A.R.S. tit. 10 ch. 19 — Arizona Revised Statutes Title 10 Chapter 19 — Not For Profit Corporations And Associations, Cooperatives And Fraternal And Benevolent Societies

A.R.S. § 10-2001 10-2001 - Definitions 10-2001. Definitions In this article, unless the context otherwise requires: 1. "Active member" is a member growing, producing, manufacturing, marketing, distributing or selling products or services handled by the association at the time of the membership meeting, or who during the previous year, delivered products or services to the association. 2. "Agricultural products" includes horticultural, viticultural, forestry, dairy, livestock, poultry, bee and any farm products. 3. "Association" means a corporation organized under this article. 4. "Marketing agreement" or "marketing contract" means any agreement entered into between an association organized under this article and its members, by the terms of which a subscribing grower, producer, manufacturer, marketer, distributor or seller and all other growers, producers, manufacturers, marketers, distributors or sellers signing similar agreements, agree to sell their products or services, goods for import or export purposes to or through such association. 5. "Member" includes members of associations. A.R.S. § 10-2002 10-2002 - Law governing associations 10-2002. Law governing associations Any law in conflict with this article shall not apply to the associations organized hereunder, but general corporation laws shall apply to the associations except when they conflict or are inconsistent with the express provisions of this article. A.R.S. § 10-2003 10-2003 - Requirements for formation; association profits 10-2003. Requirements for formation; association profits A. The following may form a cooperative association with or without capital stock under this article: 1. Five or more persons engaged in the production of products or services. 2. Five or more small businesses, individuals or entities engaged in the marketing and distribution of manufactured goods for import and export purposes. B. Associations organized under this article may make profits for themselves or for their members. A.R.S. § 10-2004 10-2004 - Articles of incorporation; amendments 10-2004. Articles of incorporation; amendments A. Articles of incorporation shall be filed setting forth: 1. The name of the association. 2. The purposes for which it is formed. 3. The place where its principal business will be transacted. 4. The term for which it is to exist. 5. The number of directors thereof, which shall not be less than five, and their term of office. 6. A statement indicating whether the association will be a for-profit association or a nonprofit association. 7. If the association will be a for-profit association and will have capital stock, a statement indicating the number of shares that the association is authorized to issue. B. The articles shall be subscribed and filed in accordance with the provisions of general corporation law. C. The articles of incorporation may be altered or amended at a regular meeting, or at a special meeting called for that purpose, by the affirmative vote of a majority of the active members of the association, and on at least thirty days' notice in writing of the proposed alteration or amendment. Amendments to the articles when adopted shall be filed as required by law. A.R.S. § 10-2005 10-2005 - Powers of association 10-2005. Powers of association An association incorporated under this article may: 1. Engage in any activity in connection with the manufacturing, marketing, harvesting, processing, storing, handling or utilization of products or services, or the providing of labor, or in connection with the purchase, hiring or use by its patrons of supplies, machinery or equipment, or in the financing of any such activities, but the associations shall not deal in the products of nonmembers to an amount greater in value than that of products handled for members. 2. Borrow money and make advances on products delivered. 3. Act as the agent or representative of any member or patron in such activities. 4. Acquire, hold, own and exercise all rights of ownership in, and sell, transfer or pledge shares of the capital stock or bonds, or become a member or a stockholder of any corporation or association engaged in a related activity or in the handling, marketing or financing of any products handled by the association, but stocks, bonds or other securities owned by a subsidiary may not be pledged, sold or otherwise disposed of until thirty days notice has been given to all members of the association in the manner provided by its bylaws. Such stock, bonds and other securities of a subsidiary may be placed with the state treasurer for safe keeping, and he shall not surrender them until proof of notice as required by this article has been given. 5. Establish reserves and invest the funds thereof in stocks and bonds of any corporation or association engaged in a related activity, or in the handling, marketing, processing or financing of the products handled by the association, or in such other property as the board of directors of the association deems satisfactory. 6. Do any act necessary to carry out the specific powers conferred by this article, and do such acts within or without the state. 7. Possess the powers, rights and privileges of corporations organized under the general law of the state, unless inconsistent with this article. 8. Engage in any activity in connection with the marketing or distribution of manufactured goods for import and export purposes or the providing of labor, in connection with the purchase, hiring or use by the association's patrons of supplies, machinery or equipment, or in connection with the financing of any such activities, but the association may not deal in the products of nonmembers to an amount greater in value than that of products handled for members. 9. Engage in any activity involving the harvesting, processing, storing, handling or use of products for the production, manufacturing and sale of products or services or the providing of labor, in connection with the purchase, hiring or use by the association's patrons of supplies, machinery or equipment, or in connection with the financing of any such activities, but the association may not deal in the products of nonmembers to an amount greater in value than that of products handled for members. 10. Raise equity from nonprofit investors and patron members. A.R.S. § 10-2006 10-2006 - Bylaws; renewal upon expiration of contract period 10-2006. Bylaws; renewal upon expiration of contract period A. Each association shall within thirty days after incorporation adopt bylaws. A majority vote of the members or their written assent is necessary to adopt such bylaws. The bylaws may provide for: 1. The time, place and manner of calling and conducting meetings. 2. The number of members constituting a quorum. 3. The right of members to vote by proxy, by mail or by both methods, and the conditions, manner, form and effect of the votes. 4. The number of directors constituting a quorum. 5. The qualifications, compensation, duties and term of office of directors and officers, time of their election and the manner of giving notice of the election. 6. Penalties for violation of the bylaws. 7. The amount of entrance, organization and membership fees, if any, the method of collecting them and the purposes for which they may be used. 8. The annual dues or assessments. 