular item of business, the membership interests shall be voted as a majority of the proxies determines. If the proxies are equally divided, the membership interests shall not be voted.

(G) Unless the appointment of a proxy contains a restriction, limitation, or specific reservation of authority, the cooperative may accept a vote or action taken by a person named in the appointment. The vote of a proxy is final, binding, and not subject to challenge, but the proxy is liable to the member for damages resulting from a failure to exercise the proxy or from an exercise of the proxy in violation of the authority granted in the appointment.

(H) If a proxy is given authority by a member to vote on fewer than all items of business considered at a members' meeting, the member is considered to be present and entitled to vote by the proxy only with respect to those items of business for which the proxy has authority to vote.

Sec. 1770.45.  A board may direct a cooperative that holds ownership interests of another business entity to elect or appoint a person to represent the cooperative at a meeting of the business entity. The representative has authority to represent the cooperative and may cast the cooperative's vote at the meeting.

Sec. 1770.46.  (A) A member is entitled to inspect and copy, at the member's expense, during regular business hours at a reasonable location specified by the cooperative, any of the records described in section 1770.13 of the Revised Code if the member meets the requirements of division (B) of this section and gives the cooperative written demand at least five business days prior to the date on which the member wishes to inspect and copy the records. However, no member shall have the right to inspect or copy any records of the cooperative relating to the amount of equity capital in the cooperative held by any person or any accounts receivable or other amounts due the cooperative from any person or any personnel records or employment records of any employee.

(B) In order to be entitled to inspect and copy records, a member shall meet the following requirements:

(1) The member shall have been a member for at least one year immediately preceding the demand to inspect and copy or be a member holding at least five per cent of all of the outstanding equity interests in the cooperative as of the date on which the demand is made.

(2) The demand is made in good faith and for a proper cooperative business purpose.

(3) The member describes with reasonable particularity the purpose of the demand to inspect and copy records and describes the records that the member desires to inspect and copy.

(4) The records are directly connected with the described purpose.

(C)(1) The right of inspection and copying granted by this section shall not be abolished or limited by the articles or bylaws or any actions of the board or the members.

(2) This section does not affect either of the following:

(a) The right of a member to inspect records to the same extent as any other litigant if the member is in litigation with the cooperative;

(b) The power of a court to compel the production of the cooperative's records for examination.

(3) Notwithstanding any other provision of this section, if the records to be inspected or copied are in active use or storage and not available at the time otherwise provided for inspection or copying, the cooperative shall notify the member and shall set a date and hour within three business days of the date otherwise set in this section for the inspection or copying.

(4) A member's agent or attorney has the same inspection and copying rights as the member.

(D) If a cooperative refuses to allow a member, or the member's agent or attorney, to inspect or copy any records in accordance with this section, the court of common pleas of the county where the cooperative's principal office is located or, if it has no principal office in this state, the court of common pleas of the county in which its registered office is located, on application of the member, may order the inspection or copying of the records demanded at the cooperative's expense.

If a court orders inspection or copying of the records demanded, unless the cooperative proves that it refused inspection or copying in good faith because it had a reasonable basis for doubt about the right of the member or the member's agent or attorney to inspect or copy the records demanded, the court may do all of the following:

(1) Order the losing party to pay the prevailing party's reasonable costs, including reasonable attorney fees;

(2) Order the losing party to pay the prevailing party for any damages that the prevailing party incurred by reason of the subject matter of the litigation;

(3) Order the cooperative to pay the member's inspection and copying expenses;

(4) Grant either party any other remedy provided by law;

(5) Impose reasonable restrictions on the use or distribution of the records by the demanding member.

Sec. 1770.50.  (A) The authorized amount and divisions of patron membership interests and, if authorized, nonpatron membership interests may be increased, decreased, established, or altered in accordance with the restrictions in this chapter by amending the articles or bylaws 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 or bylaws or, if authorized in the articles or bylaws, 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 known business prospects and risks of the cooperative as well as 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 issued by the cooperative. A membership interest may not be issued until the subscription price of the membership interest has been paid in money or property with the value of the property to be contributed approved by the board.

(C) The patron membership interests collectively shall have not less than sixty per cent of the cooperative's financial rights to profit allocations and distributions. However, if authorized in the original articles as filed, articles or bylaws adopted by an affirmative vote of the patron members, or articles or bylaws as amended by an affirmative vote of patron members, the cooperative's financial rights to profit allocations and distributions to patron members collectively may be not less than fifteen per cent.

(D) After issuance by the cooperative, membership interests in a cooperative may only be sold or transferred with the approval of the board. The board may adopt resolutions prescribing procedures to prospectively approve transfers.

(E) If authorized by the articles, the cooperative may solicit and issue nonpatron membership interests on terms and conditions determined by the board and disclosed in the articles or bylaws or by separate disclosure to the members. A member acquiring nonpatron membership interests shall sign a member control agreement or agree to the conditions in the bylaws, either of 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 articles or bylaws do not otherwise provide for the allocation of the profits and losses between patron membership interests and nonpatron membership interests, 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 that 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 this chapter. If not otherwise provided in the articles or bylaws, 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 that the contributions have been accepted by the cooperative.

(F) The articles or 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 membership interests offered for sale. A membership interest acquired by the cooperative may be held in order to be reissued or may be retired and canceled.

(G) Subject to the articles and 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 days after the amendment of the articles or bylaws and notice of the amendment to members. If the dissenting member fails to do so within the thirty-day period, or if the dissenting member voted in favor of the amendment, the right of the dissenting member to demand payment of fair value for the membership interest is waived. After receipt of the dissenting member's notice, the cooperative either shall rescind the amendment not later than sixty days after receipt of the notice or remit payment for the fair value of the membership interest to the dissenting member not later than one hundred eighty days after receipt of the notice. Upon receipt of payment for the fair value of the membership interest, the member has no further member rights in the cooperative.

Sec. 1770.51.  (A) Except as provided in division (C) of this section, a member's financial rights are transferable in whole or in part.

