Thanks to all candidates for participating, and to
all members who voted for YOUR Board of Directors!
ARTICLE 1: NAME AND OFFICE
The name of this corporation
is “The Boston
Food Cooperative, Inc.” Its principal
office is in the City of Cambridge, Commonwealth
of Massachusetts (the “Cooperative”)
ARTICLE 2: PURPOSES AND POWERS
SECTION 1: PURPOSES
The Cooperative is organized for the following
To organize the purchasing power of its members
and other to provide them with food, household
goods, and other products they may request, with
an emphasis on healthy food at reasonable prices.
To educate its members and shoppers regarding
co-operative principles and practices, and the
nutritional, health, and social effects of its
products and services.
To publicize principles of co-operative organization,
management, and decision-making.
To associate and share knowledge with other co-operative
organizations, and to advance the co-operative
movement for the mutual benefit of all people.
To provide a positive and rewarding work environment
for its paid and volunteer staff. In pursuit
of these purposes, the Cooperative will not discriminate
in any way on the basis of race, color, national
origin, sex, age, religion, sexual preference,
or physical or mental disability.
SECTION 2: POWERS
The Cooperative shall have the power:
To purchase, receive, take by grant, devise,
bequest or otherwise, lease, or otherwise deal
in and with, real or personal property, or any
interest therein, wherever situated;
To sell, convey, lease, exchange, transfer or
otherwise dispose of, or mortgage, pledge, encumber,
or create a security interest in, all or any
of its property, or any interest therein, wherever
To purchase, take, receive, subscribe for, or
otherwise acquire, own, hold, vote, employ, sell,
lend, lease, exchange, transfer, or otherwise
dispose of, mortgage, pledge, use and otherwise
deal in and with, bonds and other securities
or interests issued by others, whether engaged
in similar or different business, governmental,
or other activities;
To make contracts, give guarantees and incur
liabilities, borrow money, at such rates of interest
as the Cooperative may determine, issue its notes,
bonds and other obligations by mortgage, pledge
or encumbrance of, or security interest in, all
or any of its property or any interest therein,
To lend money, invest and reinvest its funds,
and take and hold real and personal property
as security for the payment of funds so loaned
To do business, carry on its operations, and
have offices and exercise the powers granted
by these articles in any jurisdiction within
or without the United States;
To be an incorporator of other corporations of
similar or related kind, and;
To have and exercise all powers necessary or
convenient to effect any or all of the purposes
for which the Cooperative is formed; provided
that no such power shall be exercised in a manner
inconsistent with Chapter 180 of the General
Laws of the Commonwealth.
ARTICLE 3: MEMBERS AND MEETINGS
1: DEFINITION OF MEMBERS AND EQUITY MEMBERSHIP
shall be two classes of the members of the
Cooperative, equity members and term members.
Unless qualified by the word “equity” or “term,” the
word “member” as used herein shall
refer to both equity and term members.
OF NEW MEMBERS: A person may become
a member of the Cooperative upon:
(1) submitting a written membership application
in the form prescribed by the Board of Directors;
(2) paying an initial member capital contribution
or fee in an amount to be set from time to time
by the Board of Directors based on the member’s
status as an equity member or a term member (as
described further below); and
(3) acceptance of the application by the Board
of Directors or by a person designated by the
Board of Directors
The Board of Directors may
provide for privileges to be extended to a
member’s family or
FEES: With respect to either or both
classes of members, the Board of Directors may
establish reasonable fees for processing membership
applications, withdrawals and other membership
INACTIVE STATUS: A newly admitted member
shall be deemed an active member with full voting
privileges for one year from the date of admission
and shall, thereafter, be classified as active
or inactive pursuant to this Article 3, Section
1(d). With respect to either or both classes
of members, the Board of Directors may provide
for a membership renewal fee or other method
that will qualify a member as an active member
without regard to minimum purchases. Only active
members shall be entitled to vote at meetings
of the members and only active members shall
be counted in determining the number of members
required for quorums or determining the minimum
number of votes required by the by-laws or the
articles of organization to conduct an election
or take any other action of the members. A member
who is an inactive member for five consecutive
years shall be deemed to have withdrawn from
the Cooperative and, in the case of equity members,
the Equity Membership Account of such person
shall be treated as a non-refundable contribution
to the additional paid in capital of the Cooperative.
In addition, the Board of Directors may set a
minimum amount of annual purchases for an equity
member to qualify as an active member.
