RCW ch. 23.100 — Revised Code of Washington Chapter 23.100 RCW — Limited Cooperative Associations

RCW 23.100.0101 Short title. This chapter may be cited as the Washington limited cooperative association act. [ 2019 c 37 s 101.] RCW 23.100.0102 Definitions. (1) In this chapter, except for RCW 23.100.1301 through 23.100.1320: (a) "Articles of organization" means the articles of organization of a limited cooperative association required by RCW 23.100.0201. The term includes the articles as amended or restated. (b) "Board of directors" means the board of directors of a limited cooperative association. (c) "Bylaws" means the bylaws of a limited cooperative association. The term includes the bylaws as amended or restated. (d) "Consumer cooperative" means a cooperative engaged in the retail sale, to its members and other consumers, of goods or services of a type that are generally for personal, living, or family use. (e) "Contribution," except as used in RCW 23.100.0807(3), means a benefit that a person provides to a limited cooperative association to become or remain a member or in the person's capacity as a member. (f) "Cooperative" means a limited cooperative association or an entity organized under any cooperative law of any jurisdiction. (g) "Director" means a director of a limited cooperative association. (h) "Distribution," except as used in RCW 23.100.0806(1), means a transfer of money or other property from a limited cooperative association to a member because of the member's financial rights or to a transferee of a member's financial rights. (i) "Financial rights" means the right to participate in allocations and distributions as provided in RCW 23.100.0801 through 23.100.0809 and 23.100.1001 through 23.100.1013 but does not include rights or obligations under a marketing contract. (j) "Governance rights" means the right to participate in governance of a limited cooperative association. (k) "Investor member" means a member that has made a contribution to a limited cooperative association and: (i) Is not required by the organic rules to conduct patronage with the association in the member's capacity as an investor member in order to receive the member's interest; or (ii) Is not permitted by the organic rules to conduct patronage with the association in the member's capacity as an investor member in order to receive the member's interest. (l) "Limited cooperative association" means an association formed under this chapter or that becomes subject to this chapter under RCW 23.100.1301 through 23.100.1320. (m) "Member" means a person that is admitted as a patron member or investor member, or both, in a limited cooperative association. The term does not include a person that has dissociated as a member. (n) "Member's interest" means the interest of a patron member or investor member under RCW 23.100.0501. (o) "Members meeting" means an annual members meeting or special meeting of members. (p) "Organic rules" means the articles of organization and bylaws of a limited cooperative association. (q) "Organizer" means an individual who executes the initial articles of organization. (r) "Patron member" means a member that has made a contribution to a limited cooperative association and: (i) Is required by the organic rules to conduct patronage with the association in the member's capacity as a patron member in order to receive the member's interest; or (ii) Is permitted by the organic rules to conduct patronage with the association in the member's capacity as a patron member in order to receive the member's interest. (s) "Patronage" means business transactions between a limited cooperative association and a person which entitles the person to receive financial rights based on the value or quantity of business done between the association and the person. (t) "Required information" means the information a limited cooperative association is required to maintain under RCW 23.100.0110. (u) "Voting group" means any combination of one or more voting members in one or more districts or classes that under the organic rules or chapter 23.95 RCW or this chapter are entitled to vote and can be counted together collectively on a matter at a members meeting. (v) "Voting member" means a member that, under the organic law or organic rules, has a right to vote on matters subject to vote by members under the organic law or organic rules. (w) "Voting power" means the total current power of members to vote on a particular matter for which a vote may or is to be taken. (2) The following definitions from RCW 23.95.105 apply to this chapter: "Entity," "execute," "executes," and "executed," "foreign," "jurisdiction," "jurisdiction of formation," "organic law," "organic rules," "person," "principal office," "property," "receipt," "record," "registered agent," "state," and "transfer." [ 2019 c 37 s 102.] RCW 23.100.0103 Nature of limited cooperative association. (1) A limited cooperative association organized under this chapter is an autonomous, unincorporated association of persons united to meet their mutual interests through a jointly owned enterprise primarily controlled by those persons, which permits combining: (a) Ownership, financing, and receipt of benefits by the members for whose interests the association is formed; and (b) Separate investments in the association by members who may receive returns on their investments and a share of control. (2) The fact that a limited cooperative association does not have one or more of the characteristics described in subsection (1) of this section does not alone prevent the association from being formed under and governed by this chapter nor does it alone provide a basis for an action against the association. [ 2019 c 37 s 103.] RCW 23.100.0104 Purpose and duration of limited cooperative association. (1) A limited cooperative association is an entity distinct from its members. (2) A limited cooperative association may be organized for any lawful purpose, regardless of whether for profit, except that a limited cooperative association may not be organized for the purpose of generating, purchasing, selling, marketing, transmitting, or distributing electric energy. (3) Unless the articles of organization state a term for a limited cooperative association's existence, the association has perpetual duration. [ 2019 c 37 s 104.] RCW 23.100.0105 Powers. Unless its articles of organization provide otherwise, a limited cooperative association has the capacity to sue and be sued in its own name and has the power to do all things necessary or convenient to carry on its activities and affairs. An association may maintain an action against a member for harm caused to the association by the member's violation of a duty to the association or of the organic law or organic rules. [ 2019 c 37 s 105.] RCW 23.100.0106 Governing law. The law of this state governs: (1) The internal affairs of a limited cooperative association; and (2) The liability of a member as a member and a director as a director for the debts, obligations, or other liabilities of a limited cooperative association. [ 2019 c 37 s 106.] RCW 23.100.0107 Requirements of other laws. (1) This chapter does not alter or amend any law that governs the licensing and regulation of an individual or entity in carrying on a specific business or profession even if that law permits the business or profession to be conducted by