(B) An assignment of a member's financial rights entitles the assignee to receive, to the extent assigned, only the share of profits and losses and the distributions to which the assignor would otherwise be entitled. An assignment of a member's financial rights does not dissolve the cooperative and does not entitle or empower the assignee to become a member, to exercise any governance rights, to receive any notices from the cooperative, or to cause dissolution. The assignment shall not allow the assignee to control the member's exercise of governance or voting rights.

(C) A restriction on the assignment of financial rights may be imposed in the articles, in the bylaws, in a member control agreement, by a resolution adopted by the members, by an agreement among or other written action by the members, or by an agreement among or other written action by the members and the cooperative. A restriction is not binding with respect to financial rights reflected in the records of the cooperative before the adoption of the restriction unless the owners of those financial rights are parties to the agreement or voted in favor of the restriction.

A written restriction on the assignment of financial rights that is not manifestly unreasonable under the circumstances and is noted conspicuously in the records of the cooperative may be enforced against the owner of the restricted financial rights or a successor or transferee of the owner, including a pledgee or a legal representative. Unless noted conspicuously in the records of the cooperative, a restriction, even though permitted by this section, is ineffective against a person without knowledge of the restriction.

With regard to restrictions on the assignment of financial rights, a would-be assignee of financial rights is entitled to rely on a statement of membership interest issued by the cooperative under section 1770.52 of the Revised Code. A restriction on the assignment of financial rights, which is otherwise valid and in effect at the time of the issuance of a statement of membership interest, but which is not reflected in that statement, is ineffective against an assignee who takes an assignment in reliance on the statement. Notwithstanding any provision of law, articles, bylaws, member control agreement, other agreement, resolution, or action to the contrary, a security interest in a member's financial rights may be foreclosed and otherwise enforced, and a secured party may assign a member's financial rights in accordance with applicable law, without the consent or approval of the member whose financial rights are subject to the security interest.

Sec. 1770.52.  (A) A membership interest is personal property. A member has no interest in specific cooperative property. All property of the cooperative is property of the cooperative itself.

(B) At the request of a member, the cooperative shall state in writing the particular membership interest owned by that member as of the date on which the cooperative issues the statement. The statement shall describe the member's rights to vote, if any, to share in profits and losses, and to share in distributions, restrictions on assignments of financial rights under section 1770.51 of the Revised Code, or voting rights under this chapter then in effect as well as any assignment of the member's rights then in effect other than a security interest.

(C) All the membership interests of a cooperative shall:

(1) Be of one class, without series, unless the articles or bylaws establish or authorize the board to establish more than one class or series within classes;

(2) Be ordinary patron membership interests or, if authorized in the articles or bylaws, nonpatron membership interest subject to this chapter entitled to vote as provided in this chapter and have equal rights and preferences in all matters not otherwise provided for by the board and to the extent that the articles or bylaws have fixed the relative rights and preferences of different classes and series;

(3) Share profits and losses and are entitled to distributions as provided in this chapter.

(D) On application to a court of competent jurisdiction by a judgment creditor of a member, the court may charge a member's or an assignee's financial rights with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of a member's financial rights under section 1770.51 of the Revised Code. This chapter does not deprive a member or assignee of financial rights of the benefit of any exemption laws that are applicable to the membership interest. This section is the sole and exclusive remedy of a judgment creditor with respect to the judgment debtor's membership interest.

(E) Subject to any restrictions in the articles or bylaws, the power granted in this division may be exercised by a resolution or resolutions establishing a class or series, setting forth the designation of the class or series, and fixing the relative rights and preferences of the class or series. Any of the rights and preferences of a class or series established in the articles or bylaws or by resolution of the board may do both of the following:

(1) Be made dependent on facts ascertainable outside the articles or bylaws or outside the resolution or resolutions establishing the class or series if the manner in which the facts operate on the rights and preferences of the class or series is clearly and expressly set forth in the articles or bylaws or in the resolution or resolutions establishing the class or series;

(2) Include by reference some or all of the terms of any agreements, contracts, or other arrangements entered into by the cooperative in connection with the establishment of the class or series if the cooperative retains at its principal executive office a copy of the agreements, contracts, or other arrangements.

A statement setting forth the name of the cooperative and the text of the resolution and certifying the adoption of the resolution and the date of adoption shall be given to the members before the acceptance of any contributions for which the resolution creates rights or preferences not set forth in the articles or bylaws. When the members have received notice of the creation of membership interests with rights or preferences not set forth in the articles or bylaws before the acceptance of the contributions with respect to the membership interests, the statement may be filed any time within one year after the acceptance of the contributions. The resolution is effective three days after delivery of the notice to the members.

(F) Without limiting the authority granted in this section, a cooperative may have membership interests of a class or series:

(1) Subject to the right of the cooperative to redeem any of those membership interests at the price fixed for their redemption by the articles or bylaws or by the board;

(2) Entitling the members to cumulative, partially cumulative, or noncumulative distributions;

(3) Having preference over any class or series of membership interests for the payment or distributions of any or all kinds;

(4) Convertible into membership interests of any other class or any series of the same or another class;

(5) Having full, partial, or no voting rights.

(G)(1) If a member who is an individual dies or a court of competent jurisdiction adjudges the member to be incompetent to manage the member's person or property, or an order for relief under the statutes governing bankruptcy is entered with respect to the member, the member's executor, administrator, guardian, conservator, trustee, or other legal representative may exercise all of the member's rights for the purpose of settling the estate or administering the member's property. If a member is a business entity, trust, or other entity and is dissolved, terminated, or placed by a court in receivership or bankruptcy, the powers of that member may be exercised by its legal representative or successor.

(2) If an event referred to in division (G)(1) of this section causes the termination of a member's membership interest and the termination does not result in dissolution, the terminated member's interest, subject to the articles and bylaws, shall be considered to be merely that of an assignee of the financial rights owned before the termination of membership, and the rights to be exercised by the legal representative of the terminated member shall be limited accordingly.

(H) A subscriber for membership interests or a member of a cooperative is under no obligation to the cooperative or its creditors with respect to the membership interests subscribed for or owned, except to pay to the cooperative the full consideration for which the membership interests are issued or to be issued.