9. The charge to be paid by each member for services rendered by the association to him, the time of payment and the manner of collection. 10. The marketing contract between the association and its members, which every member may be required to sign. 11. The number and qualification of members of the association and the conditions precedent to membership. 12. The method, time and manner of permitting members to withdraw. 13. The manner of assignment and transfer of the interest of members. 14. The conditions upon which, and time when membership of a member shall cease. 15. The automatic suspension of the rights of a member when he ceases to be eligible to membership, and the manner and effect of the expulsion of a member. 16. The manner of determining the value of a member's interest, and providing for purchase of such interest by the association upon his death, withdrawal, expulsion or forfeiture of membership, at the option of the association. 17. If members are to be accorded unequal voting rights, the manner of determining the number of votes to which each member is entitled. B. Upon termination of each contract period, the board of directors of the association may renew or revise the bylaws to be in effect for the next contract period, and the renewal or revision shall be the bylaws of the association after thirty days notice has been given to the members, unless more than fifty per cent of the members of the association have filed objections thereto in writing, except that when property rights of the members are affected, section 10-2007 shall apply. A.R.S. § 10-2007 10-2007 - By-laws concerning property rights of members; amendment 10-2007. By-laws concerning property rights of members; amendment The property rights and interest of each member, whether equal or unequal, shall be set forth in the by-laws of the association as general rules applicable to all members by which the property rights and interest of each member shall be determined and fixed. The association may admit new members, who, when admitted, shall share in the property of the association with the old members in accordance with such general rules. By-laws defining the property rights of members shall not be altered, amended or repealed except by written consent or the vote of three fourths of the members qualified to vote under the by-laws of the association. A.R.S. § 10-2008 10-2008 - Eligibility for membership 10-2008. Eligibility for membership Under the terms and conditions prescribed in its bylaws, an association may admit as members persons engaged in production of the products or services to be handled by or through the association, including lessees and tenants of land used for production of such products, lessors and landlords who receive as rent part of the crop raised or products created on the leased premises and persons or corporations regularly engaged in financing such production of commodities. A.R.S. § 10-2009 10-2009 - Membership certificates; voting; liability 10-2009. Membership certificates; voting; liability If a member of an association established without capital stock has paid his membership fee, he may receive a certificate of membership. Members are not liable for debts of the association above the sum remaining unpaid on their membership fees. No member is entitled to more than one vote unless the bylaws provide otherwise. In no event is a member allowed to have more than five votes which are based on actual patronage, and a member is not allowed more than one vote because of the amount of membership capital he may own. A.R.S. § 10-2010 10-2010 - Appraisal of interest and payment upon withdrawal or expulsion of member 10-2010. Appraisal of interest and payment upon withdrawal or expulsion of member If a member withdraws or is expelled, the board of directors shall, within three years after withdrawal or expulsion, equitably appraise his property interest in the association and pay him for that interest. The appraisal is conclusive. A.R.S. § 10-2011 10-2011 - General powers of directors; election; compensation 10-2011. General powers of directors; election; compensation A. The affairs of the association shall be managed by the board of directors elected by the members from their number. The bylaws may provide that the territory in which the association has members be divided into districts and that the directors be elected according to such districts. If the territory is so divided the bylaws shall also specify the number of directors to be elected by each district, the manner and method of apportioning the directors and of dividing the territory into districts. The bylaws may provide that primary elections be held in each district to elect the directors apportioned to the districts, and the result of such elections shall be ratified by the next regular meeting of the association. The bylaws may further provide that additional directors be elected at large and the manner of their election. B. The association may provide a fair remuneration for the time actually spent by its officers and directors in its service. C. If a vacancy on the board occurs other than by expiration of term, the remaining members by a majority vote shall fill the vacancy. A.R.S. § 10-2012 10-2012 - Organization of board of directors 10-2012. Organization of board of directors The directors shall elect from their number a president and one or more vice-presidents, and a secretary and treasurer, who need not be members. The offices of secretary and treasurer may be combined. The funds of the association shall be deposited only as authorized by the board. A.R.S. § 10-2013 10-2013 - Removal of officer or director 10-2013. Removal of officer or director A. A member may bring charges against an officer or director by filing them in writing with the secretary of the association, together with a petition for removal signed by ten per cent of the members. The removal shall be voted upon at the next regular or special meeting and the association may remove the officer or director by a majority vote of the members. The director or officer shall be informed in writing of the charges previous to the meeting, and he and the person bringing the charges may be heard in person or by counsel and may call witnesses at the meeting. B. If the by-laws provide for election of directors by districts with primary elections in each district, then the petition for removal of a director shall be signed by twenty per cent of the members residing in the district from which he was elected. The board shall call a special meeting of the members residing in that district to consider the removal of the director, and he may be removed by a vote of the majority of the members of that district. A.R.S. § 10-2014 10-2014 - General and special meetings of association; notice 10-2014. General and special meetings of association; notice The by-laws shall provide for one or more regular meetings annually. The board of directors may call a special meeting at any time, or ten per cent of the members may file a request for a special meeting, stating the specific business to be brought before the association, and the meeting shall thereupon be called by the directors. Notice of all meetings, together with a statement of the purposes thereof, shall be mailed to each member at least ten days prior to the meeting, but the by-laws may require that such notice be given by