OF INFORMATION RECEIVED BY MEMBERS: Members shall treat all information regarding
the Cooperative received by them as confidential
information and shall not disclose such information
to any competitor retail food outlet or any employee,
owner, agent or affiliate of such competitor.
If a member is or becomes an employee, owner,
agent or affiliate of a retail food outlet in
the Boston area, he or she shall not use information
received regarding the Cooperative for competitive
purposes or in any manner that does not fully
protect the proprietary interest of the Cooperative.
ACCOUNT: Each equity member shall have a membership
account on the books of the Cooperative (an “Equity Membership
Account”). Equity Membership Accounts do
not bear interest, are not transferable and are
not refundable except upon the equity member’s
withdrawal from the Cooperative. The Board of
Directors shall determine from time to time the
minimum amount required in an Equity Membership
Account, the amount of a fully paid Equity Membership
Account and the procedure for making payments
into an Equity Membership Account until it is
fully paid. No equity member is liable or may
be assessed if an Equity Membership Account is
less than fully paid.
EQUITY MEMBERSHIP ACCOUNT: An equity
member who withdraws is entitled to receive a
refund of the balance in his or her Equity Membership
Account in accordance with policies as may be
determined by the Board of Directors. The Board
of Directors may adopt policies for the frequency
and timing of refunds, postponement or suspension
of refunds, and other conditions.
EQUITY MEMBERSHIP ACCOUNT: The Cooperative may offset an equity
Equity Membership Account for any debt of the
equity member or the equity member’s household
to the Cooperative.
SECTION 2: RIGHTS OF MEMBERS
A member of the Cooperative
has the following rights, subject to the member’s
status as active or inactive, as described
in Article 3, Section 1(d) above:
to use the Cooperative’s
to vote at meetings of the members, in referenda
and in elections of the Board of Directors,
to be informed about the Cooperative, and the
discretion of management or ultimately, of the
to participate in committees, subject to the
approval of the Board or committee members, and
to attend Board of Directors meetings, except
SECTION 3: RESIGNATION AND REMOVAL OF MEMBERS
Any member may resign from
the Cooperative by delivering a written resignation
to the president or secretary of the Cooperative
or any person designated by these officers.
The Board may terminate an individual’s membership by a 2/3 majority
vote, provided that the member has 15 days’ notice
by mail and shall be entitled to speak before
SECTION 4: ANNUAL MEETINGS
Annual meetings of the members of the Cooperative
shall be held each year between September 15
and November 30, at a place designated by the
Board of Directors.
SECTION 5: SPECIAL MEETINGS
Special meetings of the members may be called
at any time by two Board members including the
president or secretary of the Cooperative, or
any four other Board members. A special meeting
must be called by the president or secretary
if requested in writing by at least as many members
as would constitute a quorum (see sec. 7).
SECTION 6: NOTICE OF MEETINGS
Notice of annual and special
meetings of the members must be given by the
secretary of the Cooperative. This notice – including time,
place, and purpose or purposes of the meeting – must
be given by publication in a local newspaper
or the newsletter of the organization not less
than 5, nor more than 20 days, before the meeting.
In addition, notices of the meeting must be posted
conspicuously at the office of the Cooperative
and on the premises in which the Cooperative
conducts business. The failure of any member
to receive formal or actual notice of any annual
or special meeting will not invalidate any action
that may be take at these meetings.
SECTION 7: QUORUM
Unless otherwise provided by law, a quorum at
any meeting of the members of the Cooperative
shall consist of a number of active members specified
by the Board as approximately equal to the square
root of the size of the active membership. The
Board shall revise this estimate whenever the
size of the active membership changes substantially.
Unless otherwise provided by statute or by these
by-laws, any act approved by a majority of active
members at a meeting of the members at which
there is a quorum is an act of the membership.
SECTION 8: CHAIRING THE MEETING
The Board of Directors shall appoint a chair
for the annual meeting. The secretary or some
other person appointed by the Board of Directors
shall make the necessary records of the meeting.
SECTION 9: RULES
The most recent edition of
of Order will be the formal guide to procedure
at meetings of the members.
SECTION 10: VOTING BY MEMBERS
Each member of the Cooperative shall be entitled
to one vote.
PROXIES: At every meeting of members,
each member shall be entitled to vote in person.
Upon the demand of any 5 members, a vote on a
question before the meeting shall be by paper
ballot. If the Board of Directors specifically
authorizes proxy voting for a particular meeting,
members are entitled to vote at that meeting
either in person or by written proxy dated not
more than 3 months before the meeting.