a limited cooperative association, a foreign cooperative, or members of either. (2) A limited cooperative association may not conduct an activity that, under law of this state other than this chapter, may be conducted only by an entity that meets specific requirements for the internal affairs of that entity unless the organic rules of the association conform to those requirements. [ 2019 c 37 s 107.] RCW 23.100.0108 Relation to restraint of trade and antitrust laws. To the extent a limited cooperative association or activities conducted by the association in this state meet the material requirements for other cooperatives entitled to an exemption from or immunity under any provision of RCW 19.86.030 through 19.86.050, the association and its activities are entitled to the exemption or immunity. This section does not create any new exemption or immunity for an association or affect any exemption or immunity provided to a cooperative organized under any law other than this chapter. [ 2019 c 37 s 108.] RCW 23.100.0109 Effect of organic rules. (1) The relations between a limited cooperative association and its members are consensual. Unless required, limited, or prohibited by this chapter, the organic rules may provide for any matter concerning the relations among the members of the association and between the members and the association, the activities of the association, and the conduct of its activities. (2) The matters referred to in (a) through (k) of this subsection may be varied only in the articles of organization. The articles may: (a) State a term of existence for the association under RCW 23.100.0104(3); (b) Limit or eliminate the acceptance of new or additional members by the initial board of directors under RCW 23.100.0202(2); (c) Vary the limitations on the obligations and liability of members for association obligations under RCW 23.100.0404; (d) Require a notice of an annual members meeting to state a purpose of the meeting under RCW 23.100.0408(2); (e) Vary the board of directors meeting quorum under RCW 23.100.0615(1); (f) Vary the matters the board of directors may consider in making a decision under RCW 23.100.0620; (g) Specify causes of dissolution under RCW 23.100.1002(1); (h) Delegate amendment of the bylaws to the board of directors pursuant to RCW 23.100.0305(6); (i) Provide for member approval of asset dispositions under RCW 23.100.1201; (j) Subject to RCW 23.100.0620, provide for the elimination or limitation of liability of a director to the association or its members for money damages pursuant to RCW 23.100.0618; (k) Provide for permitting or making obligatory indemnification under RCW 23.100.0701(1); and (l) Provide for any matters that may be contained in the organic rules, including those under subsection (3) of this section. (3) The matters referred to in (a) through (y) of this subsection may be varied only in the organic rules. The organic rules may: (a) Require more information to be maintained under RCW 23.100.0110 or provided to members under RCW 23.100.0405(10); (b) Provide restrictions on transactions between a member and an association under RCW 23.100.0111; (c) Provide for the percentage and manner of voting on amendments to the organic rules by district, class, or voting group under RCW 23.100.0304(1); (d) Provide for the percentage vote required to amend the bylaws concerning the admission of new members under RCW 23.100.0305(5)(e); (e) Provide for terms and conditions to become a member under RCW 23.100.0402; (f) Restrict the manner of conducting members meetings under RCW 23.100.0406(3) and 23.100.0407(5); (g) Designate the presiding officer of members meetings under RCW 23.100.0406(5) and 23.100.0407(7); (h) Require a statement of purposes in the annual meeting notice under RCW 23.100.0408(2); (i) Increase quorum requirements for members meetings under RCW 23.100.0410 and board of directors meetings under RCW 23.100.0615; (j) Allocate voting power among members, including patron members and investor members, and provide for the manner of member voting and action as permitted by RCW 23.100.0411 through 23.100.0417; (k) Authorize investor members and expand or restrict the transferability of members' interests to the extent provided in RCW 23.100.0502 and 23.100.0503; (l) Provide for enforcement of a marketing contract; (m) Provide for qualification, election, terms, removal, filling vacancies, and member approval for compensation of directors in accordance with RCW 23.100.0603 through 23.100.0605, 23.100.0607, 23.100.0609, and 23.100.0610; (n) Restrict the manner of conducting board meetings and taking action without a meeting under RCW 23.100.0611 and 23.100.0612; (o) Provide for frequency, location, notice, and waivers of notice for board meetings under RCW 23.100.0613 and 23.100.0614; (p) Increase the percentage of votes necessary for board action under RCW 23.100.0616(2); (q) Provide for the creation of committees of the board of directors and matters related to the committees in accordance with RCW 23.100.0617; (r) Provide for officers and their appointment, designation, and authority under RCW 23.100.0622; (s) Provide for forms and values of contributions under RCW 23.100.0802; (t) Provide for remedies for failure to make a contribution; (u) Provide for the allocation of profits and losses of the association, distributions, and the redemption or repurchase of distributed property other than money in accordance with RCW 23.100.0803 through 23.100.0806; (v) Specify when a member's dissociation is wrongful and the liability incurred by the dissociating member for damage to the association under RCW 23.100.0901 (2) and (3); (w) Provide the personal representative or other legal representative of a deceased member or a member adjudged incompetent with additional rights under RCW 23.100.0903; (x) Increase the percentage of votes required for board of director approval of: (i) A resolution to dissolve under RCW 23.100.1005(1)(a); (ii) A proposed amendment to the organic rules under RCW 23.100.0302(1)(a); (iii) A proposed disposition of assets under RCW 23.100.1203(1); and (iv) A plan of merger or plan of conversion under RCW 23.100.1301 through 23.100.1320; and (y) Vary the percentage of votes required for members approval of: (i) A resolution to dissolve under RCW 23.100.1005; (ii) An amendment to the organic rules under RCW 23.100.0305; (iii) A disposition of assets under RCW 23.100.1204; and (iv) A plan of merger or plan of conversion under RCW 23.100.1301 through 23.100.1320. (4) The organic rules must address members' contributions pursuant to RCW 23.100.0801. [ 2019 c 37 s 109.] RCW 23.100.0110 Required information. (1) Subject to subsection (2) of this section, a limited cooperative association shall maintain in a record available at its principal office: (a) A list containing the name, last known street address and, if different, mailing address, and term of office of each director and officer; (b) The initial articles of organization and all amendments to and restatements of the articles, together with an executed copy of any power of attorney under which any article, amendment, or restatement has been executed; (c) The initial bylaws and all amendments to and restatements of the bylaws; (d) All filed articles of merger and conversion; (e) All financial statements of the association for the three most recent years; (f) The