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General Assembly Committee Bill No. 138
January Session, 2019
LCO No. 6309
Referred to Committee on JUDICIARY
Introduced by:
(JUD)
AN ACT MODERNIZING T HE STATE'S COOPERATIVE ASSOCIATION
STATUTES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 33-183 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective October 1, 2019): 2
[Seven] Three or more persons of lawful age [,] and inhabitants of 3
this state, may, by written articles of [agreement] association, associate 4
themselves together for the purposes of trade or for carrying on any 5
lawful mercantile, mechanical, manufacturing or agricultural business 6
within this state, and, when such articles of association have been 7
executed and filed in the office of the Secretary of the State, the 8
franchise tax provided by section 33-187, as amended by this act, paid 9
to, and such articles of association approved by, said secretary, such 10
persons shall become a corporation and enjoy all the powers and 11
privileges and be subject to all the duties, restrictions and liabilities of 12
other corporations, except so far as [the same] such duties, restrictions 13
and liabilities may be limited or enlarged by this chapter. 14
Sec. 2. Section 33-184 of the general statutes is repealed and the 15
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following is substituted in lieu thereof (Effective October 1, 2019): 16
The objects for which such association is established, and the place 17
within which its business is to be carried on, shall be distinctly set forth 18
in its articles of [agreement] association, and it shall not do business in 19
any other place or places than those mentioned in its articles. 20
Sec. 3. Section 33-185 of the general statutes is repealed and the 21
following is substituted in lieu thereof (Effective from passage): 22
[The] (a) Prior to September 30, 2019, the business of the association 23
shall be managed by not fewer than seven members, who shall be 24
styled a board of managers, shall be chosen annually by the 25
stockholders and shall hold their offices until others are chosen and 26
have qualified in their stead, except that when the bylaws of such 27
association so prescribe, the board of managers may be divided into 28
not more than three classes, each class to hold office for not more than 29
three years, one of which classes shall be elected annually. Such 30
association shall have such other officers appointed as its bylaws 31
prescribe. The terms of the members of the board serving on the 32
effective date of this act shall expire on September 30, 2019. 33
(b) On and after October 1, 2019, the business of the association shall 34
be managed by a board of directors consisting of not fewer than three 35
members of the association. The board of directors shall be elected 36
annually by the member shareholders and shall hold office until a 37
successor has been elected, except, when the bylaws of such 38
association so prescribe, the board of directors may be divided into not 39
more than three classes, one of which classes shall be elected annually, 40
with each class to hold office for not more than six years. Such 41
association may adopt bylaws concerning the appointment of other 42
officers of the association and to implement the provisions of this 43
section. 44
Sec. 4. Section 33-187 of the general statutes is repealed and the 45
following is substituted in lieu thereof (Effective October 1, 2019): 46
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The amount of capital stock of any cooperative association 47
organized under the provisions of this chapter shall be fixed by its 48
articles of association at a sum not exceeding [five] fifty million dollars 49
par value, and shall be subject to the same franchise tax as the capital 50
stock of other corporations organized under the general [law] laws, 51
which tax shall be paid to the Secretary of the State. The association 52
may increase or diminish the amount and number of shares of such 53
stock at any meeting of the [stockholders] member shareholders 54
specially called for such purpose, but no shares shall be issued at less 55
than their par value. [Within] Not later than five days after the passage 56
of any vote increasing or diminishing such stock, such association shall 57
cause a certificate setting forth such vote, signed by a majority of the 58
board of [managers] directors, to be recorded in the office of the 59
Secretary of the State. 60
Sec. 5. Section 33-188 of the general statutes is repealed and the 61
following is substituted in lieu thereof (Effective October 1, 2019): 62
Not later than thirty days after the first meeting of the association, 63
the board of [managers] directors shall prepare a report, setting forth 64
the name of the association, the principal office of the association, the 65
names of the respective business and residence addresses of the board 66
of [managers] directors and officers of the association, the amount of 67
capital stock, the par value of the shares, and the number of shares 68
issued, together with a statement that such shares are fully paid or, if 69
not fully paid, a statement of the amount payable in respect thereof, 70
which report shall be filed and recorded in the office of the Secretary of 71
the State. On or before the tenth day of March [in each year] annually 72
thereafter, the board of [managers] directors shall prepare a [like] 73
report of the [same] facts as they existed on the first day of [such] 74
March and [the same] such report shall be filed and recorded in the 75
office of the Secretary of the State. [All the statements] Any statement 76
provided for in this section shall be signed and sworn to by a majority 77
of the board of [managers] directors. 78
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Sec. 6. Section 33-191 of the general statutes is repealed and the 79
following is substituted in lieu thereof (Effective October 1, 2019): 80
No certificate of shares shall be issued to any person until the full 81
amount thereof has been paid in cash, and no shareholder shall receive 82
less than the par value of any share when disposing of the same to the 83
board of [managers] directors. No person shall be allowed to become a 84
shareholder in such association except by the consent of the 85
[managers] shareholders. 86
Sec. 7. Section 33-192 of the general statutes is repealed and the 87
following is substituted in lieu thereof (Effective October 1, 2019): 88
[If the board of managers fails to make any return required by this 89
chapter or makes an untrue return, the members thereof shall be 90
jointly and severally liable for all debts existing at the date of such 91
return or at the time when the return should have been made, and 92
such association shall forfeit to the state fifty dollars for each failure.] If 93
the association fails to file the annual report required by section 33-188, 94
as amended by this act, or makes an untrue report, the association 95
shall pay to the Secretary of the State fifty dollars for each such failure. 96
Sec. 8. Section 33-193 of the general statutes is repealed and the 97
following is substituted in lieu thereof (Effective October 1, 2019): 98
There shall be [such] a distribution of the profits or [earnings] 99
surplus of [such] an association among the member shareholders as is 100
prescribed by the association's bylaws. [; provided no distribution shall 101
be declared or paid until a sum equal to ten per cent of the net profits 102
is appropriated for a contingent or sinking fund and until there has 103
been thereby accumulated a sum equal to twenty per cent of the capital 104
stock.] The board of directors of an association may declare a sum of 105
not more than forty per cent of the net profits or surplus to be 106
appropriated for a contingent or sinking fund, an unallocated reserve 107
fund or a collective account as may be prescribed in the association's 108
bylaws. 109
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This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2019 33-183
Sec. 2 October 1, 2019 33-184
Sec. 3 from passage 33-185
Sec. 4 October 1, 2019 33-187
Sec. 5 October 1, 2019 33-188
Sec. 6 October 1, 2019 33-191
Sec. 7 October 1, 2019 33-192
Sec. 8 October 1, 2019 33-193
Statement of Purpose:
To revise state statutes governing the formation of cooperative
associations in order to enhance the use of such associations as a
business model in the state.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline,
except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is
not underlined.]
Co-Sponsors: SEN. OSTEN, 19th Dist.; SEN. FLEXER, 29th Dist.
REP. ORANGE, 48th Dist.; REP. JOHNSON, 49th Dist.
REP. HADDAD, 54th Dist.; REP. CONLEY, 40th Dist.
S.B. 138