Sec. 1770.53.  (A) The membership interests of a cooperative shall be either certificated or uncertificated. A holder of certificated membership interests is entitled to a certificate of membership interests. Certificates shall be signed by a statutory agent or officer authorized in the articles or bylaws to sign share certificates or, in the absence of an authorization, by the chair or records officer of the cooperative.

If a person signs or has a facsimile signature placed on a certificate while the chair or an officer, transfer agent, or records officer of a cooperative, the certificate may be issued by the cooperative, even if the person has ceased to have that capacity before the certificate is issued, with the same effect as if the person had that capacity on the date of its issue.

(B) A certificate of membership interests of a cooperative shall contain on its face all of the following:

(1) The name of the cooperative;

(2) A statement that the cooperative is organized under the laws of this state and this chapter;

(3) The name of the person to whom the certificate is issued;

(4) The number and class of membership interests, and the designation of the series, if any, that the certificate represents;

(5) A statement that the membership interests in the cooperative are subject to the articles and bylaws of the cooperative;

(6) Any restrictions on transfer, including approval of the board, if applicable, first rights of purchase by the cooperative, and other restrictions on transfer, which may be stated by reference to the back of the certificate or to another document.

(C) A certificate of membership interests issued by a cooperative that is authorized to issue membership interests of more than one class or series shall state on the face or back of the certificate that the cooperative will furnish to any member upon request and without charge a full statement of the designations, preferences, limitations, and relative rights of the membership interests of each class or series authorized to be issued, so far as they have been determined, and the authority of the board to determine the relative rights and preferences of subsequent classes or series.

(D) A certificate that is signed as provided in division (A) of this section is prima-facie evidence of the ownership of the membership interests referred to in the certificate.

(E) Unless uncertificated membership interests are prohibited by the articles or bylaws, a resolution approved by the affirmative vote of a majority of the directors present may provide that some or all of any or all classes and series of its membership interests will be uncertificated membership interests. The resolution does not apply to membership interests represented by a certificate until the certificate is surrendered to the cooperative. Within a reasonable time after the issuance or transfer of uncertificated membership interests, the cooperative shall send to the new member the information required by this section to be stated on certificates. The information is not required to be sent to the new holder by a publicly held cooperative that has adopted a system of issuance, recordation, and transfer of its membership interests by electronic or other means not involving an issuance of certificates if the system complies with section 17A of the "Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a. Except as otherwise expressly provided in the Revised Code, the rights and obligations of the holders of certificated and uncertificated membership interests of the same class and series are identical.

Sec. 1770.54.  A new certificate of membership interests may be issued in place of one that is alleged to have been lost, stolen, or destroyed. The issuance of a new certificate under this section does not constitute an overissue of the membership interests that it represents.

Sec. 1770.55.  (A) A restriction on the transfer or registration of transfer of membership interests of a cooperative may be imposed in the articles, in the bylaws, by a resolution adopted by the members, or by an agreement among or other written action by a number of members or holders of other membership interests or among them and the cooperative. A restriction is not binding with respect to membership interests issued prior to the adoption of the restriction unless the holders of those membership interests are parties to the agreement or voted in favor of the restriction.

(B) A written restriction on the transfer or registration of transfer of membership interests of a cooperative that is not manifestly unreasonable under the circumstances may be enforced against the holder of the restricted membership interests or a successor or transferee of the holder, including a pledgee or a legal representative, if the restriction is either noted conspicuously on the face or back of the certificate, established in this chapter or the articles or bylaws, or included in information sent to the holders of uncertificated membership interests. A restriction that is not so noted, established, or included, even though permitted by this section, is ineffective against a person without knowledge of the restriction. A restriction under this section is determined to be noted conspicuously on a certificate and is effective if the existence of the restriction is stated on the certificate and reference is made to a separate document creating or describing the restriction.

Sec. 1770.56.  (A) A written agreement among persons who are then members, including a sole member, or who have signed subscription or contribution agreements, relating to the control of any phase of the business and affairs of the cooperative, its liquidation, dissolution, and termination, or the relations among members or persons who have signed subscription or contribution agreements is valid as provided in division (B) of this section. Whenever this chapter provides that a particular result may or shall be obtained through a provision in the articles or bylaws, the same result may be accomplished through a member control agreement valid under this section or through a procedure established by a member control agreement valid under this section.

(B) Other than patron member voting control under section 1770.40 of the Revised Code and patron member allocation and distribution under sections 1770.64 and 1770.65 of the Revised Code, a written agreement among persons described in division (A) of this section that relates to the control of or the liquidation, dissolution, and termination of the cooperative; the relations among members or other persons; or any phase of the business and affairs of the cooperative, including, without limitation, the management of its business, the declaration and payment of distributions, the sharing of profits and losses, the election of directors, the employment of members by the cooperative, or the arbitration of disputes, is valid if the agreement is signed by all persons who are then members of the cooperative, whether or not the members all have voting power, and all those who have signed contribution agreements regardless of whether those signatories will, when members, have voting power.

(C) This section does not apply to, limit, or restrict agreements otherwise valid, nor is the procedure established in this section the exclusive method of agreement among members or between the members and the cooperative with respect to any of the matters described in this section.

Sec. 1770.60.  (A) Subject to any restrictions in this chapter regarding patron and nonpatron membership interests or in the articles or bylaws, and only when authorized by the board, a cooperative may accept contributions, which may be patron or nonpatron membership contributions as determined by the board under divisions (B) and (C) of this section, make contribution agreements under section 1770.62 of the Revised Code, and make contribution allowance agreements under section 1770.63 of the Revised Code.

(B) A person may make a contribution to a cooperative by paying money or transferring the ownership of an interest in property to the cooperative or performing services to or for the benefit of the cooperative or through a written obligation signed by the person to pay money or transfer ownership of an interest in property to the cooperative or to perform services to or for the benefit of the cooperative.

(C) No purported contribution is to be treated as or considered to be a contribution unless both of the following apply:

(1) The board accepts the contribution on behalf of the cooperative and in that acceptance describes the contribution, including terms of future performance, if any, and states the value being accorded to the contribution.

(2) The fact of contribution and the contribution's accorded value are both reflected in the records of the cooperative.