publication in a newspaper. A.R.S. § 10-2015 10-2015 - Referral to membership 10-2015. Referral to membership Upon demand of one half of the entire board of directors any matter that has been approved or passed by the board shall be referred to the membership or the shareholders for decision at the next special or regular meeting. A.R.S. § 10-2016 10-2016 - Marketing contracts; remedies for breach 10-2016. Marketing contracts; remedies for breach A. The association and its members may make and execute marketing contracts requiring the members to sell, for any period of time not over ten years, all or any specified part of their agricultural products, their specified commodities or their manufactured goods exclusively to or through the association or its facilities. B. The membership contract may provide for membership for a longer period than ten years but not exceeding thirty years, if the contract provides opportunity to the members for withdrawal at least once each year. C. The contract may provide that the association may sell the products of its members, with or without taking title thereto, and pay to its members the average sale price based on grade and quantity, after deducting all necessary selling, overhead and other costs and expenses. D. When provided in the bylaws, the marketing contract may fix, as liquidated damages, specific sums to be paid by the members to the association upon the breach by him of any provision of the marketing contract regarding the sale or delivery or withholding of products, and that the member will pay all costs, premiums for bonds, expenses and fees if an action is brought upon the contract by the association, and such provision shall be valid and enforceable in the courts. E. In event of a breach, or threatened breach, of the marketing contract by a member, the association may apply for an injunction to prevent the further breach of the contract, and to enforce specific performance thereof. A.R.S. § 10-2017 10-2017 - Pilot agreement; list of other agreements; recording 10-2017. Pilot agreement; list of other agreements; recording The association may record one of the executed marketing agreements in the office of the county recorder of the county in which the subscribing member is producing or proposing to produce the products to be marketed for him, and such agreement shall be known as the pilot agreement. After recording the pilot agreement, the association may, from time to time, in lieu of recording other agreements obtained from its members, file with the recorder an affidavit of its secretary stating that the association has executed agreements with other members, giving their names and addresses, a description of the premises owned or leased by each of the members and the date on which the agreements were executed by the members. The affidavit, when so filed, shall be recorded in the book of miscellaneous records, and shall constitute notice of the agreements. A.R.S. § 10-2018 10-2018 - Investments; limitation; disposition of profits 10-2018. Investments; limitation; disposition of profits A. An association may organize, form, operate, own, control, have an interest in, own stock of or be a member of any other corporation, with or without capital stock, engaged in processing, handling, utilizing, manufacturing, marketing, financing or selling products or services handled by the association, or the by-products thereof. B. Profits or income received from the investments provided for in subsection A may be added to the reserves of the association to be distributed or handled according to the discretion of the board of directors. C. An association may enter into agreements and arrangements with another cooperative corporation or association formed in this or any other state for the cooperative and more economical carrying on of its business, or any part thereof. Any two or more associations may by agreement unite in employing and using the same methods, means and agencies for conducting their businesses. A.R.S. § 10-2019 10-2019 - Annual reports 10-2019. Annual reports The association shall make an annual report on forms furnished by the corporation commission, containing a general statement of its business during the fiscal year showing: 1. The number of members and amount of membership fees received. 2. The total expense of operations. 3. Its indebtedness or liabilities, and its balance sheets. A.R.S. § 10-2020 10-2020 - License and other fees; tax exemption 10-2020. License and other fees; tax exemption Each association shall pay a nonrefundable annual license fee of ten dollars. A nonprofit agricultural products association formed pursuant to this article shall be exempt from all franchise or license taxes imposed on its income. Each association shall pay a nonrefundable fee of ten dollars for filing articles of incorporation and a nonrefundable fee of two dollars fifty cents for filing an amendment to the articles. All other for-profit association filing, service and copying fees are determined pursuant to section 10-122 and all other nonprofit association filing, service and copying fees are determined pursuant to section 10-3122. A.R.S. § 10-2021 10-2021 - Distribution of unclaimed reserves 10-2021. Distribution of unclaimed reserves If, after ten years from the date of declaration of distribution of reserves, any reserves so distributable remain unclaimed, they may be used by the association in its research and educational work. A.R.S. § 10-2022 10-2022 - Associations not deemed in restraint of trade 10-2022. Associations not deemed in restraint of trade An association shall not be deemed to be a combination in restraint of trade, an illegal monopoly or an attempt to lessen competition or fix prices arbitrarily. The marketing contracts or agreements between the association and its members, or any agreements or acts authorized by this article, shall not be considered in restraint of trade. A.R.S. § 10-2023 10-2023 - Inducing breach of contract; spreading false report; classification 10-2023. Inducing breach of contract; spreading false report; classification A person knowingly inducing any member of an association to breach his marketing contract with the association, or who knowingly spreads false reports concerning the finances or management thereof, is guilty of a class 2 misdemeanor, and is also liable to the injured association in a civil action in the sum of five hundred dollars. A.R.S. § 10-2024 10-2024 - Producer-distributor agreement not to join, become or remain member of cooperative or trade association 10-2024. Producer-distributor agreement not to join, become or remain member of cooperative or trade association Every undertaking or promise made, whether written or oral, express or implied, is contrary to public policy and void and shall not afford any reason for granting legal or equitable relief, when constituted or contained in a contract or agreement for the sale of agricultural, horticultural or dairy products between a producer of such products and a distributor or purchaser thereof, whereby either party to the contract or agreement undertakes or promises not to join, become or remain a member of a cooperative association organized under this article, or of a trade association of the producers, distributors or purchasers of such products. A.R.S. § 10-2025 10-2025 - Security law; applicability 10-2025. Security law; applicability Title 44, chapter 12 applies only to a cooperative association that is formed under this article if either: 1. The cooperative association is formed with capital stock. 