The Board may specify a record date by which
membership must be established for participation
in any vote or meeting by the members.
ARTICLE 4: DIRECTORS
SECTION 1: POWERS AND RESPONSIBILITIES
Subject to statute and any limitation in the
Articles of Organization or these by-laws, the
activities and property of the Cooperative shall
be managed an controlled by the Board of Directors,
and all corporate powers shall be vested in and
exercised by the Board of Directors.
OF RESPONSIBILITY: The Board of Directors
may delegate any of these powers and responsibilities
to any person, committee, or organization, as
it sees fit and to the extent permitted by law,
though ultimate responsibility and authority
always shall remain with the Board.
ANNUAL REPORTS: The Board of Directors shall
make such reports at the Annual Meeting as are
necessary to disclose the financial condition
and the status of affairs of the Cooperative.
PROGRAMS: The Board of Directors
may establish programs under which the Cooperative
may issue notes or other debt instruments to
SECTION 2: COMPOSITION
NUMBER: There shall be up
to nine (9) Directors. As many as two (2)
additional members of the Board of Directors
may be appointed by the Board of Directors,
following the procedure given in Article IV,
Section 6. By amendment to these bylaws, this
number may be changed within limits fixed
by the Cooperative’s Articles of
Organization, and according to the procedures
set forth in Article 11. If the number of Directors
is decreased, each Director will serve the remainder
of his/her term, unless resigned or removed.
TERM OF OFFICE: Directors shall hold office for
one, two or three years, as provided for in Section
e, from the date of his/her election until the
election and qualification of his/her successors
unless other provisions of these by-laws come
into effect to fill vacancies, replace resigned
members or to remove Directors.
ELIGIBILITY: All Directors must be members of
RESTRICTIONS: No more than three salaried employees
of the Cooperative may serve on the Board of
Directors at any one time.
At any Board election, there shall be no more
seats with three-year terms than one-third the
total number of seats on the Board (rounded up
if needed to make a whole number). There shall
also be no more seats with two-year terms than
one-half the remaining number of seats on the
Board (rounded up if needed to make a whole number).
The final remaining seats shall have one-year
SECTION 3: ELECTION
NOMINATIONS: Directors may be nominated either
(a) by the Board-appointed Nominations and Elections
Committee or (b) by a written petition signed
by at least twenty (20) members and delivered
to the Nominations and Elections Committee by
the date set by the Board of Directors, usually
at least forty-five days before the date of commencement
of voting. No member of the nominating committee
may be nominated for election to the Board. Candidates
must be present at the annual meeting in order
to be elected unless their presence is specifically
waived by the Board.
ELECTIONS: If there are more candidates
nominated than there are vacant seats on the
Board of Directors, then the election is contested.
Members will have as many votes as there are
vacant seats, and may cast no more than one vote
for any nominee. The candidates who receive the
most votes will be elected. If board terms of
different lengths are being filled, longer terms
will go to candidates receiving more votes. Ties
shall be decided by coin toss.
there are no more candidates nominated than
there are vacant seats on the Board of Directors,
then the election is uncontested. In uncontested
elections each member may vote “Yes” and “No” for
each candidate. Candidates who receive more “Yes” votes
than “No” votes are elected. Spoiled
ballots or a failure to vote “Yes” or “No” for
a candidate do not count as either “Yes” or “No” votes.
If both two-year and one-year terms are being
filled, the two-year terms are awarded to the
candidates with the largest number of “Yes” votes.
ADMINISTRATION: Both Contested and Uncontested
elections will be carried out by an in-store
election. The Board shall set an election period
between two and six weeks beginning with the
annual meeting. The Board Nominations and Election
Committee will supervise the elections, making
sure all deadlines and policies are adhered to.
Candidates may have representatives present for
the counting of ballots. The Board may also authorize
balloting by mail and specify appropriate procedures.
SECTION 4: RESIGNATION
Any Director may resign at any time by giving
written notice of resignation to the Board of
SECTION 5: REMOVAL OF DIRECTORS
BY THE BOARD
OF DIRECTORS: A Director may be
removed from his/her office by the affirming
vote of a simple majority of the remaining Directors
if he/she is absent from two consecutive regular
or special meetings of the Board without giving
notice to the Board of his/her intended absence
at or before the start of these meetings.
BY THE MEMBERSHIP. A Director may be removed
from office for cause; cause shall include the
Conduct detrimental to the interests of the Cooperative.