(D) The determinations of the board as to the amount or fair value or the fairness to the cooperative of the contribution accepted or to be accepted by the cooperative or the terms of payment or performance, including under a contribution agreement under section 1770.62 of the Revised Code and a contribution allowance agreement under section 1770.63 of the Revised Code, are presumed to be proper if they are made in good faith and on the basis of accounting methods, or a fair valuation or other method, reasonable in the circumstances. Directors who are present and entitled to vote and who, intentionally or without reasonable investigation, fail to vote against approving a consideration that is unfair to the cooperative, or overvalue property or services received or to be received by the cooperative as a contribution, are jointly and severally liable to the cooperative for the benefit of the then members who did not consent to and are damaged by the action to the extent of the damages to those members. A director against whom a claim is asserted under this division, except in a case of knowing participation in a deliberate fraud, is entitled to contribution on an equitable basis from other directors who are liable under this division.

Sec. 1770.61.  (A) As used in this section, "old contribution" means a contribution that is reflected in the records of a cooperative before the time at which the cooperative accepts a new contribution.

(B) When a cooperative accepts a new contribution, the board shall restate, as required by this section, the value of all old contributions.

(C) A cooperative shall restate the value of old contributions that pertain to the same series or class to which a new contribution pertains in accordance with this division unless otherwise provided in the articles or bylaws. To restate the value, a cooperative shall do all of the following:

(1) State the value that the cooperative has accorded to the new contribution under division (C) of section 1770.60 of the Revised Code;

(2) Determine what percentage the value stated under division (C)(1) of this section will constitute, after the restatement, of the total value of all contributions that pertain to the particular series or class to which the new contribution pertains;

(3) Divide the value stated under division (C)(1) of this section by the percentage determined under division (C)(2) of this section, yielding the total value, after the restatement, of all contributions pertaining to the particular series or class;

(4) Subtract the value stated under (C)(1) of this section from the value determined under division (C)(3) of this section, yielding the total value, after the restatement, of all the old contributions pertaining to the particular series or class;

(5) Subtract the value, as reflected in the records of the cooperative before the restatement, of the old contributions from the value determined under division (C)(4) of this section, yielding the value to be allocated among and added to the old contributions pertaining to the particular series or class;

(6) Allocate the value determined under division (C)(5) of this section proportionally among the old contributions pertaining to the particular series or class, add the allocated values to those old contributions, and change the records of the cooperative accordingly.

The values determined under division (C)(5) of this section and allocated and added under division (C)(6) of this section may be positive, negative, or zero.

(D) A cooperative shall restate the value of old contributions that do not pertain to the same series or class to which a new contribution pertains in accordance with this division unless otherwise provided in the articles or bylaws. To restate the value, a cooperative shall do both of the following:

(1) Determine the percentage by which the restatement under division (C) of this section has changed the total contribution value reflected in the records of the cooperative for the series or class to which the new contribution pertains;

(2) For each old contribution that does not pertain to the same series or class to which the new contribution pertains, change the value reflected in the records of the cooperative by the percentage determined under division (D)(1) of this section. The percentage determined under division (D)(1) of this section may be positive, negative, or zero.

(E) If a cooperative accepts more than one new contribution pertaining to the same series or class at the same time, the cooperative may consider all the new contributions to be a single contribution for the purpose of the restatement required by this section.

Sec. 1770.62.  (A) A contribution agreement, whether made before or after the formation of the cooperative, is not enforceable against the would-be contributor unless it is in writing and signed by the would-be contributor.

(B) Unless otherwise provided in the contribution agreement, or unless all of the would-be contributors and, if in existence, the cooperative consent to a shorter or longer period, a contribution agreement is irrevocable for a period of six months.

(C) A contribution agreement, whether made before or after the formation of a cooperative, shall be paid or performed in full at the time or times or in the installments, if any, specified in the contribution agreement. In the absence of a provision in the contribution agreement specifying the time at which the contribution is to be paid or performed, the contribution shall be paid or performed at the time or times determined by the board, but a call made by the board for payment or performance on contributions shall be uniform for all membership interests of the same class or for all membership interests of the same series.

(D)(1) Unless otherwise provided in the contribution agreement, in the event of default in the payment or performance of an installment or call when due, the cooperative may proceed to collect the amount due in the same manner as a debt due the cooperative. If a would-be contributor does not make a required contribution of property or services, the cooperative shall require the would-be contributor to contribute cash equal to that portion of the value, as stated in the records of the cooperative, of the contribution that has not been made.

(2) If the amount due under a contribution agreement remains unpaid for a period of twenty days after written notice of demand for payment has been given to the delinquent would-be contributor, the membership interests that were subject to the contribution agreement may be offered for sale by the cooperative for a price in money equaling or exceeding the sum of the full balance owed by the delinquent would-be contributor plus the expenses incidental to the sale. If the membership interests that were subject to the contribution agreement are sold according to division (D)(2) of this section, the cooperative shall pay to the delinquent would-be contributor or to the delinquent would-be contributor's legal representative the lesser of the following:

(a) The excess of net proceeds realized by the cooperative over the sum of the amount owed by the delinquent would-be contributor plus the expenses incidental to the sale less any penalty stated in the contribution agreement, which may include forfeiture of the partial contribution;

(b) The amount actually paid by the delinquent would-be contributor.

(3) If the membership interests that were subject to the contribution agreement are not sold according to division (D)(2) of this section, the cooperative may collect the amount due in the same manner as a debt due the cooperative or cancel the contribution agreement according to division (D)(3) of this section.

If the amount due under a contribution agreement remains unpaid for a period of twenty days after written notice of demand for payment has been given to the delinquent would-be contributor and the membership interests that were subject to the contribution agreement have not been sold according to division (D)(2) of this section, the cooperative may cancel the contribution agreement, the cooperative may retain any portion of the contribution agreement price actually paid as provided in the contribution agreement, and the cooperative shall refund to the delinquent would-be contributor or the delinquent would-be contributor's legal representatives any portion of the contribution agreement price as provided in the contribution agreement.

(E) Unless otherwise provided in the articles or bylaws, a would-be contributor's rights under a contribution agreement may not be assigned, in whole or in part, to a person who was not a member at the time of the assignment unless all the members approve the assignment by unanimous written consent.