most recent annual report delivered by the association to the secretary of state; (g) The minutes of members meetings for the period of the association's existence; (h) Evidence of all actions taken by members without a meeting for the period of the association's existence; (i) A list containing: (i) The name, in alphabetical order, and last known street address and, if different, mailing address of each patron member and each investor member; and (ii) If the association has districts or classes of members, information from which each current member in a district or class may be identified; (j) The federal income tax returns, any state and local income tax returns, and any tax reports of the association for the three most recent years; (k) Accounting records maintained by the association in the ordinary course of its operations for the three most recent years; (l) The minutes of directors meetings for the period of the association's existence; (m) Evidence of all actions taken by directors without a meeting for the period of the association's existence; (n) The amount of money contributed and agreed to be contributed by each member; (o) A description and statement of the agreed value of contributions or benefits other than money made or provided and agreed to be made or provided by each member; (p) The times at which, or events on the happening of which, any additional contribution is to be made by each member; (q) For each member, a description and statement of the member's interest or information from which the description and statement can be derived; and (r) All communications concerning the association made in a record to all members, or to all members in a district or class, for the three most recent years. (2) If a limited cooperative association has existed for less than the period for which records must be maintained under subsection (1) of this section, the period records must be kept is the period of the association's existence. (3) The organic rules may require that more information be maintained. [ 2019 c 37 s 110.] RCW 23.100.0111 Business transactions of member with limited cooperative association. Subject to RCW 23.100.0618 and 23.100.0619 and except as otherwise provided in the organic rules or a specific contract relating to a transaction, a member may lend money to and transact other business with a limited cooperative association in the same manner as a person that is not a member. [ 2019 c 37 s 111.] RCW 23.100.0112 Dual capacity. A person may have a patron member's interest and an investor member's interest. When such person acts as a patron member, the person is subject to this chapter and the organic rules governing patron members. When such person acts as an investor member, the person is subject to this chapter and the organic rules governing investor members. [ 2019 c 37 s 112.] RCW 23.100.0113 Use of the term "cooperative" in name. Use of the term "cooperative" or its abbreviation under this chapter is not a violation of the provisions restricting the use of the term under RCW 23.86.030. [ 2019 c 37 s 113.] RCW 23.100.0114 Subjects covered outside chapter. The following subjects are covered in whole or in part outside this chapter: (1) Delivery of record: RCW 23.95.110; (2) Filing with secretary of state: RCW 23.95.200 through 23.95.265; (3) Name of entity: RCW 23.95.300 through 23.95.315; (4) Registered agent of entity: RCW 23.95.400 through 23.95.460; (5) Foreign entities: RCW 23.95.500 through 23.95.555; (6) Administrative dissolution: RCW 23.95.600 through 23.95.625; (7) Miscellaneous provisions, including supplemental principles of law and reservation of power to amend or repeal: RCW 23.95.700 through 23.95.715. [ 2019 c 37 s 114.] RCW 23.100.0201 Formation of limited cooperative association—Articles of organization. (1) One or more persons may act as organizers to form a limited cooperative association by delivering to the secretary of state for filing articles of organization. (2) The articles of organization must state: (a) The name of the limited cooperative association, which must comply with RCW 23.95.300 and 23.95.305(5); (b) The purposes for which the association is formed; (c) The street and mailing addresses in this state of the initial registered agent; (d) The street and mailing addresses of the initial principal office; (e) The name and street and mailing addresses of each organizer; and (f) The term for which the association is to exist if other than perpetual. (3) Subject to RCW 23.100.0109, articles of organization may contain any other provisions in addition to those required by subsection (1) of this section. (4) A limited cooperative association is formed after articles of organization that substantially comply with subsection (1) of this section are delivered to the secretary of state, are filed, and become effective under RCW 23.95.210. [ 2019 c 37 s 201.] RCW 23.100.0202 Organization of limited cooperative association. (1) After a limited cooperative association is formed: (a) If initial directors are named in the articles of organization, the initial directors shall hold an organizational meeting to adopt initial bylaws and carry on any other business necessary or proper to complete the organization of the association; or (b) If initial directors are not named in the articles of organization, the organizers shall designate the initial directors and call a meeting of the initial directors to adopt initial bylaws and carry on any other business necessary or proper to complete the organization of the association. (2) Unless the articles of organization otherwise provide, the initial directors may cause the limited cooperative association to accept members, including those necessary for the association to begin business. (3) Initial directors need not be members. (4) An initial director serves until a successor is elected and qualified at a members meeting or the director is removed, resigns, is adjudged incompetent, or dies. [ 2019 c 37 s 202.] RCW 23.100.0203 Bylaws. (1) Bylaws must be in a record and, if not stated in the articles of organization, must include: (a) A statement of the capital structure of the limited cooperative association, including: (i) The classes or other types of members' interests and relative rights, preferences, and restrictions granted to or imposed upon each class or other type of member's interest; and (ii) The rights to share in profits or distributions of the association; (b) A statement of the method for admission of members; (c) A statement designating voting and other governance rights, including which members have voting power and any restriction on voting power; (d) A statement that a member's interest is transferable if it is to be transferable and a statement of the conditions upon which it may be transferred; (e) A statement concerning the manner in which profits and losses are allocated and distributions are made among patron members and, if investor members are authorized, the manner in which profits and losses are allocated and how distributions are made among investor members and between patron members and investor members; (f) A statement concerning: (i) Whether persons that are not members but conduct business with the association may be permitted to share in allocations of profits and losses and receive distributions; and (ii) The manner in which profits and losses are