2. The cooperative association exercises its powers pursuant to section 10-2005, paragraph 10. A.R.S. § 10-2026 10-2026 - Merger, interest exchange, conversion, domestication or division; definitions 10-2026. Merger, interest exchange, conversion, domestication or division; definitions A. A domestic cooperative association may be a party to or otherwise undertake a merger, an interest exchange, a conversion, a domestication or a division by complying with chapter 34 of this title and title 29, chapter 6. B. If a domestic cooperative association is to be created in a merger, a conversion, a domestication or a division, the initial members of the association must consist of any of the following: 1. Five or more persons engaged in the production of agricultural products pursuant to section 10-2003, subsection A. 2. Five or more small businesses, individuals or entities engaged in the marketing and distribution of manufactured goods for import and export purposes. 3. Five or more persons for the purpose of producing, manufacturing and selling goods or services. C. For the purposes of this section, references in chapter 34 of this title to a "corporation" are deemed references to a domestic cooperative association. D. For the purposes of this section: 1. "Conversion" means a transaction authorized by title 29, chapter 6, article 4. 2. "Division" means a transaction authorized by title 29, chapter 6, article 6. 3. "Domestication" means a transaction authorized by title 29, chapter 6, article 5. 4. "Interest exchange" means a transaction authorized by title 29, chapter 6, article 3. 5. "Merger" means a transaction authorized by title 29, chapter 6, article 2. A.R.S. § 10-2051 10-2051 - Definitions 10-2051. Definitions In this article, unless the context otherwise requires: 1. "Affiliate" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with another person. 2. "Broadband service" means providing access and transport to the internet, computer processing, information storage or protocol conversion at a download rate of at least twenty-five megabits per second and at an upload rate of at least three megabits per second. 3. "Cooperative" means a corporation that is organized under this article or that becomes subject to this article in the manner provided in this article. 4. "Executed by the cooperative" means executed by manual or facsimile signature on behalf of the cooperative by a duly authorized officer or, if the corporation is under the control of a receiver or trustee, by the receiver or trustee. 5. "Person" means a natural person, firm, association, corporation, business trust, partnership, federal agency, state or political subdivision or agency of a state or any body politic. A.R.S. § 10-2052 10-2052 - Purpose 10-2052. Purpose A. Cooperative nonprofit membership corporations may be organized under this article for any of the following purposes: 1. Supplying, purchasing, marketing, selling, transmitting or distributing electric energy to persons and promoting and extending the use of electric energy. 2. Providing billing, metering, communications and other services related or incidental to supplying, providing or transmitting electric energy, whether or not the cooperative is itself supplying or transmitting that energy. 3. Engaging in activities designed to promote economic development of rural areas as described in section 10-2057. 4. Engaging in activities for any lawful purpose. 5. Directly or through an affiliate, providing broadband service to areas in which the cooperative provides electric energy services. B. In a rural area where there is no telephone service, a cooperative that is supplying electric energy in the area may enter into a cooperative agreement with the existing holder of a certificate of convenience and necessity for telephone service in the general area to supply telephone service in the same area. C. Generation and transmission cooperatives as defined in article 4 of this chapter are subject to article 4 of this chapter and not to this article. A.R.S. § 10-2053 10-2053 - Requirements for formation 10-2053. Requirements for formation Five or more natural persons, or two or more cooperatives, may organize a cooperative in the manner provided in this article. A.R.S. § 10-2054 10-2054 - Name 10-2054. Name A. The name of a cooperative shall include the words "electric" and "cooperative," and the abbreviation "inc.," unless, in a statement executed by the cooperative and filed with the corporation commission, or in an affidavit made by a person signing the articles of incorporation, consolidation, merger or conversion, which relate to the cooperative, and filed, together with the articles, with the corporation commission, it appears that the cooperative desires to do business in another state and is or would be precluded from doing so by reason of the inclusion of either or both of those words in its name. B. The name of a cooperative shall be distinguishable from the name of any other cooperative or corporation organized under the laws of, or authorized to do business in, this state. Only a cooperative doing business in this state pursuant to this article shall use both the words "electric" and "cooperative" in its name, but this section shall not apply to any corporation that becomes subject to this article by converting to a cooperative pursuant to title 29, chapter 6 and that elects to retain a corporate name that does not comply with this section. The restriction on the use of the words "electric" and "cooperative" does not apply to generation and transmission cooperatives organized under article 4 of this chapter. A.R.S. § 10-2055 10-2055 - Articles of incorporation 10-2055. Articles of incorporation A. Articles of incorporation of a cooperative shall recite that they are executed pursuant to this article and shall state: 1. The name of the cooperative. 2. The address of its principal office. 3. The names and addresses of the incorporators. 4. The names and addresses of its directors. B. The articles may also contain provisions not inconsistent with this article which are deemed necessary or advisable for the conduct of its business. C. The articles shall be executed by an incorporator. D. It is not necessary to recite in the articles of incorporation the purpose for which the cooperative is organized or to recite any of its corporate powers. A.R.S. § 10-2056 10-2056 - Amendment of articles 10-2056. Amendment of articles A. A cooperative may amend its articles by complying with the requirements prescribed in subsection B of this section, but a change in location of its principal office may be effected in the manner set forth in section 10-2066. B. The proposed amendment shall be presented to a meeting of the members, and the notice of the meeting shall set forth or have attached to it the proposed amendment. If the proposed amendment, with any changes, is approved by the affirmative vote of not less than two-thirds of those members voting or the number of members prescribed in the bylaws but not less than a majority of those members voting, the articles of amendment shall be executed by the cooperative. C. The articles of amendment shall state: 1. The name of the cooperative. 2. The address of its principal office. 