Sec. 1770.63.  Subject to any restrictions in the articles or bylaws, a cooperative may enter into contribution rights agreements under the terms, provisions, and conditions fixed by the board. Any contribution rights agreement shall be in writing and shall state in full, summarize, or include by reference all the agreement's terms, provisions, and conditions of the rights to make contributions. Unless otherwise provided in the articles or bylaws, a would-be contributor's rights under a contribution rights agreement may not be assigned, in whole or in part, to a person who was not a member at the time of the assignment unless all the members approve the assignment by unanimous written consent.

Sec. 1770.64.  (A) The bylaws shall prescribe the allocation of profits and losses between patron membership interests collectively and any other membership interests. If the bylaws do not provide otherwise, the profits and losses between patron membership interests collectively and other membership interests shall be allocated on the basis of the value of contributions to capital made by the patron membership interests collectively and other membership interests and accepted by the cooperative. The allocation of profits to the patron membership interests collectively shall not be less than fifty per cent of the total profits in any fiscal year, except that if authorized in the original articles as filed, in the articles or bylaws that are adopted by the affirmative vote of the patron members, or in the articles or bylaws that are amended by the affirmative vote of the patron members, the allocation of profits to the patron membership interests collectively shall not be less than fifteen per cent of the total profits in any fiscal year.

(B) The bylaws shall prescribe the distribution of cash or other assets of the cooperative among the membership interests of the cooperative. If the bylaws do not provide otherwise, distribution shall be made to the patron membership interests collectively and other members on the basis of the value of contributions to capital made and accepted by the cooperative, by the patron membership interests collectively, and by other membership interests. The distributions to patron membership interests collectively shall not be less than fifty per cent of the total distributions in any fiscal year, except that if authorized in the articles or bylaws that are adopted by the affirmative vote of the patron members or in the articles or bylaws that are amended by the affirmative vote of the patron members, the distributions to patron membership interests collectively shall not be less than fifteen per cent of the total distributions in any fiscal year.

Sec. 1770.65.  (A) A cooperative may set aside a portion of net income allocated to the patron membership interests as the board determines advisable to create or maintain a capital reserve. In addition to a capital reserve, the board, for patron membership interests, may do either of the following:

(1) Set aside an amount not to exceed five per cent of the annual net income of the cooperative for promoting and encouraging cooperative organization;

(2) Establish and accumulate reserves for new buildings, machinery and equipment, depreciation, losses, and other proper purposes.

(B) Net income allocated to patron members in excess of dividends on equity and additions to reserves shall be distributed to patron members on the basis of patronage. A cooperative may establish allocation units that are functional, divisional, departmental, geographic, or otherwise and pooling arrangements and may account for and distribute net income to patrons on the basis of allocation units and pooling arrangements. A cooperative may offset the net loss of an allocation unit or pooling arrangement against the net income of other allocation units or pooling arrangements.

(C) Distribution of net income shall be made at least annually. The board shall present to the members at their annual meeting a report covering the operations of the cooperative during the preceding fiscal year. A cooperative may distribute net income to patron members in cash, capital credits, allocated patronage equities, revolving fund certificates, or its own or other securities. The cooperative may provide in the bylaws that nonmember patrons are allowed to participate in the distribution of net income payable to patron members on equal terms with patron members.

(D) If a nonmember patron with patronage credits is not qualified or eligible for membership, a refund due may be credited to the patron's individual account. The board may issue a certificate of interest to reflect the credited amount. After the patron is issued a certificate of interest, the patron may participate in the distribution of income on the same basis as a patron member.

Sec. 1770.70. (A) Unless otherwise prohibited, a cooperative may merge or consolidate with one or more business entities if the merger or consolidation is permitted by the laws under which each constituent entity exists and the cooperative complies with this section.

(B) To initiate a merger or consolidation of a cooperative, a written plan of merger or consolidation shall be prepared by the board or by a committee selected by the board to prepare a plan. The plan shall state all of the following:

(1) The names of the cooperative or cooperatives and other business entities that are parties to the merger;

(2) The name of the surviving or new cooperative or other business entity;

(3) The manner and basis of converting membership or ownership interests in the cooperative and other business entities into membership or ownership interests in the surviving or new cooperative or other business entity;

(4) The terms of the merger or consolidation;

(5) The proposed effect of the consolidation or merger on the members and patron members of each constituent cooperative and business entity.

With respect to a consolidation, the plan also shall contain the articles of the entity or organizational documents to be filed with the state in which the entity is organized.

(C) The board shall mail or otherwise transmit or deliver notice of the merger or consolidation to each member. The notice shall contain the full text of the plan and the time and place of the meeting at which the plan will be considered. A cooperative with more than two hundred members may provide the notice in the same manner as a regular members' meeting notice.

(D) A plan of merger or consolidation shall be adopted by a cooperative if both of the following apply:

(1) A quorum of the members exists as determined in accordance with section 1770.37 of the Revised Code.

(2) The plan is approved by the patron members or, if otherwise provided in the articles or bylaws, by a majority of the votes cast in each class of votes cast, or, for a cooperative with articles or bylaws requiring more than a majority of the votes cast or other conditions for approval, the plan is approved by a proportion of the votes cast or the number of members required by the articles or bylaws and the conditions for approval in the articles or bylaws have been satisfied.

After the plan has been adopted, articles of merger or consolidation stating the plan and that the plan was adopted according to this division shall be signed by the chair, vice-chair, records officer, or documents officer of each constituent cooperative or business entity.

For a merger, the articles of the surviving cooperative are deemed amended to the extent provided in the articles of merger. Unless a later date is provided in the plan, the merger or consolidation is effective when the articles of merger or consolidation are filed in accordance with section 1770.72 of the Revised Code.

Sec. 1770.71. (A) After a plan of merger or consolidation has been approved under section 1770.70 of the Revised Code, but before the effective date of the merger or consolidation as provided in that section, the plan may be amended or abandoned by the same vote that approved the plan.