allocated and distributions are made with respect to those persons; and (g) A statement of the number and terms of directors or the method by which the number and terms are determined. (2) Subject to RCW 23.100.0109(3) and the articles of organization, bylaws may contain any other provision for managing and regulating the affairs of the association. (3) In addition to amendments permitted under RCW 23.100.0301 through 23.100.0307, the initial board of directors may amend the bylaws by a majority vote of the directors at any time before the admission of members. [ 2019 c 37 s 203.] RCW 23.100.0204 Executing of records to be delivered for filing to secretary of state. A record delivered to the secretary of state for filing pursuant to chapter 23.95 RCW and this chapter must be executed as follows: (1) A limited cooperative association's initial articles of organization must be executed by at least one person acting as an organizer. (2) A statement of withdrawal under RCW 23.95.215 must be executed as provided in that section. (3) Except as otherwise provided in subsection (4) of this section, a record executed by an existing association must be executed by an officer. (4) A record filed on behalf of a dissolved association must be executed by a person winding up activities under RCW 23.100.1006(2) or a person appointed under RCW 23.100.1006(3) to wind up those activities. (5) Any other record delivered on behalf of a person to the secretary of state for filing must be executed by that person. [ 2019 c 37 s 204.] RCW 23.100.0301 Authority to amend organic rules. (1) A limited cooperative association may amend its organic rules under this chapter for any lawful purpose. In addition, the initial board of directors may amend the bylaws of an association under RCW 23.100.0203. (2) Unless the organic rules otherwise provide, a member does not have a vested property right resulting from any provision in the organic rules, including a provision relating to the management, control, capital structure, distribution, entitlement, purpose, or duration of the limited cooperative association. [ 2019 c 37 s 301.] RCW 23.100.0302 Notice and action on amendment of organic rules. (1) Except as provided in RCW 23.100.0301(1) and 23.100.0305(6), the organic rules of a limited cooperative association may be amended only at a members meeting. An amendment may be proposed by either: (a) A majority of the board of directors, or a greater percentage if required by the organic rules; or (b) One or more petitions executed by at least ten percent of the patron members or at least ten percent of the investor members. (2)(a) The board of directors shall call a members meeting to consider an amendment proposed pursuant to subsection (1) of this section. (b) Subject to RCW 23.100.0408 and 23.100.0419, not later than thirty days following the proposal of the amendment by the board or receipt of a petition, the board must mail or otherwise transmit or deliver in a record to each member: (i) The proposed amendment, or a summary of the proposed amendment and a statement of the manner in which a copy of the amendment in a record may be reasonably obtained by a member; (ii) A recommendation that the members approve the amendment, or if the board determines that because of conflict of interest or other special circumstances it should not make a favorable recommendation, the basis for that determination; (iii) A statement of any condition of the board's submission of the amendment to the members; and (iv) Notice of the meeting at which the proposed amendment will be considered, which must be given in the same manner as notice for a special meeting of members. (c) The meeting must be held at least ten and not more than one hundred twenty days after providing the notice required by (b) of this subsection. [ 2019 c 37 s 302.] RCW 23.100.0303 Method of voting on amendment of organic rules. (1) A substantive change to a proposed amendment of the organic rules may not be made at the members meeting at which a vote on the amendment occurs. (2) A nonsubstantive change to a proposed amendment of the organic rules may be made at the members meeting at which the vote on the amendment occurs and need not be separately voted upon by the board of directors. (3) A vote to adopt a nonsubstantive change to a proposed amendment to the organic rules must be by the same percentage of votes required to pass a proposed amendment. [ 2019 c 37 s 303.] RCW 23.100.0304 Voting by district, class, or voting group. (1) This section applies if the organic rules provide for voting by district or class, or if there is one or more identifiable voting groups that a proposed amendment to the organic rules would affect differently from other members with respect to matters identified in RCW 23.100.0305(5) (a) through (e). Approval of the amendment requires the same percentage of votes of the members of that district, class, or voting group required in RCW 23.100.0305 and 23.100.0414. (2) If a proposed amendment to the organic rules would affect members in two or more districts or classes entitled to vote separately under subsection (1) of this section in the same or a substantially similar way, the districts or classes affected must vote as a single voting group unless the organic rules otherwise provide for separate voting. [ 2019 c 37 s 304.] RCW 23.100.0305 Approval of amendment. (1) Subject to RCW 23.100.0304 and subsections (3) and (4) of this section, an amendment to the articles of organization must be approved by: (a) At least two-thirds of the voting power of members present at a members meeting called under RCW 23.100.0302; and (b) If the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage vote by patron members. (2) Subject to RCW 23.100.0304 and subsections (3) through (6) of this section, an amendment to the bylaws must be approved by: (a) At least a majority vote of the voting power of all members present at a members meeting called under RCW 23.100.0302, unless the organic rules require a greater percentage; and (b) If a limited cooperative association has investor members, a majority of the votes cast by patron members, unless the organic rules require a larger affirmative vote by patron members. (3) The organic rules may require that the percentage of votes under subsection (1)(a) or (2)(a) of this section be: (a) A different percentage that is not less than a majority of members voting at the meeting; (b) Measured against the voting power of all members; or (c) A combination of (a) and (b) of this subsection. (4) Consent in a record by a member must be delivered to a limited cooperative association before delivery of an amendment to the articles of organization or restated articles of organization for filing pursuant to RCW 23.100.0307, if as a result of the amendment the member will have: (a) Personal liability for an obligation of the association; or (b) An obligation or liability for an additional contribution. (5) The vote required to amend bylaws must satisfy the requirements of subsection (1) of this section if the proposed amendment modifies: (a) The equity capital structure of the limited cooperative association, including the rights of the association's members to share in profits or distributions, or the relative rights, preferences, and restrictions granted to or imposed upon one or more districts, classes, or voting