3. The amendment of its articles of incorporation. A.R.S. § 10-2057 10-2057 - Powers of electric cooperative 10-2057. Powers of electric cooperative A. A cooperative organized under this article may: 1. Sue and be sued in its corporate name. 2. Have perpetual existence. 3. Adopt and alter a corporate seal. 4. Engage in the generation, manufacture, purchase, acquisition, accumulation, transmission, marketing, sale, distribution, supply and disposition of electric energy, either individually or jointly in collaboration with other entities. 5. Assist persons to whom electric energy is or will be supplied by the cooperative in wiring their premises and in acquiring and installing electrical and plumbing appliances, equipment, fixtures and apparatus by means of financing. 6. Assist persons to whom electric energy is or will be supplied by the cooperative in constructing, equipping, maintaining and operating electric cold storage or processing plants by means of financing. 7. Construct, purchase, lease or otherwise acquire, and equip, maintain and operate, and sell, assign, convey, lease, mortgage, pledge or otherwise dispose of or encumber electric transmission and distribution lines or systems, electric generating plants, lands, buildings, structures, dams, plants and equipment, and any other real or personal property, tangible or intangible, that is deemed necessary, convenient or appropriate to accomplish any purpose for which the cooperative is organized or that it elects to undertake. 8. Purchase, lease or otherwise acquire, and use, and exercise and sell, assign, convey, mortgage, pledge or otherwise dispose of or encumber, franchises, rights, privileges, licenses and easements. 9. Borrow money and otherwise contract indebtedness, and issue notes, bonds and other evidences of indebtedness, and secure the payment thereof by mortgage, pledge or deed of trust of, or any other encumbrance on, any or all of its presently owned or after-acquired real or personal property, assets, franchises or revenues. 10. Construct, maintain and operate electric transmission and distribution lines along, on, under and across publicly owned lands and public thoroughfares, including all roads, highways, streets, alleys, bridges and causeways, and acquire for such purposes franchises, licenses, permits, easements, rights-of-way and all similar rights and privileges relating to such purposes. 11. Exercise the power of eminent domain in the manner and to the extent provided by the laws of this state for the exercise of such power by other corporations constructing or operating electric transmission and distribution lines or systems. 12. Become a member of other cooperatives or corporations or own stock in those cooperatives or corporations or otherwise financially participate and invest in those cooperatives or corporations. 13. Conduct its business and exercise its powers within or outside this state. 14. Adopt, amend and repeal bylaws. 15. Do and perform other acts and things and have and exercise other powers that may be necessary, convenient or appropriate to accomplish the purpose for which the cooperative is organized or to carry out its business and affairs. 16. Subject to any limitation imposed by federal law, invest its own monies, make loans or guarantees or participate in rural community infrastructure projects, in job creation activities and in other activities to promote economic development in rural areas if the rural development activities are approved by the rural utilities service. 17. Directly or through an affiliate, construct, operate, maintain, lease and license fiber-optic cables and other facilities to provide broadband service over, under, across, on or along real property, personal property, rights-of-way, easements and licenses and other property rights that are owned, held or used by the cooperative, including easement or other property rights owned, held or used by the cooperative to provide electricity or other services. B. The authority granted in subsection A, paragraph 16 of this section shall be used only for economic development in rural areas, and the electric cooperative shall not use monies intended for rural economic development to purchase or acquire electrical works or electrical facilities, whether real or personal property, or both, by the exercise of the right of eminent domain or condemnation nor shall such monies be used to purchase, construct, lease or acquire any electrical works or electrical facilities or make any extensions or additions designed to serve areas or territories already being lawfully served. For the purposes of subsection A, paragraph 16 of this section and this subsection: 1. "Economic development" includes project feasibility studies, start-up costs, incubator projects and other reasonable expenses for the purpose of fostering rural economic development. 2. "Invest" means to commit monies to earn a financial return on assets that are not expected to be used or useful in furnishing electric service. The total amount that the electric cooperative invests, loans or uses as a guarantee is limited to those monies authorized under federal law for rural development programs. 3. "Job creation activities" includes providing technical, financial and managerial assistance. 4. "Rural community infrastructure projects" includes water and waste systems and garbage collection services. C. The indemnification of members, directors, officers, employees and agents of a cooperative shall be in accordance with chapter 31, article 5 of this title. A.R.S. § 10-2058 10-2058 - Board of directors; compensation; term; quorum 10-2058. Board of directors; compensation; term; quorum A. The business of a cooperative shall be managed by a board of directors. Unless the bylaws provide otherwise, each of the directors shall be a member of the cooperative or of another cooperative that is a member. The bylaws shall prescribe the number of directors, their qualifications other than those prescribed in this article and the manner of holding meetings of the board of directors and of electing successors to directors who resign or die or who are otherwise incapable of acting. The bylaws may also provide for the removal of directors from office and for the election of their successors. B. Unless the bylaws provide otherwise, the directors shall not receive salaries for services as directors and, except in emergencies, shall not be employed by the cooperative in any capacity involving compensation without the approval of the members. The bylaws may allow a payment of a fee and provide that expenses of attendance may be allowed to each director for attendance at each meeting of the board of directors. C. The directors of a cooperative named in the articles of incorporation, consolidation, merger or conversion shall hold office until successors are elected and qualify. The bylaws shall prescribe the manner of electing directors and the number and terms of the directors, including whether the terms are staggered. If stated in the bylaws, at each annual meeting, or, in case of failure to hold the annual meeting as specified in the bylaws, at a special meeting called for that purpose, the members shall elect directors to hold office until the next annual meeting of the members, except as otherwise provided in this article. Each director shall hold office for the term for which the director is elected and until a successor is elected and qualifies. A director may resign at any time by