(ii) Lack of sympathy with the Cooperative’s
(iii) Refusal to render reasonable assistance
in carrying out the Cooperative’s purposes.
REMOVAL PROCESS: An affirmative vote of two-thirds
(2/3) of the members present at a membership
meeting with a quorum, whether a regular Annual
Meeting or a special meeting called for that
purpose, is required to remove a Director.
RIGHT OF THE
DIRECTOR: Any Director recommended
for removal shall be given written notice by
mail at least 5 days prior to the meeting at
which his/her removal is to be voted upon. This
Director is also entitled to appear before and
be heard by the Board.
SECTION 6: VACANCIES
An affirmative vote by a majority of the Board
members then serving is sufficient to fill any
Board vacancy, including any vacancy created
by the Board of Directors to increase the number
of Directors. Any Director appointed by the Board
to fill a vacancy shall serve until the next
SECTION 7: MEETINGS
REGULAR: Regular meetings of the Board of Directors
shall be held at least every 2 months. The exact
time and place of these meetings shall be fixed
by the Board of Directors.
SPECIAL: The president or the Executive Committee
may call special meetings of the Board. On written
request of any 2 members of the Board, the Executive
Committee or president must call a special meeting.
MEETINGS: All Directors
shall receive written notice at their usual
business or residence address of all Directors’ meetings
at least three days in advance or notice by
telephone at least one day in advance. This
notice may be waived by any Director. If every
Director is present at a meeting, even though
no notice of the meeting was given or waivers
of notice received, any business may be transacted.
QUORUM: At all meetings of the Board of Directors
a simple majority of all the Directors elected
or appointed shall constitute a quorum for the
transaction of business.
VOTING PARTICIPATION: Unless otherwise provided
by statute or by these by-laws, those able to
participate in decision making at Board meetings
are those Board members present.
VOTING: The Board of Directors will make decisions
by majority vote. The Board may approve operating
procedures that allow for the use of new technologies
for holding meetings and voting.
ACTION: Each of the official acts of
the Board of Directors shall be recorded.
SECTION 8: COMMITTEES
The Board of Directors may create committees.
The constitution and duties of each committee
shall be determined by the Board.
SECTION 9: EXECUTIVE COMMITTEE
The Board of Directors shall elect each year
for one-year terms a 3-4 person Executive Committee.
This committee shall consist of officers of the
Board. Responsibilities of the Executive Committee
will be to facilitate and schedule issues to
be acted on by the Board. The Executive Committee
may also call meetings of the Board, make emergency
decisions (if the Board is polled or a Board
meeting held within 48 hours), authorize administrative
expenditures (up to a limit set by the Board),
make administrative decisions and carry out any
other responsibilities as authorized and directed
by the Board.
SECTION 10: AGENTS AND REPRESENTATIVES
The Board of Directors may appoint such agents
and representatives of the Cooperative with such
powers and to perform such acts or duties on
behalf of the Cooperative as the Board of Directors
may determine, but no appointments shall exceed
the extent authorized or permitted by law.
SECTION 11: INDEMNIFICATION
The Cooperative may, to the
extent legally permissible, indemnify each
of its present and former Members, Directors,
agents, and employees (“Covered
Persons”) against all expenses and liabilities
that a Covered Person has reasonably incurred
in connection with or arising out of any action
or threatened action, suit, or proceeding in
which a Covered Person may be involved by reason
of being or having been a Covered Person. Such
expenses and liabilities shall include, but not
be limited to, judgments, court costs, attorney’s
fees, and reasonable settlements.
No indemnification shall be made under this
Article unless, based on a review of readily
available information, a reasonable determination
is made by (1) majority vote of a quorum of disinterested
Directors; (2) a special indemnification committee
appointed by the Board; or (3) an independent
counsel in a written opinion, that the Covered
Person acted in good faith and in reasonable
belief that any action taken was in, and not
opposed to, the best interests of the Cooperative
and, with respect to a criminal action or proceeding,
that the Covered Person had no reasonable cause
to believe that the conduct was unlawful. In
no event shall the Cooperative indemnify in relation
to any matter in which the person to be indemnified
is found not to have acted in good faith.
The foregoing indemnification provisions shall
not be exclusive of other rights to which any
Member, Director, agent, or employee may be entitled
to as a matter of law.
ARTICLE 5: OFFICERS
SECTION 1: NUMBER
The officers of the Cooperative shall be the
president, secretary, and treasurer, and such
other officers with such powers and duties not
inconsistent with these by-laws as may be appointed
and determined by the Board of Directors. The
Board of Directors must elect at least three
persons as officers. Two offices may be held
by the same person. All officers must be Directors.