groups of similarly situated members; (b) The transferability of a member's interest; (c) The manner or method of allocation of profits or losses among members; (d) The quorum for a meeting and the rights of voting and governance; or (e) Unless otherwise provided in the organic rules, the terms for admission of new members. (6) Except for the matters described in subsection (5) of this section, the articles of organization may delegate amendment of all or a part of the bylaws to the board of directors without requiring member approval. (7) If the articles of organization delegate amendment of bylaws to the board of directors, the board shall provide a description of any amendment of the bylaws made by the board to the members in a record not later than thirty days after the amendment, but the description may be provided at the next annual members meeting if the meeting is held within the thirty-day period. [ 2019 c 37 s 305.] RCW 23.100.0306 Restated articles of organization. A limited cooperative association, by the affirmative vote of a majority of the board of directors taken at a meeting for which the purpose is stated in the notice of the meeting, may adopt restated articles of organization that contain the original articles as previously amended. Restated articles may contain amendments if the restated articles are adopted in the same manner and with the same vote as required for amendments to the articles under RCW 23.100.0305(1). Upon filing, restated articles supersede the existing articles and all amendments. [ 2019 c 37 s 306.] RCW 23.100.0307 Amendment or restatement of articles of organization—Filing. (1) To amend its articles of organization, a limited cooperative association must deliver to the secretary of state for filing an amendment of the articles, or restated articles of organization, which contain one or more amendments of the articles of organization, stating: (a) The name of the association; (b) The date of filing of the association's initial articles; and (c) The text of the amendment. (2) Before the beginning of the initial meeting of the board of directors, an organizer who knows that information in the filed articles of organization was inaccurate when the articles were filed or has become inaccurate due to changed circumstances shall promptly: (a) Cause the articles to be amended; or (b) If appropriate, deliver an amendment to the secretary of state for filing pursuant to RCW 23.95.110(2). (3) To restate its articles of organization, a limited cooperative association must deliver to the secretary of state for filing a restatement designated as such in its heading. (4) Upon filing, an amendment of the articles of organization or other record containing an amendment of the articles which has been properly adopted by the members is effective as provided in RCW 23.95.210. [ 2019 c 37 s 307.] RCW 23.100.0401 Members. To begin business, a limited cooperative association must have at least two patron members unless the sole member is a cooperative. [ 2019 c 37 s 401.] RCW 23.100.0402 Becoming a member. After formation of a limited cooperative association, a person becomes a member: (1) As provided in the organic rules; (2) As the result of a conversion or merger effective under RCW 23.100.1301 through 23.100.1320; or (3) With the affirmative vote or consent of all the members. [ 2019 c 37 s 402.] RCW 23.100.0403 No agency power of member as member. (1) A member is not an agent of a limited cooperative association solely by reason of being a member. (2) A person's status as a member does not prevent or restrict law other than this chapter from imposing liability on a limited cooperative association because of the person's conduct. [ 2019 c 37 s 403.] RCW 23.100.0404 Liability of members and directors. (1) Unless the articles of organization provide otherwise, a debt, obligation, or other liability of a limited cooperative association is solely the debt, obligation, or other liability of the association. A member or director is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or other liability of the association solely by reason of being or acting as a member or director of the association. This subsection applies regardless of the dissolution of the association. (2) The failure of a limited cooperative association to observe formalities relating to the exercise of its powers or management of its activities and affairs is not grounds for imposing liability on any member or director for a debt, obligation, or other liability of the association. [ 2019 c 37 s 404.] RCW 23.100.0405 Right of members and dissociated members to information. (1) On at least ten business days' demand made in a record received by a limited cooperative association, a member may inspect and copy during regular business hours, at the principal office or a reasonable location specified by the limited cooperative association, required information listed in RCW 23.100.0110(1) (a) through (h). A member need not have any particular purpose for seeking the information. The association is not required to provide the same information listed in RCW 23.100.0110(1) (a) through (h) to the same member more than once during a six-month period. (2) Subject to subsection (3) of this section, on at least ten business days' demand made in a record received by a limited cooperative association, a member may inspect and copy during regular business hours, at the principal office or a reasonable location specified by the limited cooperative association, required information listed in RCW 23.100.0110(1) (i), (j), (l), (m), (p), and (r), if: (a) The member seeks the information in good faith and for a proper purpose reasonably related to the member's interest; (b) The demand includes a description with reasonable particularity of the information sought and the purpose for seeking the information; (c) The information sought is directly connected to the member's purpose; and (d) The demand is reasonable. (3) Not later than ten business days after receipt of a demand pursuant to subsection (2) of this section, a limited cooperative association shall provide, in a record, the following information to the member that made the demand: (a) If the association agrees to provide the demanded information: (i) What information the association will provide in response to the demand; and (ii) A reasonable time and place at which the association will provide the information; or (b) If the association declines to provide some or all of the demanded information, the association's reasons for declining. (4) On at least ten business days' demand made in a record received by a limited cooperative association, a dissociated member may have access to information to which the person was entitled while a member if the information pertains to the period during which the person was a member, the person seeks the information in good faith, and the person satisfies the requirements imposed on a member by subsection (2) of this section. The association shall respond to a demand made pursuant to this subsection in the manner provided in subsection (3) of this section. (5) Not later than ten business days after receipt by a limited cooperative association of a demand made by a member in a record, but not more often than once in a six-month period, the association shall deliver to the member a record stating the information with