Chapter 193

193.411 193.411 Election of directors.

193.411(1) (1) Initial board. The initial board shall be established as provided under s. 193.205 (2) and, except as provided in s. 193.205 (2), shall serve until directors are elected by members. The initial board shall appoint directors to fill any vacancies on the initial board, until the directors are elected by the members.

193.411(2) (2) Generally.

193.411(2)(a) (a) Directors shall be elected or appointed for the term, at the time, and in the manner provided in this section and the articles and bylaws.

193.411(2)(b) (b) If nonpatron members or nonpatron membership interest are granted voting rights, a majority of the directors shall be members and a majority of the directors shall be elected exclusively by patron members, unless otherwise provided in the articles or bylaws. The patron members may also elect an outside director who is an expert in financial matters but who has no financial interest in the cooperative. Unless the articles or bylaws provide otherwise, the outside director may not vote.

193.411(2)(d) (d) A director holds office for the term for which the director was elected and until a successor is elected and has qualified, unless the director is removed or a vacancy in the office of the director occurs.

193.411(2)(g) (g) Directors may be divided into, designated, and elected by class or other distinction as provided in the articles or bylaws.

193.411(3) (3) Election at regular meeting. Except as provided under sub. (1) or (4) or s. 193.415 (4) or 193.421, all directors shall be elected at the regular members’ meeting.

193.411(4) (4) District or local unit election of directors. For a cooperative with districts or other units, directors may be elected by members on a district or unit basis if the articles or bylaws so provide. Directors elected on a district or unit basis may be nominated or elected at district member meetings if the articles or bylaws so provide. Directors who are nominated at district meetings shall be elected at the regular members’ meeting by vote of the entire membership, unless the articles or bylaws provide that such directors are to be elected at a district member meeting or the regular members’ meeting by vote of the members of the district.

193.411(4m) (4m) Cumulative voting. Unless the articles or bylaws so provide, directors may not be elected through the use of any system of voting that permits a voter to allocate multiple votes among eligible candidates.

193.411(5) (5) Ballots. All of the following apply to voting under this section:

193.411(5)(a) (a) A member may vote only by casting a ballot as provided under s. 193.545 (3).

193.411(5)(b) (b) The ballot shall be in a form prescribed by the board.

193.411(5)(c) (c) To cast a ballot by mail, a member shall mark the ballot for the candidate chosen, seal the ballot in a plain envelope bearing the member’s name and the words “BALLOT ENCLOSED,” or similar words, and enclose that envelope in another envelope addressed to the cooperative. To cast an alternative ballot, a member shall follow the procedure prescribed by the board.

193.411(5)(d) (d) If the ballot of the member is received by the cooperative on or before the date of the election, or as otherwise prescribed for alternative ballots, and if all other applicable requirements are satisfied the cooperative shall accept and count the ballot as the vote of the absent member.

193.411(6) (6) Business entity members may nominate persons for director. Any member that is not an individual may nominate one or more individuals as candidates for election as a director of the cooperative, unless the cooperative’s articles or bylaws provide otherwise.

193.411(9) (9) Compensation. Subject to any limitation in the articles or bylaws, the board may fix the compensation of the directors, except that any outside director elected under sub. (2) (b) may not receive any compensation other than authorized per diem reimbursements.

193.411 History History: 2005 a. 441.

193.415 193.415 Removal of directors. All of the following apply, unless the articles or bylaws provide otherwise:

193.415(2) (2) Removal of temporary directors by board. A director who was appointed by the board to fill a vacancy may be removed by the board at any time, with or without cause, if all of the following apply:

193.415(2)(a) (a) The members have not elected directors in the interval between the time of the appointment to fill the vacancy and the time of the removal.

193.415(2)(b) (b) A majority of the remaining directors present affirmatively vote to remove the director.