SECTION 2: ELECTION AND TERM OF OFFICE
All officers shall be elected annually by the
Directors at the first meeting of the Board of
Director after the annual Board election.
SECTION 3: VACANCIES
In case any office of the Cooperative becomes
vacant by death, resignation, retirement, disqualification,
or any other cause, the majority of the Directors
then in office may elect an officer to fill such
a vacancy, and the officer so elected shall serve
until the first meeting of the Board of Directors
after the annual Board election.
SECTION 4: PRESIDENT
The president shall represent the Cooperative
and shall do or perform such other duties as
may be assigned to him or her by the Board of
Directors. In all activities the president shall
be subject to the direction, management, and
control of the Board of Directors.
SECTION 5: SECRETARY
The secretary shall insure that minutes and
other documents and papers are maintained at
the corporate offices and shall make them available
for inspection by members. He or she shall see
that required reports are filed with the state.
He or she may sign with the president or treasurer,
in the name of the Cooperative, any contracts
or agreements authorized by the Board of Directors.
He or she shall in general perform all duties
incident to the role of clerk, subject to the
control of the Board of Directors, and shall
do such other activities as may be assigned to
him or her by the Board of Directors.
SECTION 6: TREASURER
The treasurer shall insure that appropriate
records of financial transaction are kept, that
appropriate reports are filed when necessary,
and that books are available for member inspection.
He or she shall, in general, perform all the
duties incident to the office of treasurer, subject
to the control of the Board of Directors.
SECTION 7: EXECUTION OF PAPERS
Except as the Board of Directors may generally
or in particular cases authorize the execution
thereof in some other manner, all deeds, releases,
transfers, contracts, bonds, shall be signed
either by the president and the treasurer or
by the president and treasurer and the secretary.
SECTION 8: REMOVAL
Any officer may be removed from office by the
affirmative vote of 2/3 of all Directors at any
regular or special meeting called for that purpose
for non-feasance, mal-feasance, mis-feasance,
or conduct detrimental to the interests of the
Cooperative. The officer involved shall receive
5 days advance notice of the meeting at which
this issue will be considered and shall be entitled
to appear before and be heard by the Board of
Directors at such a meeting.
ARTICLE 6: REFERENDA
Referenda may be placed before the membership
by the Board of Directors, or by petition of
10% of the membership. Referenda shall be conducted
according to rules established by the Board.
Results of a referendum shall be binding on the
Board if 25% of the membership casts ballots,
and if 60% of those ballots favor a proposal,
Decisions to boycott a product, or to take a
public political stance, shall be vetoed if opposed
by 10% of the entire membership, either by signing
a petition or by voting against it in a referendum.
ARTICLE 7: VOTING UPON STOCK OF OTHER CORPORATION
Unless otherwise ordered by the Board of Directors,
the president shall have full power and authority
on behalf of the Cooperative to vote in person
or by proxy at any meeting of stockholders of
any corporation in which this Cooperative may
hold stock, and at any such meeting may possess
and exercise all the rights and powers incident
to the ownership of such stock which, as the
owner thereof, this Cooperative might have possessed
and exercised if present. The Board of Directors
may confer like power upon any other person and
may revoke any such powers as granted at its
ARTICLE 8: PATRONAGE DIVIDENDS
SECTION 1: DISTRIBUTABLE NET EARNINGS
In arriving at distributable net earnings, the
realized net earnings of the Cooperative for
each fiscal year, to the extent attributable
to the patronage of members, shall be reduced
by the following: (i) such adjustments as may
be necessary to put such earnings on a tax basis;
and (ii) such reasonable reserves for necessary
business purposes as may be determined by the
Board of Directors.
SECTION 2: ALLOCATION TO MEMBERS
Distributable net earnings, as so determined,
shall be allocated among members in proportion
to their patronage and distributed as patronage
dividends. Patronage shall be measured by the
dollar amount of purchases from the Cooperative.
Any allocations of such a nominal amount as not
to justify the expenses of distribution may,
as determined by the Board of Directors, be excluded
from distribution provided that they are not
then or later distributed to other members. Members
shall retain the right to waive in whole or in
part, by action at a meeting of members, any
patronage dividends to which they may be entitled.