respect to the member required by RCW 23.100.0110(1)(q). (6) In addition to any restriction or condition stated in its organic rules, a limited cooperative association, as a matter within the ordinary course of its activities and affairs, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient. In a dispute concerning the reasonableness of a restriction under this subsection, the association has the burden of proving reasonableness. (7) A limited cooperative association may charge a person that makes a demand under this section reasonable costs of copying, limited to the costs of labor and material. (8) A member or dissociated member may exercise rights under this section through an agent or, in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the organic rules or under subsection (7) of this section applies both to the agent or legal representative and the member or dissociated member. (9) The rights stated in this section do not extend to a person as transferee. (10) The organic rules may require a limited cooperative association to provide more information than required by this section and may establish conditions and procedures for providing the information. [ 2019 c 37 s 405.] RCW 23.100.0406 Annual meeting of members. (1) Members shall meet annually at a time provided in the organic rules or set by the board of directors not inconsistent with the organic rules. (2) An annual members meeting may be held inside or outside this state at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules. (3)(a) Unless the organic rules otherwise provide: (i) If the board of directors or another person is authorized in the bylaws to determine the place of annual meetings, the board of directors or such other person may, in the sole discretion of the board of directors or such other person, determine that an annual meeting will not involve a physical assembly of members at a particular geographic location, but instead will be held solely by means of remote communication, in accordance with (b) of this subsection. (ii) An association may permit any or all members to participate in an annual members meeting by means of, or conduct the meeting solely through the use of, remote communication. Subject to the provisions of (b) of this subsection, participation by remote communication is to be subject to any guidelines and procedures adopted by or pursuant to the authority of the board of directors. (b) If an association elects to permit participation by means of, or conduct a meeting solely through the use of, remote communication: (i) The notice of the meeting must specify how a member may participate in the meeting by means of remote communication. (ii) The association must implement reasonable measures to (A) verify that each person participating remotely as a member is a member, and (B) provide each person participating remotely as a member a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings. (iii) Participation in a meeting in accordance with this section constitutes presence in person at that meeting. (iv) If the board of directors or another authorized person determines to hold an annual members meeting without a physical assembly of members in accordance with this subsection (3), all members entitled to vote at such meeting must have the opportunity to participate in the meeting by remote communication in accordance with this subsection (3). (4) The board of directors shall report, or cause to be reported, at the association's annual members meeting the association's business and financial condition as of the close of the most recent fiscal year. (5) Unless the organic rules otherwise provide, the board of directors shall designate the presiding officer of the association's annual members meeting. (6) Failure to hold an annual members meeting does not affect the validity of any action by the limited cooperative association. [ 2019 c 37 s 406.] RCW 23.100.0407 Special meeting of members. (1) A special meeting of members may be called only: (a) As provided in the organic rules; (b) By a majority vote of the board of directors on a proposal stating the purpose of the meeting; (c) By demand in a record executed by members holding at least twenty percent of the voting power of the persons in any district or class entitled to vote on the matter that is the purpose of the meeting stated in the demand; or (d) By demand in a record executed by members holding at least ten percent of the total voting power of all the persons entitled to vote on the matter that is the purpose of the meeting stated in the demand. (2) A demand under subsection (1)(c) or (d) of this section must be submitted to the officer of the limited cooperative association charged with keeping its records. (3) Any voting member may withdraw its demand under subsection (1)(c) or (d) of this section before receipt by the limited cooperative association of demands sufficient to require a special meeting of members. (4) A special meeting of members may be held inside or outside this state at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules. (5) Unless the organic rules otherwise provide, the provisions of RCW 23.100.0406(3) apply to special meetings of members as though the special meeting of members were an annual meeting of members. (6) Only business within the purpose or purposes stated in the notice of a special meeting of members may be conducted at the meeting. (7) Unless the organic rules otherwise provide, the presiding officer of a special meeting of members shall be designated by the board of directors. [ 2019 c 37 s 407.] RCW 23.100.0408 Notice of members meeting. (1) A limited cooperative association shall notify each member of the time, date, and place of a members meeting at least ten and not more than one hundred twenty days before the meeting. (2) Unless the articles of organization otherwise provide, notice of an annual members meeting need not include any purpose of the meeting. (3) Notice of a special meeting of members must include each purpose of the meeting as contained in the demand under RCW 23.100.0407(1) (c) or (d) or as voted upon by the board of directors under RCW 23.100.0407(1)(b). (4) Notice of a members meeting must be given in a record unless oral notice is reasonable under the circumstances. [ 2019 c 37 s 408.] RCW 23.100.0409 Waiver of members meeting notice. (1) A member may waive notice of a members meeting before, during, or after the meeting. (2) A member's participation in a members meeting is a waiver of notice of that meeting unless the member objects to the meeting at the beginning of the meeting or promptly upon the member's arrival at the meeting and does not thereafter vote for or assent to action taken at the meeting. [ 2019 c 37 s 409.] RCW 23.100.0410 Quorum of members. Unless the organic rules otherwise require a greater number of members or percentage of the voting power, the voting member or members present at a members meeting constitute a quorum. [ 2019 c 37 s 410.] RCW 23.100.0411 Voting by patron members. Except as provided by RCW 23.100.0412(1), each patron member has one vote. The organic rules may allocate voting power among patron members as provided in RCW 23.100.0412(1). [ 2019 c 37 s 411.] RCW 23.100.0412 Allocation of voting power of patron members. (1) The organic rules may allocate voting power among patron members on the basis of one or a