193.415(3) (3) Removal of directors by members. A director may be removed at any time, with or without cause, by the affirmative vote of the holders of a majority of the voting power of membership interests entitled to vote at an election of directors, except that a director who was elected solely by the patron members or the holders of a class or series of membership interests, as provided in the articles or bylaws, may be removed only by the affirmative vote of the holders of a majority of the voting power of the patron members or of all membership interests of the class or series entitled to vote at an election of that director, respectively.

193.415(4) (4) Election of replacement directors. Notwithstanding s. 193.421, a replacement director may be elected to serve out the remaining term of the removed director at a meeting at which the director was removed.

193.415 History History: 2005 a. 441.

193.417 193.417 Resignation of directors. A director may resign by giving notice to the board or the chairperson of the board. The resignation is effective without acceptance upon receipt by the board or the chairperson of the board, unless the notice specifies a later effective date.

193.417 History History: 2005 a. 441.

193.421 193.421 Filling vacancies.

193.421(1) (1) Patron directors. If a vacancy occurs in the office of a director who was elected solely by the patron members, as provided in the articles or bylaws, or a new office of director is created for such a director, the board, in consultation with the other directors elected solely by the patron members, as provided in the articles or bylaws, shall appoint a patron member of the cooperative to temporarily fill the vacancy until a successor is elected at the next regular or special members’ meeting. An appointment under this subsection shall be by majority vote of the remaining directors, regardless of whether there is a quorum present. If there are no other directors elected solely by the patron members, as provided in the articles or bylaws, at the time of the vacancy, the office shall remain vacant and a special patron members’ meeting shall be called to elect a successor.

193.421(2) (2) Nonpatron directors. Unless otherwise provided in the articles or bylaws, if a vacancy occurs in the office of any director other than a director described in sub. (1) or if a new office of director is created other than a new office described in sub. (1), the board shall appoint a director to temporarily fill the vacancy by majority vote of the remaining directors, regardless of whether there is a quorum present. A successor shall be elected at the next regular or special members’ meeting.

193.421(3) (3) Term of successor. Any successor elected under this section is elected for the remainder of the unexpired term of the director whose vacancy the successor was elected to fill.

193.421 History History: 2005 a. 441.

193.423 193.423 Allocation of voting authority among directors.

193.423(1) (1) The voting authority of the directors may be allocated according to allocation units or equity classifications of the cooperative if any of the following conditions is satisfied:

193.423(1)(a) (a) The directors elected by patron members have collectively at least 51 percent of the voting authority of the board on general matters of the cooperative.

193.423(1)(b) (b) The directors elected by patron members do not have, collectively, minority voting authority on the board on general matters of the cooperative.

193.423(2) (2) The patron board directors’ vote shall be voted collectively as determined by a majority vote of the patron directors. A tie in the number of patron board director votes shall be construed as a vote against the matter.

193.423 History History: 2005 a. 441.

193.425 193.425 Board meetings.

193.425(1) (1) Time and place. Meetings of the board may be held from time to time as provided in the articles or bylaws at any location that the board selects or by any means described in sub. (2).

193.425(2) (2) Virtual meetings and attendance. Meetings of the board may be held by any means of communication through which the directors may simultaneously hear each other during the meeting. A director may participate in a meeting of the board at which other directors are physically present by any means of communication through which the director, all other directors so participating, and all directors physically present may simultaneously hear each other during the meeting. The number of directors physically present at a meeting, if any, shall be added to the number of directors otherwise participating in the meeting under this subsection to determine whether a quorum is present under s. 193.431, except that any director who objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and who fails to participate in the meeting after the objection may not be considered as present at the meeting for purposes of determining whether a quorum is present.

193.425(3) (3) Calling meetings and notice. Unless the articles or bylaws provide for a different time period and except as provided in s. 193.205 (3) and subs. (4) and (5), a director may call a board meeting by giving at least 10 days’ notice. The notice shall state the date, time, and place of the meeting, except that, if the meeting is held under sub. (2) and if no physical presence of directors at the meeting is intended, the notice shall so state. If required under this chapter, the articles, or the bylaws, the notice shall state the purpose of the meeting.