SECTION 3: NOTICE AND DISTRIBUTION
Patronage dividends shall be evidenced by written
notices of allocation delivered to recipient
members within eight months and fifteen days
following the close of the fiscal year. Each
notice shall state the dollar amount of the patronage
dividend. All notices, except those subject to
Section 6 of this Article, shall be accompanied
by checks in amounts determined by the Board
of Directors which must be at least twenty percent
(20%) of the amount allocated to each member.
SECTION 4: CONSENT OF MEMBERS
By obtaining or retaining membership in the
Cooperative, each member shall thereby consent
to take into account, in the manner and to the
extent required by Section 1385 of the Internal
Revenue Code, the stated dollar amount of any
qualified written notice of allocation in the
taxable year in which such notice is received.
A copy of this section and the appended explanation
shall be provided to all members before the commencement
of any member patronage.
SECTION 5: DEFERRED AMOUNTS
Patronage dividends not currently distributed
under Section 3 of this Article shall be credited
to revolving capital accounts in the names of
recipient members. Such deferred patronage dividends
shall accrue no monetary return on investment
and shall not be transferable. They shall be
redeemed at no more than their carrying value
on the books of the Cooperative when determined
by the Board of Directors to be no longer needed
for capital purposes of the Cooperative. At that
time they shall be redeemed in the order of the
oldest outstanding amounts and on a pro rata
basis among such amounts, and shall be payable
only to persons who are then active members or
who become so within ninety days of the effective
date of redemption. Deferred patronage dividends
may also be redeemed under compelling circumstances
as determined by the Board of Directors.
SECTION 6: ALLOCATION OF NET LOSS
In the event the Cooperative
shall incur a net loss in any fiscal year,
such loss may be charged against retained
earnings or other unallocated members’ equity accounts. If the net loss
exceeds such amounts, or in any event if the
Board of Directors so determines, the amount
of such loss may either be carried forward to
offset adjusted net earnings of subsequent fiscal
years or allocated to members in the same manner
as for adjusted net earnings except that such
allocation shall not exceed the total of invested
capital. Any such allocated net loss shall be
charged first against retained patronage dividends
of prior fiscal years and then against patronage
dividend allocations of subsequent fiscal years.
Allocated net losses which are not so offset
may be charged against the carrying value of
a member’s Equity Membership Account or
other capital account only upon termination of
membership. Allocated net losses shall not otherwise
be assessed to or collected from members.
ARTICLE 9: FISCAL YEAR
The fiscal year of the Cooperative shall be
such period as is determined from time to time
by the Board of Directors.
ARTICLE 10: DISSOLUTION
Upon dissolution, any assets of the Cooperative
remaining after payment of all obligations and
the fulfillment of all legal requirements, including
redemption of all qualified written notices of
allocation and return of Equity Membership Account
balances and any other capital contributions
of the members, shall be distributed to the patrons
based on their prior patronage with the Cooperative
as shown by the records of the Cooperative to
the extent practicable.
ARTICLE 11: AMENDMENTS
SECTION 1: BY DIRECTORS
The Board of Directors may adopt, amend, or
repeal these by-laws by an affirmative vote of
2/3, so long as the action is proposed at one
meeting and adopted at a subsequent meeting,
unless the action would extend the term of a
director beyond the term for which he or she
SECTION 2: BY MEMBERS
The by-laws may be altered, amended, or repealed
at any meeting of members of the Cooperative
by vote of a majority of active members present
or represented at any meeting at which there
is a quorum provided that the proposed action
is inserted in the notice of such meeting.
The Board of Directors allows for voting via
electronic mail on any issue if its first
version of proposal has been made at least
one week prior to vote. A quorum of Directors
must respond in writing (including fax and
email) either in favor, against, or in abstention.
EXPLANATION OF PATRONAGE DIVIDEND CONSENT PROVISION
The Internal Revenue Code generally requires
each person receiving a patronage dividend to
include the amount of such distribution in his
or her gross income in the taxable year in which
the related notice is received. Under bylaw Article
8, Section 4, mere acceptance or retention of
membership in the Cooperative constitutes a consent
to such inclusion in taxable income, including
the portion of the patronage dividend that is
retained by the Cooperative for its capital needs.
The Cooperative has been
advised by legal counsel, however, that the
general rule for inclusion in income of patronage
dividends is subject to an exception that
is applicable to consumer cooperatives. Under
that exception, a patronage dividend is not
required to be included in gross income if
the member’s purchases from the Cooperative
related to “personal, living or family
items.” The patronage dividend would thus
be taxable to a member only if his or her purchases
related to the operation of a trade or business
or other income-producing activities.