delivering written notice to the board of directors, its presiding officer or the cooperative. A resignation is effective when the notice is delivered unless the notice specifies a later effective date or event. D. A majority of the board of directors shall constitute a quorum. E. If a husband and wife hold a joint membership in a cooperative, either one, but not both, may be elected a director. F. The board of directors may take any action without a meeting if the action would be allowed at a meeting and if before the board takes the action all of the directors who are normally required to approve the action at a meeting provide prior consent by signing a written statement that explains and approves the action. G. The board of directors may exercise all the powers of a cooperative not conferred upon the members by this article, or its articles of incorporation or bylaws. H. Any person who serves as a director or officer or who serves on a board or council in an advisory capacity to the cooperative or board of directors of a cooperative is immune from civil liability and is not subject to a suit directly or by way of contribution for any act or omission that results in damage or injury if that person was acting in good faith and within the scope of that person's official capacity and the damage or injury was not caused by the wilful conduct or gross negligence of that person. Nothing in this subsection limits or modifies in any manner the duties or liabilities of a director or person who serves in any advisory capacity to the cooperative or the cooperative members. For the purposes of this subsection, "official capacity" means any decision, act or event the cooperative undertakes in furtherance of the purposes for which the cooperative is organized or operating. A.R.S. § 10-2059 10-2059 - Officers of cooperative 10-2059. Officers of cooperative The officers of a cooperative shall consist of a president, vice-president, secretary and treasurer, who shall be elected annually by and from the board of directors. If stated in the bylaws, the officers of the cooperative do not have to be directors. Unless the bylaws provide otherwise, if a person holding any office ceases to be a director the person shall cease to hold the office. The offices of secretary and treasurer may be held by the same person. The board of directors may also elect or appoint all other officers, agents or employees it deems necessary or advisable and shall prescribe their powers and duties. An officer may be removed from office and his successor may be elected in the manner prescribed in the bylaws. A.R.S. § 10-2060 10-2060 - Members in cooperative 10-2060. Members in cooperative Each incorporator of a cooperative shall be a member of the cooperative, but no other person may become a member unless the person agrees to use electric energy or other services furnished by the cooperative as the cooperative establishes in its bylaws. A husband and wife may hold a joint membership in a cooperative. Membership in a cooperative is not transferable, except as provided in the bylaws. The bylaws may prescribe additional qualifications, limitations, classifications and rights concerning membership. A.R.S. § 10-2061 10-2061 - Nonliability of members for cooperative indebtedness 10-2061. Nonliability of members for cooperative indebtedness A member shall not be liable or responsible for the acts, debts, liabilities or obligations of the cooperative and the property of the members shall not be subject to execution therefor. A.R.S. § 10-2062 10-2062 - Annual and special meetings of members; notice; quorum; voting 10-2062. Annual and special meetings of members; notice; quorum; voting A. An annual meeting of the members of a cooperative shall be held at such time and place as provided in the bylaws. Special meetings of the members may be called by the president, by the board of directors, by any three directors or by not less than ten per cent of the members. B. Except as otherwise provided in this article, written or printed notice stating the time and place of each meeting of the members and, in the case of a special meeting, the purpose for which the meeting is called shall be given to each member, either personally or by mail, not less than ten nor more than twenty-five days before the date of the meeting. If mailed, the notice shall be deemed to be given when deposited in the United States mail with postage prepaid addressed to the member at the member's address appearing on the records of the cooperative. C. Unless the bylaws prescribe the presence of a greater percentage or number of the members for a quorum, a quorum for the transaction of business at all meetings of the members of a cooperative having not more than one thousand members shall be five per cent of all members present in person or by ballot, and of a cooperative having more than one thousand members, shall be fifty members present in person or by ballot. If less than a quorum is present at any meeting, a majority of those present in person may adjourn the meeting from time to time without further notice. D. Unless the bylaws provide otherwise, each member shall be entitled to one vote on each matter submitted to a vote at a meeting of the members. Voting shall be in person but, if the bylaws so provide, may also be by mail or by proxy. A.R.S. § 10-2063 10-2063 - Waiver of notice of meeting 10-2063. Waiver of notice of meeting A person entitled to notice of a meeting may waive notice in writing either before or after the meeting. If the person attends the meeting, his attendance constitutes a waiver of notice of the meeting, unless he participates therein solely to object to the transaction of any business because the meeting has not been legally called or convened. A.R.S. § 10-2064 10-2064 - Bylaws 10-2064. Bylaws The board of directors shall adopt the first bylaws of a cooperative to be adopted following incorporation, conversion, merger or consolidation. Thereafter either the board of directors or the members may amend or repeal the bylaws. The bylaws shall set forth the rights and duties of members and directors and may contain other provisions for the regulation and management of the affairs of the cooperative not inconsistent with this article or with its articles of incorporation. A.R.S. § 10-2065 10-2065 - Districts; boundaries 10-2065. Districts; boundaries The bylaws may provide for the division of the territory served or to be served by a cooperative into two or more districts for any purpose, including, without limitation, the nomination and election of directors and the election and functioning of district delegates. The bylaws shall prescribe the boundaries of the districts, or the manner of establishing the boundaries, the manner of changing such boundaries and the manner in which the districts shall function. A.R.S. § 10-2066 10-2066 - Change of location of principal office 10-2066. Change of location of principal office A cooperative may, upon authorization of its board of directors or its members, change the location of its principal office by filing in the office of the corporation commission a certificate reciting the change of principal office, executed by the cooperative. A.R.S. § 10-2067 10-2067 - Nonprofit operation 10-2067. Nonprofit operation A cooperative shall be operated on a nonprofit basis for the mutual benefit of its members and patrons. The by-laws of a cooperative or its