(B) If the merger or consolidation is amended or abandoned as provided in division (A) of this section, an authorized officer of each constituent cooperative and business entity shall sign a certificate of amendment or abandonment stating that the plan of merger or consolidation has been amended or abandoned and the date of that action and shall file the certificate in the same manner as the articles of merger or consolidation in accordance with section 1770.72 of the Revised Code. A certificate of amendment or abandonment shall be filed prior to the date on which the merger or consolidation would otherwise be effective.

Sec. 1770.72. (A) Upon adoption of a plan of merger or consolidation under section 1770.70 of the Revised Code, the articles of merger or consolidation that were signed as required by that section shall be filed with the secretary of state on a form prescribed by the secretary of state that sets forth the following:

(1) The name and form of each constituent cooperative or business entity and the state law under which each constituent cooperative or business entity exists;

(2) A statement that each constituent cooperative or business entity has adopted the plan of merger or consolidation, including the manner of adoption, and that the plan was adopted in compliance with the laws applicable to each constituent cooperative or business entity;

(3) The effective date of the merger or consolidation, which date may be on or after the date of filing of the articles;

(4) In the case of a merger, a statement that one or more specified constituent cooperatives or business entities will be merged into a specified surviving cooperative or business entity, or, in the case of a consolidation, a statement that the constituent cooperatives or business entities will be consolidated into a new cooperative or business entity;

(5) The name and address of the statutory agent on whom any process, notice, or demand against any constituent cooperative or business entity, or the surviving or new cooperative or business entity, may be served.

(B)(1) In the case of a merger into a cooperative or business entity, any amendments to the articles of incorporation or the articles of organization of the surviving cooperative or business entity shall be filed with the articles of merger or consolidation.

(2) In the case of a consolidation to form a new cooperative or business entity, the articles of incorporation or the articles of organization of the new cooperative or business entity shall be filed with the articles of merger or consolidation.

(C) If the surviving or new entity is a foreign entity that desires to transact business in this state as a foreign entity, the articles of merger or consolidation shall be accompanied by the information required for qualification of a foreign entity in this state by Chapter 1703. of the Revised Code, in the case of a foreign corporation or foreign cooperative, or by sections 1705.53 and 1705.54 of the Revised Code, in the case of a foreign limited liability company.

(D) A copy of the articles of merger or consolidation, certified by the secretary of state, may be filed for record in the office of the county recorder of any county in this state. For the recording the county recorder shall charge and collect the same fee as in the case of deeds. The certified copy of the articles of merger or consolidation shall be recorded in the records of deeds.

Sec. 1770.80. (A) A cooperative, by affirmative vote of a majority of the board present, on terms and conditions and for considerations, which may be money, securities, or other instruments for the payment of money or other property, that the board considers expedient and without member approval, may do any of the following:

(1) Sell, lease, transfer, or otherwise dispose of all or substantially all of its property and assets in the usual and regular course of its business;

(2) Sell, lease, transfer, or otherwise dispose of all or substantially all of its property and assets not in the usual and regular course of its business if all of the following apply:

(a) The cooperative's accountant has given an opinion that the cooperative cannot continue as an ongoing business and the cooperative is under financial duress.

(b) The cooperative has given notice to the members of the impending or potential disposition prior to the disposition.

(c) The board has determined that failure to proceed with the disposition would be adverse to the interests of the members and the cooperative.

(3) Grant a security interest in all or substantially all of its property and assets whether or not in the usual and regular course of its business;

(4) Transfer any or all of its property to a business entity all the ownership interests of which are owned by the cooperative;

(5) For purposes of debt financing, transfer any or all of its property to a special purpose entity owned or controlled by the cooperative for an asset securitization.

(B) Except as provided in division (A) of this section, a cooperative, by affirmative vote of a majority of the board present, may sell, lease, transfer, or otherwise dispose of all or substantially all of its property and assets, including its good will, not in the usual and regular course of its business, on terms and conditions and for considerations, which may be money, securities, or other instruments for the payment of money or other property, that the board considers expedient when approved at a members' meeting by the affirmative vote of the owners of a majority of the voting power of the interests entitled to vote. Written notice of the meeting shall be given to all members whether or not they are entitled to vote at the meeting. The written notice shall state that a purpose of the meeting is to consider the sale, lease, transfer, or other disposition of all or substantially all of the property and assets of the cooperative.

(C) Confirmatory deeds, assignments, or similar instruments to evidence a sale, lease, transfer, or other disposition may be signed and delivered at any time in the name of the transferor by its current chair of the board or authorized agents.

(D) The transferee is liable for the debts, obligations, and liabilities of the transferor only to the extent provided in the contract or agreement between the transferee and the transferor or to the extent provided by law.

Sec. 1770.81. (A) A cooperative may be dissolved voluntarily in the manner provided in this section.

(B) A resolution of dissolution of a cooperative shall state both of the following:

(1) That the cooperative elects to be dissolved;

(2) Any additional provision considered necessary with respect to the proposed dissolution and winding up.

(C) The directors may adopt a resolution of dissolution in the following cases:

(1) When the cooperative has been adjudged bankrupt or has made a general assignment for the benefit of creditors;

(2) By leave of the court, when a receiver has been appointed in a general creditors' suit or in any suit in which the affairs of the cooperative are to be wound up;

(3) When substantially all of the assets have been sold at judicial sale or otherwise;

(4) When the period of existence of the cooperative specified in its articles has expired.

(D) At a meeting held for that purpose, the members may adopt a resolution of dissolution by the affirmative vote of sixty per cent of the member votes cast on the proposal or, if the articles or bylaws provide or permit, by the affirmative vote of a greater or lesser portion though not less than a majority, of the voting power, of any particular class as required by the articles or bylaws. Notice of the meeting shall be provided to the members as required by this chapter.

(E) Upon the adoption of a resolution of dissolution, a certificate shall be filed with the secretary of state, on a form prescribed by the secretary of state, stating all of the following:

(1) The name of the cooperative;

(2) A statement that a resolution of dissolution has been adopted, including the manner of adoption, and, in the case of its adoption by directors, a statement of the basis for the adoption;

(3) The place where the cooperative's principal executive office is located;

(4) The names and addresses of the cooperative's directors and officers;

(5) The name and address of the cooperative's statutory agent.