combination of the following: (a) One member, one vote; (b) Use or patronage; or (c) If a patron member is a cooperative, the number of its patron members. (2) The organic rules may provide for the allocation of patron member voting power by districts or class, or any combination thereof. [ 2019 c 37 s 412.] RCW 23.100.0413 Voting by investor members. If the organic rules provide for investor members, each investor member has one vote, unless the organic rules otherwise provide. The organic rules may provide for the allocation of investor member voting power by class, classes, or any combination of classes. [ 2019 c 37 s 413.] RCW 23.100.0414 Voting requirements for members. If a limited cooperative association has both patron and investor members, the following rules apply: (1) The total voting power of all patron members may not be less than a majority of the entire voting power entitled to vote. (2) Action on any matter is approved only upon the affirmative vote of at least a majority of: (a) All members voting at the meeting unless more than a majority is required by RCW 23.100.0301 through 23.100.0307, 23.100.1001 through 23.100.1013, or 23.100.1201 through 23.100.1204 or the organic rules; and (b) Votes cast by patron members unless the organic rules require a larger affirmative vote by patron members. (3) The organic rules may provide for the percentage of the affirmative votes that must be cast by investor members to approve the matter. [ 2019 c 37 s 414.] RCW 23.100.0415 Manner of voting. (1) Unless the organic rules otherwise provide, voting by a proxy at a members meeting is prohibited. This subsection does not prohibit delegate voting based on district or class. (2) If voting by a proxy is permitted, a patron member may appoint only another patron member as a proxy and, if investor members are permitted, an investor member may appoint only another investor member as a proxy. (3) The organic rules may provide for the manner of and provisions governing the appointment of a proxy. (4) The organic rules may provide for voting on any question by ballot delivered by mail or voting by other means on questions that are subject to vote by members. [ 2019 c 37 s 415.] RCW 23.100.0416 Action without a meeting. (1) Unless the organic rules require that action be taken only at a members meeting, any action that may be taken by the members may be taken without a meeting if the action is approved by members entitled to vote on the action in the aggregate not less than the minimum number of votes that would be necessary to approve that action at a meeting of which all members entitled to vote on the action were present and voted. Action may be approved by members without a meeting or a vote by means of execution of a single consent or multiple consents in a record to the action. (2) Consent under subsection (1) of this section may be withdrawn by a member in a record at any time before the limited cooperative association receives a consent from each member entitled to vote. (3) Consent to any action may specify the effective date or time of the action. [ 2019 c 37 s 416.] RCW 23.100.0417 Districts and delegates—Classes of members. (1) The organic rules may provide for the formation of geographic districts of patron members and: (a) For the conduct of patron member meetings by districts and the election of directors at the meetings; or (b) That districts may elect district delegates to represent and vote for the district at members meetings. (2) A delegate elected under subsection (1)(b) of this section has one vote unless voting power is otherwise allocated by the organic rules. (3) The organic rules may provide for the establishment of classes of members, for the preferences, rights, and limitations of the classes, and: (a) For the conduct of members meetings by classes and the election of directors at the meetings; or (b) That classes may elect class delegates to represent and vote for the class in members meetings. (4) A delegate elected under subsection (3)(b) of this section has one vote unless voting power is otherwise allocated by the organic rules. [ 2019 c 37 s 417.] RCW 23.100.0418 Approval of certain transactions. (1) For a limited cooperative association to approve a plan for a transaction under RCW 23.100.1301 through 23.100.1320, the plan must be approved by a majority of the board of directors, or a greater vote if required by the organic rules, and the board shall call a members meeting to consider the plan, hold the meeting not later than ninety days after approval of the plan by the board, and, subject to RCW 23.100.0419, mail or otherwise transmit or deliver in a record to each member: (a) The plan, or a summary of the plan and a statement of the manner in which a copy of the plan in a record reasonably may be obtained by a member; (b) A recommendation that the members approve the plan, or if the board determines that because of a conflict of interest or other circumstances it should not make a favorable recommendation, the basis for that determination; (c) A statement of any condition of the board's submission of the plan to the members; and (d) Notice of the meeting at which the plan will be considered, which must be given in the same manner as notice of a special meeting of members. (2) Subject to subsections (3) and (4) of this section, a plan must be approved by: (a) At least two-thirds of the voting power of members present at a members meeting called under subsection (1) of this section; and (b) If the limited cooperative association has investor members, at least a majority of the votes cast by patron members, unless the organic rules require a greater percentage vote by patron members. (3) The organic rules may provide that the required vote under subsection (2)(a) of this section be: (a) A different fraction that is not less than a majority of members voting at the meeting; (b) Measured against the voting power of all members; or (c) A combination of (a) and (b) of this subsection. (4) The vote required under subsections (2) and (3) of this section to approve a plan may not be less than the vote required for the members of the limited cooperative association to amend the articles of organization. (5) A member's consent in a record to a plan must be delivered to the limited cooperative association before delivery to the secretary of state for filing of articles of merger or conversion if, as a result of the merger or conversion, the member will have interest holder liability for debts, obligations, or other liabilities that are incurred after the transaction becomes effective. (6) The voting requirements for districts, classes, or voting groups under RCW 23.100.0304 apply to approval of a transaction under RCW 23.100.1301 through 23.100.1320. [ 2019 c 37 s 418.] RCW 23.100.0419 Notice to members of consumer cooperative. (1) A consumer cooperative organized under this chapter may satisfy any provisions of this chapter requiring that certain information or materials must be set forth in a writing accompanying or contained in the notice of a meeting of its members, by: (a) Posting the information or materials on an electronic network not less than thirty days prior to the meeting at which such information or materials will be considered by members; and (b) Delivering to those members who are eligible to vote a notification, either in a meeting notice authorized