contracts with consumers shall contain such provisions relative to the disposition of revenues and receipts as may be necessary and appropriate to establish and maintain its nonprofit and cooperative character. A.R.S. § 10-2068 10-2068 - Disposition of property 10-2068. Disposition of property A. The board of directors of a cooperative, without authorization by the members of the cooperative, may authorize the execution and delivery of mortgages or deeds of trust pledging or encumbering any or all of the property, assets, rights, privileges, licenses, franchises and permits of the cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenues therefrom, all upon such terms and conditions as the board of directors determines, to secure any indebtedness of the cooperative. Any such mortgages or deeds of trust shall be exempt from the mortgage recording tax. B. A cooperative may not sell, lease or otherwise dispose of all or a substantial portion of its property unless the sale, lease or other disposition is authorized by the affirmative vote of not less than a majority of those members of the cooperative present at the meeting of the members. A.R.S. § 10-2069 10-2069 - Recording of mortgages; effect 10-2069. Recording of mortgages; effect A. Any mortgage, deed of trust or other instrument executed by a cooperative doing business in this state pursuant to this article, which affects real and personal property and which is recorded in the office of the county recorder in any county in which the property is located or is to be located, shall have the same force and effect as if the mortgage, deed of trust or other instrument were also recorded, filed or indexed as provided by law in the office of the county recorder in such county as a mortgage of personal property. All after-acquired property of the cooperative described or referred to as being mortgaged or pledged in the mortgage, deed of trust or other instrument, shall become subject to the lien thereof immediately upon acquisition of such property by the cooperative whether or not such property was in existence at the time of execution of such mortgage, deed of trust or other instrument. Recording of the mortgage, deed of trust or other instrument constitutes notice and otherwise has the same effect with respect to after-acquired property as it has under the laws relating to recording with respect to property owned by the cooperative at the time of execution of the mortgage, deed of trust or other instrument and therein described or referred to as being mortgaged or pledged thereby. B. The lien upon personal property of the mortgage, deed of trust or other instrument shall, after recording, continue in existence and of record for the period of time specified therein without refiling or the filing of a renewal certificate, affidavit or other supplemental information required by law relating to renewal, maintenance or extension of liens upon personal property. A.R.S. § 10-2070 10-2070 - Use of roads and streets; notice; protest 10-2070. Use of roads and streets; notice; protest A. A cooperative shall have the use of, and the right is expressly granted to it to use, the public highways, county highways and streets and alleys in or outside the service area of the cooperative. The cooperative may construct and operate lines connecting any points within the state and connect at the state boundary with like lines. B. Within the confines of municipal corporations however, use and occupancy of streets shall be under such rights as may be acquired by franchises according to law, and subject to control and regulation by municipal authorities, and the use of public highways, except state highways, by cooperatives not within the confines of an incorporated city or town, shall be regulated by the board of supervisors of the county, by license or franchise. The board of supervisors in granting the license or franchise, or at any time after it is granted, may impose such restrictions and limitations as to the use of the public roads as may be deemed best for the public safety or welfare. Every franchise granted under this section shall include provisions requiring the grantee to bear all expenses, including damage and compensation for any alteration of the direction, surface, grade or alignment of any county road, made for the purpose of such franchise. C. The board of supervisors before granting the privileges contemplated by this section, shall give public notice of its intention to make the grant, by publishing notice in some newspaper of general circulation, published within the county, for at least once a week for three weeks prior to the day set for the consideration of such action. If, on or before such date, more than fifty per cent of the qualified electors of the county petition the board of supervisors to deny the privilege, they shall so act, and any privilege granted contrary to the petition shall be void. A.R.S. § 10-2071 10-2071 - Unclaimed patronage capital credits; fees; uses; exemption; definition 10-2071. Unclaimed patronage capital credits; fees; uses; exemption; definition A. A patronage capital credit retirement payment or fee payment from a cooperative to its member or former member is an unclaimed capital credit or fee if the credit or fee remains unclaimed for a period of two years after the payment was made available to the member or former member. B. All unclaimed capital credits or fees are exempt from title 44, chapter 3, and a cooperative may retain or use all unclaimed capital credits or fees for any lawful purpose. C. A cooperative may retain, use or assign all unclaimed capital credits or fees for any lawful purpose if the purpose is consistent with the cooperative's bylaws and is specified by the cooperative's board of directors. D. The cooperative shall pay a verifiable unclaimed capital credit or fee claim by a member or former member originating on, before and after August 3, 2018. E. Each cooperative shall maintain a searchable list on its website that contains the name and last known address of each member or former member appearing from the cooperative's records to be the owner of the unclaimed capital credits or fees of fifty dollars or more and instructions on how to claim the unclaimed capital credits or fees. The list shall include records from and after December 31, 2001. F. For the purposes of this section, "patronage capital" includes all amounts received by a cooperative from sales of electric power, energy distribution services or other services to members in excess of the cooperative's cost of furnishing electric power, energy distribution services or other services to members and other margins as determined by the board of directors of the cooperative. A.R.S. § 10-2073 10-2073 - Merger, interest exchange, conversion, domestication or division; definitions 10-2073. Merger, interest exchange, conversion, domestication or division; definitions A. A domestic electric cooperative nonprofit membership corporation may be a party to or otherwise undertake a merger, an interest exchange, a conversion, a domestication or a division by complying with chapter 34 of this title and title 29, chapter 6. A plan must be approved by two-thirds of the members. B. If a domestic electric cooperative nonprofit membership corporation is to be created in a merger, a conversion, a domestication or a division, both of the following apply: 1. The initial members of the corporation must consist of five or more natural persons or two or more cooperatives in accordance with section 10-2053. 