(F) When a resolution of dissolution is adopted by the directors or by the members, the certificate that is required by division (E) of this section shall be signed by an authorized officer. However, if no authorized officer executes and files the certificate within thirty days after the adoption of the resolution or on any date specified in the resolution as the date on which the certificate is to be filed or upon the expiration of any period specified in the resolution as the period within which the certificate is to be filed, whichever is latest, the certificate of dissolution may be signed by three members or, if there are fewer than three members, by all of the members and shall include a statement that the persons signing the certificate are members and are filing the certificate because of the failure of an authorized officer to do so.

(G) A certificate of dissolution, filed with the secretary of state, shall be accompanied by all of the following:

(1) An affidavit of one or more of the persons executing the certificate of dissolution or of an authorized officer of the cooperative containing a statement of the counties, if any, in this state in which the cooperative has personal property or a statement that the cooperative is of a type that is required to pay personal property taxes to state authorities only;

(2) A receipt, certificate, or other evidence showing the payment of all sales, use, highway use, and other applicable taxes accruing up to the date of the filing or that payment adequately has been guaranteed;

(3) A receipt, certificate, or other evidence showing the payment of all personal property taxes accruing up to the date of the filing;

(4) A receipt, certificate, or other evidence from the director of job and family services showing that all contributions due from the cooperative as an employer have been paid, that payment adequately has been guaranteed, or that the cooperative is not subject to such contributions;

(5) A receipt, certificate, or other evidence from the bureau of workers' compensation showing that all premiums due from the cooperative as an employer have been paid, that payment adequately has been guaranteed, or that the cooperative is not subject to such premium payments.

(H) Upon the filing of a certificate of dissolution and the accompanying documents required by division (G) of this section, the cooperative shall be dissolved.

Sec. 1770.82. Following the filing of a certificate of dissolution, the directors or members who filed the certificate, as the case may be, shall cause a notice of voluntary dissolution to be published once a week on the same day of each week for two successive weeks in a newspaper that is published and of general circulation in the county in which the principal executive office of the cooperative was or is located and shall cause written notice of the dissolution to be given to all known creditors of, and to all known claimants against, the dissolved cooperative.

Sec. 1770.83. (A) When a cooperative is dissolved voluntarily, when the articles of organization of a cooperative have been canceled, when a final order of a court of common pleas is made dissolving a cooperative under section 1770.84 of the Revised Code, or when the period of existence of a cooperative specified in its articles of organization has expired, the cooperative shall cease to carry on business and shall do only those acts that are required to wind up its affairs.

(B) Any claim existing or action or proceeding pending by or against the cooperative or that would have accrued against it may be prosecuted to judgment, with right of appeal as in other cases, but any proceeding, execution, or process, or the satisfaction or performance of any order, judgment, or decree, may be stayed as provided in section 1770.84 of the Revised Code.

(C) Any process, notice, or demand against the cooperative may be served by delivering a copy to an officer, director, liquidator, or person having charge of its assets or, if no such person can be found, to the statutory agent.

(D) The directors of the cooperative or their successors shall act as the board of directors in accordance with the articles of organization and bylaws until the affairs of the cooperative are completely wound up. Subject to the orders of courts of this state having jurisdiction over the cooperative, the directors shall proceed as speedily as is practicable to a complete winding up of the affairs of the cooperative and, to the extent necessary or expedient to that end, shall exercise all the authority of the cooperative. Without limiting the generality of that authority, the directors may fill vacancies; elect officers; carry out contracts of the cooperative; make new contracts; borrow money; mortgage or pledge the property of the cooperative as security; sell its assets at public or private sale; make conveyances in the cooperative's name; lease real estate for any term, including ninety-nine years renewable forever; settle or compromise claims in favor of or against the cooperative; appoint or employ one or more persons as liquidators to wind up the affairs of the cooperative with authority that the directors see fit to grant; cause the title to any of the assets of the cooperative to be conveyed to those liquidators for that purpose; apply assets to the payment of obligations; and, after paying or adequately providing for the payment of all known obligations of the cooperative, distribute the remainder of the assets either in cash or in kind among the members or patrons according to their respective rights and interests. In addition, the directors may perform all other acts that are necessary or expedient to the winding up of the affairs of the cooperative.

(E) The directors, or any liquidator to whom the directors grant such authority, in the course of winding up the cooperative's affairs, shall apply the assets of the cooperative in the following order:

(1) To expenses that are incidental to winding up the cooperative's affairs;

(2) To all legally enforceable liabilities and obligations of the cooperative that are due claimants and creditors;

(3) To the members and patrons of the cooperative as provided in the cooperative's articles or bylaws.

(F) Without limiting the authority of the directors, any action within the purview of this section that is authorized or approved at a meeting of the members by sixty per cent of the member votes cast shall be conclusive for all purposes on all members or patrons of the cooperative.

(G) All deeds and other instruments of the cooperative shall be in the name of the cooperative and shall be executed, acknowledged, and delivered by the officers appointed by the directors.

(H) At any time during the winding up of its affairs, the cooperative by its directors may apply to the court of common pleas of the county in this state in which the principal executive office of the cooperative is located to have the winding up continued under supervision of the court as provided in section 1770.84 of the Revised Code. However, if the cooperative has no principal executive office in this state, the application may be made to a court of common pleas in the county in this state where the statutory agent resides.