under this chapter or in such other reasonable form as the board of directors may specify, setting forth the address of the electronic network at which and the date after which such information or materials will be posted and available for viewing by members eligible to vote, together with comprehensible instructions regarding how to obtain access to the information and materials posted on the electronic network. (2) A consumer cooperative that elects to post information or materials required by this chapter on an electronic network shall, at its expense, provide a copy of such information or materials in a written or other tangible medium to any member who is eligible to vote and so requests. [ 2019 c 37 s 419.] RCW 23.100.0501 Member's interest. A member's interest: (1) Is personal property; (2) Consists of: (a) Governance rights; (b) Financial rights; and (c) The right or obligation, if any, to do business with the limited cooperative association; and (3) May be in certificated or uncertificated form. [ 2019 c 37 s 501.] RCW 23.100.0502 Patron and investor members' interests. (1) Unless the organic rules establish investor members' interests, a member's interest is a patron member's interest. (2) Unless the organic rules otherwise provide, if a limited cooperative association has investor members, while a person is a member of the association, the person: (a) If admitted as a patron member, remains a patron member; (b) If admitted as an investor member, remains an investor member; and (c) If admitted as a patron member and investor member remains a patron and investor member if not dissociated in one of the capacities. [ 2019 c 37 s 502.] RCW 23.100.0503 Transferability of member's interest. (1) The provisions of this chapter relating to the transferability of a member's interest are subject to Title 62A RCW. (2) Unless the organic rules otherwise provide, a member's interest other than financial rights is not transferable. (3) Unless a transfer is restricted or prohibited by the organic rules, a member may transfer its financial rights in the limited cooperative association. (4) The terms of any restriction on transferability of financial rights must be: (a) Set forth in the organic rules and the member records of the association; and (b) Conspicuously noted on any certificates evidencing a member's interest. (5) A transferee of a member's financial rights, to the extent the rights are transferred, has the right to share in the allocation of profits or losses and to receive the distributions to the member transferring the interest to the same extent as the transferring member. (6) A transferee of a member's financial rights does not become a member upon transfer of the rights unless the transferee is admitted as a member by the limited cooperative association. (7) A limited cooperative association need not give effect to a transfer under this section until the association has notice of the transfer. (8) A transfer of a member's financial rights in violation of a restriction on transfer contained in the organic rules is ineffective if the intended transferee has notice of the restriction at the time of transfer. [ 2019 c 37 s 503.] RCW 23.100.0601 Board of directors. (1) A limited cooperative association must have a board of directors of at least three individuals, unless the association has fewer than three members. If the association has fewer than three members, the number of directors may not be fewer than the number of members. (2) The affairs of a limited cooperative association must be managed by, or under the direction of, the board of directors. The board may adopt policies and procedures that do not conflict with the organic rules or this chapter. (3) An individual is not an agent for a limited cooperative association solely by being a director. [ 2019 c 37 s 601.] RCW 23.100.0602 No liability as director for limited cooperative association's obligations. A debt, obligation, or other liability of a limited cooperative association is solely that of the association and is not a debt, obligation, or other liability of a director solely by reason of being a director. An individual is not personally liable, directly or indirectly, for an obligation of an association solely by reason of being a director. [ 2019 c 37 s 602.] RCW 23.100.0603 Qualifications of directors. (1) Unless the organic rules otherwise provide, and subject to subsection (3) of this section, each director of a limited cooperative association must be an individual who is a member of the association or an individual who is designated by a member that is not an individual for purposes of qualifying and serving as a director. Initial directors need not be members. (2) Unless the organic rules otherwise provide, a director may be an officer or employee of the limited cooperative association. (3) If the organic rules provide for nonmember directors, at least two-thirds of the directors must be members. (4) The organic rules may provide qualifications for directors in addition to those in this section. [ 2019 c 37 s 603.] RCW 23.100.0604 Election of directors and composition of board. (1) Unless the organic rules require a greater number: (a) At least one-third of the directors must be patron members; and (b) A majority of the board of directors must be elected exclusively by patron members. (2) Unless the organic rules otherwise provide, if a limited cooperative association has investor members, the directors who are not elected exclusively by patron members are elected by the investor members. (3) Subject to subsection (1) of this section, the organic rules may provide for the election of all or a specified number of directors by one or more districts or classes of members. (4) Subject to subsection (1) of this section, the organic rules may provide for the nomination or election of directors by districts or classes, directly or by district delegates. (5) If a class of members consists of a single member, the organic rules may provide for the member to appoint a director or directors. (6) Unless the organic rules otherwise provide, cumulative voting for directors is prohibited. (7) Except as otherwise provided by the organic rules, subsection (5) of this section, or RCW 23.100.0202, 23.100.0416, 23.100.0417, and 23.100.0609, member directors must be elected at an annual members meeting. [ 2019 c 37 s 604.] RCW 23.100.0605 Term of director. (1) Unless the organic rules otherwise provide, and subject to subsections (3) and (4) of this section and RCW 23.100.0202(4), the term of a director expires at the annual members meeting following the director's election or appointment. The term of a director may not exceed three years. (2) Unless the organic rules otherwise provide, a director may be reelected. (3) Except as otherwise provided in subsection (4) of this section, a director continues to serve until a successor director is elected or appointed and qualifies or the director is removed, resigns, is adjudged incompetent, or dies. (4) Unless the organic rules otherwise provide, a director does not serve the remainder of the director's term if the director ceases to qualify to be a director. [ 2019 c 37 s 605.] RCW 23.100.0606 Resignation of director. A director may resign at any time by giving notice in a record to the limited cooperative association. Unless the notice states a later effective date