2. The name of the corporation must comply with section 10-2054. C. For the purposes of this section: 1. "Conversion" means a transaction authorized by title 29, chapter 6, article 4. 2. "Division" means a transaction authorized by title 29, chapter 6, article 6. 3. "Domestication" means a transaction authorized by title 29, chapter 6, article 5. 4. "Interest exchange" means a transaction authorized by title 29, chapter 6, article 3. 5. "Merger" means a transaction authorized by title 29, chapter 6, article 2. 6. "Plan" means a plan of merger, interest exchange, conversion, domestication or division. A.R.S. § 10-2077 10-2077 - Dissolution 10-2077. Dissolution A. A cooperative that has not commenced business may be dissolved by delivering to the corporation commission articles of dissolution, which shall be executed by the cooperative and which shall state: 1. The name of the cooperative. 2. The address of its principal office. 3. That the cooperative has not commenced business. 4. That any monies received by the cooperative, less any part disbursed for expenses of the cooperative, have been returned or paid to those entitled to the monies. 5. That no debt of the cooperative is unpaid. 6. That a majority of the incorporators elect that the cooperative be dissolved. B. A cooperative that has commenced business may be dissolved in the following manner: 1. The proposition to dissolve shall be submitted to the members of the cooperative at any annual or special meeting, the notice of which shall set forth the proposition. 2. The members at the meeting shall approve, by the affirmative vote of not less than a majority of all members of the cooperative, the proposition that the cooperative be dissolved. 3. On approval, a certificate of election to dissolve, designated in this subsection as the "certificate", shall be executed by the cooperative. 4. The certificate shall state: (a) The name of the cooperative. (b) The address of its principal office. (c) That the members of the cooperative have duly voted that the cooperative be dissolved. 5. The certificate shall be submitted to the corporation commission for filing. 6. On filing the certificate with the corporation commission the cooperative shall cease to carry on its business except to the extent necessary for winding up, but its corporate existence shall continue until articles of dissolution have been filed with the corporation commission. 7. The board of directors shall immediately cause notice of the dissolution proceedings to be mailed to each known creditor of and claimant against the cooperative, and such notice shall be published once a week for two successive weeks in a newspaper of general circulation in the county in which the principal office of the cooperative is located. 8. The board of directors shall wind up and settle the affairs of the cooperative, collect monies owing to it, liquidate its property and assets, pay and discharge its debts, obligations and liabilities, other than those to patrons arising by reason of their patronage, and do all other things required to wind up its business. After paying or discharging or adequately providing for the payment or discharge of all its debts, obligations and liabilities, other than those to patrons arising by reason of their patronage, the board of directors shall distribute any remaining sums, first to patrons for the pro rata return of all amounts standing to their credit by reason of their patronage, and second to members for the pro rata repayment of membership fees. Any sums then remaining shall be distributed among its members and former members in proportion to their patronage. 9. The board of directors shall thereupon authorize the execution of articles of dissolution, which shall be executed by the cooperative. 10. The articles of dissolution shall recite that they are executed pursuant to this article and shall state: (a) The name of the cooperative. (b) The address of its principal office. (c) The date on which the certificate of election to dissolve was filed by the corporation commission. (d) That there are no actions or suits pending against the cooperative. (e) That all debts, obligations and liabilities of the cooperative have been paid and discharged or that adequate provision has been made for payment and discharge. (f) That the preceding provisions of this subsection have been duly complied with. 11. The articles of dissolution prepared pursuant to paragraph 10 of this subsection shall be delivered to the corporation commission for filing. Within sixty days after the corporation commission approves the filing, either of the following must occur: (a) A copy of the articles of dissolution shall be published. An affidavit evidencing the publication may be filed with the corporation commission. (b) The corporation commission shall input the information regarding the approval into the database as prescribed by section 10-130. A.R.S. § 10-2078 10-2078 - Filing of articles 10-2078. Filing of articles Articles of incorporation, amendment, consolidation, merger, conversion or dissolution, when executed by the cooperative, shall be delivered to the corporation commission for filing. If the corporation commission finds that the articles presented conform to the requirements of this article, it shall, upon the payment of the fees as provided in this article, file the articles, and upon such filing, the incorporation, amendment, consolidation, merger, conversion or dissolution shall be in effect. The provisions of this section shall also apply to certificates of election to dissolve. A.R.S. § 10-2079 10-2079 - Fees 10-2079. Fees The corporation commission shall charge and collect the following nonrefundable fees for: 1. Filing articles of incorporation, ten dollars. 2. Filing articles of amendment, ten dollars. 3. Filing statement of merger, interest exchange, conversion, domestication or division, ten dollars. 4. Filing certificate of election to dissolve, ten dollars. 5. Filing articles of dissolution, ten dollars. 6. Filing certificate of change of principal office, five dollars. A.R.S. § 10-2080 10-2080 - Exemption from securities regulations 10-2080. Exemption from securities regulations The provisions of chapter 12 of title 44 shall not apply to any note, bond or other evidence of indebtedness issued by a cooperative doing business in this state pursuant to this article to the United States or any agency or instrumentality thereof, or to any mortgage, deed of trust or other instrument executed to secure such note, bond or other evidence of indebtedness, nor shall such provisions apply to the issuance of membership certificates or other evidence of member interest by a cooperative. A.R.S. § 10-2081 10-2081 - Exemption from antitrust statutes 10-2081. Exemption from antitrust statutes Title 44, chapter 10, article 1 does not apply to any conduct or activity of a cooperative organized pursuant to this article, if the conduct or activity is approved by a statute of this state or of the United States or by the corporation commission or an administrative agency of this state or of the United States that has jurisdiction of the subject matter. A.R.S. § 10-2082 10-2082 - Taking of acknowledgments by officer or member 10-2082. Taking of acknowledgments by officer or member A person authorized to take acknowle