Sec. 1770.84. (A) The court of common pleas of the county in this state in which is located the principal executive office of a voluntarily dissolved cooperative or of a cooperative whose period of existence has expired, upon the complaint of the cooperative, or a majority of the directors, or ten per cent of the members or twenty members, whichever is less, and upon notice to all the directors and other interested persons that the court considers proper, at any time may order and adjudge any of the following matters:

(1) The presentation and proof of all claims and demands against the cooperative and of all rights, interests, or liens in or on any of its property; the fixing of the time and the manner in which such proof shall be made and the person to whom presentation shall be made; and the barring from participation in any distribution of assets of all persons failing to make and present proofs as required by the order of the court;

(2) The stay of the prosecution of any proceeding against the cooperative or involving any of its property; the requirement that the parties to the proceeding present and prove their claims, demands, rights, interests, or liens at the time and in the manner required of creditors or others; or the grant of leave to bring or maintain an independent proceeding to enforce liens;

(3) The settlement or determination of all claims of every nature against the cooperative or any of its property; the determination of the assets required to be retained to pay or provide for the payment of such claims or any claim; the determination of the assets available for distribution among and rights of members or patrons; and the making of new parties to the proceeding so far as the court considers proper for the determination of all matters;

(4) The presentation and filing of intermediate and final accounts of the directors or of the liquidators and hearings on them; the allowance, disallowance, or settlement of the accounts; and the discharge of the directors, the liquidators, or any of them from their duties and liabilities;

(5) The appointment of a special master commissioner to hear and determine any matters with authority that the court considers proper;

(6) The filling of any vacancies in the number of directors or liquidators when the directors are unable to act on the vacancies for want of a quorum or for any other reason;

(7) The appointment of a receiver, in accordance with the usage of a court in equitable matters, to wind up the affairs of the cooperative, to take custody of any of its property, or for any other purpose;

(8) The issuance or entry of any injunction or any other order that the court considers proper in the winding up of the affairs of the cooperative and the giving of notice of the entry of injunction or order;

(9) The allowance and payment of compensation to the directors or any of them, to liquidators, to a receiver, to the attorney for the complainant, or to any person properly rendering services beneficial to the cooperative or to those interested in it;

(10) The entry of a judgment or decree that, if it so provides, may operate as the deed or other instrument ordered to be executed, or the appointment of a master to execute the deed or instrument in the name of the cooperative with the same effect as if executed by an authorized officer pursuant to authority conferred by the directors or the members of the cooperative whenever there is no officer or agent competent to execute the deed or instrument, whenever the cooperative or its officers do not perform or comply with a judgment or decree of court, or whenever the court considers it proper.

(B) If the cooperative has no principal executive office in this state, without limiting the generality of its authority, the court of common pleas in the county in this state where the statutory agent resides may order and adjudge the matters described in division (A) of this section.

(C) A judicial proceeding under this section concerning the winding up of the affairs of a cooperative is a special proceeding, and final orders in the proceeding may be vacated, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505. of the Revised Code.

Sec. 1770.85. (A) Whenever, after a cooperative is dissolved voluntarily or the period of existence of a cooperative has expired, a receiver is appointed to wind up the affairs of the cooperative, all the claims, demands, rights, interests, or liens of creditors, claimants, members, and patrons shall be determined as of the day on which the receiver was appointed. Unless it is otherwise ordered, the appointment vests in the receiver and successors of the receiver the right to the immediate possession of all the property of the cooperative, which, if so ordered, shall execute and deliver conveyances of that property to the receiver.

(B) Any officer, director, member, or other person, whether a resident of the state or a nonresident and however interested, may be appointed as receiver.

(C) The receiver shall have all the authority vested in the directors and officers of the cooperative, shall exercise authority subject to orders that are made by the court, and may be required to qualify by giving bond to the state in an amount that the court fixes, with surety to the satisfaction of the clerk of the court, conditioned for the faithful discharge of duties and for a due accounting for all money or property received.

Sec. 1770.86. (A) A cooperative may be dissolved judicially and its affairs wound up by an order of the court of common pleas of the county in this state in which the cooperative has its principal executive office, in an action brought by the members having sixty per cent of the voting power of the cooperative on the proposal, or the holders of a lesser portion as are entitled by the articles or bylaws to dissolve the cooperative voluntarily, when it is established that it is beneficial to the members or patrons that the cooperative be judicially dissolved. However, if the cooperative has no principal executive office in this state, the court of common pleas in the county in this state where the statutory agent resides may dissolve and wind up the affairs of a cooperative in accordance with this section.

(B) A complaint for judicial dissolution shall be verified by any of the complainants and shall set forth facts showing that the case is as specified in this section. A schedule shall be annexed to the complaint setting forth the name and address of each member of the cooperative, if it is known, or the fact that it is not known.

(C) Upon the filing of a complaint for judicial dissolution, the court with which it is filed shall have power to issue injunctions; to appoint a receiver with authority and duties that the court from time to time may direct; to take other proceedings that may be necessary to protect the property or the rights of the members or patrons; and to carry on the business of the cooperative until a full hearing can be conducted. Upon or after the filing of a complaint for judicial dissolution, the court, by injunction or order, may stay the prosecution of any proceeding against the cooperative or involving any of its property and require the parties to the proceeding to present and prove their claims, demands, rights, interests, or liens at the time and in the manner required of creditors or others. The court may refer the complaint to a special master commissioner.

(D) After a hearing upon notice as that court directs to be given to all parties to the proceeding and to any other parties in interest designated by the court, a final order based either on the evidence or on the report of the special master commissioner, if one has been appointed, shall be made dissolving the cooperative or dismissing the complaint. An order or judgment for the judicial dissolution of a cooperative shall contain a concise statement of the proceedings leading up to the order or judgment, the name of the cooperative, the place where its principal executive office is located, the names and addresses of its directors and officers, the name and address of a statutory agent, and, if desired, other provisions with respect to the judicial dissolution and winding up that are considered necessary or desirable. A certified copy of the order shall be filed in the office of the secretary of state, whereupon the cooperative shall be dissolved. To the extent consistent with orders entered in the proceeding, the effect of judicial dissolution shall be the same as in the case of voluntary dissolution, and the provisions of sections 1770.83, 1770.84, and 1770.85 of the Revised Code relating to the authority and duties of directors during the winding up of the affairs of a cooperative dissolved voluntarily, with respect to the jurisdiction of courts over the winding up of the affairs of a cooperative, and with respect to receivers for winding up the affairs of a cooperative shall be applicable to cooperatives that are judicially dissolved.

(E) A proceeding under this section for judicial dissolution of a cooperative is a special proceeding, and final orders in it may be vacated, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505. of the Revised Code.

Sec. 1770.99.  Whoever violates division (E) of section 1770.17 of the Revised Code is guilty of a misdemeanor and shall pay a fine of not less than one hundred dollars and not more than one thousand dollars for each offense.

Section 2.  That existing section 111.16 of the Revised Code is hereby repealed.