193.425(4) (4) Previously scheduled or adjourned meetings. If the day, time, and place of a board meeting are provided in the articles or bylaws, or announced at a previous board meeting, no notice of the meeting is required. Notice that an adjourned meeting will be reconvened need not be given other than by announcement at the meeting at which adjournment is taken.

193.425(5) (5) Waiver of notice and objection. A director may waive notice of a board meeting. A waiver is effective whether given before, at, or after the meeting, and whether given in writing, orally, or by attendance. Attendance by a director at a board meeting is a waiver of notice of that meeting, unless the director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting after the objection.

193.425(6) (6) Voting by absent directors. If the articles or bylaws so provide, a director may give advance written consent or opposition to a proposal to be acted on at a board meeting. If the director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum. If the proposal to be acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or opposed, the consent or opposition shall be counted as the vote of a director present at the meeting in favor of or against the proposal and shall be entered in the minutes or other record of action at the meeting.

193.425 History History: 2005 a. 441.

193.431 193.431 Quorum; presence of objecting director. Unless otherwise provided in the articles or bylaws, a majority of the directors currently holding office is a quorum for the transaction of business. Any director who objects at the beginning of a board meeting to the transaction of business because the meeting is not lawfully called or convened and who fails to participate in the meeting after the objection may not be considered as present at the meeting for purposes of determining whether a quorum is present. In the absence of a quorum, a majority of the directors present may adjourn a meeting from time to time until a quorum is present. If a quorum is present when a meeting is properly convened, the directors present may continue to transact business until adjournment, even though the withdrawal of a number of directors originally present leaves less than a quorum.

193.431 History History: 2005 a. 441.

193.435 193.435 Actions of the board.

193.435(1) (1) Generally. Unless this chapter or the articles or bylaws provide otherwise and except as provided in sub. (2), the board shall take action by the affirmative vote of the greater of the following:

193.435(1)(a) (a) A majority of directors present at a meeting at the time the action is taken.

193.435(1)(b) (b) A majority of the minimum number of directors that would constitute a quorum for the transaction of business at the meeting.

193.435(2) (2) Exception for objecting director. Any director who objects at the beginning of a board meeting to the transaction of business because the meeting is not lawfully called or convened and who fails to participate in the meeting after the objection may not be considered as present at the meeting for purposes of sub. (1).

193.435 History History: 2005 a. 441.

193.441 193.441 Actions without a meeting.

193.441(1) (1) Generally.

193.441(1)(a) (a) Unless the articles or bylaws provide otherwise, any action required or permitted by this chapter to be authorized at a board meeting may be authorized without a meeting if that action is authorized by all directors and is evidenced by one or more written statements, signed by each director, describing and consenting to the action. Such an action has the same effect as an action authorized by unanimous vote at a meeting at which all directors are present and may be described as such in any document.

193.441(1)(b) (b) The articles or bylaws may allow the board to take any other action on behalf of the cooperative, other than an action requiring member approval, without a board meeting, if the action is authorized by the number of directors that would be required to approve the action at a board meeting at which all directors were present and if the action is evidenced by one or more written statements, signed by each authorizing director, describing and consenting to the action. Such an action has the same effect as an action authorized by vote of the number of authorizing directors at a meeting at which all directors are present and may be described as such in any document.

193.441(2) (2) Effective date. Any action authorized under sub. (1) is effective when the last director necessary for authorization signs the statement evidencing his or her consent, unless the statement specifies a different effective date.

193.441(3) (3) Notice and liability. When an action is taken under sub. (1) (b) with the authorization of less than all directors, the authorizing directors shall ensure that all other directors are notified immediately of the action and its effective date. Failure to provide the notice does not invalidate the action. A director who does not authorize an action taken under sub. (1) (b) may not be held liable as a result of the action.

193.441(4) (4) Records. A cooperative shall retain all statements signed by its directors under sub. (1).

193.441 History History: 2005 a. 441.

193.443 193.443 Board authority concerning certain cooperative property.

193.443(1) (1) Sale in usual and regular course of business. The board may sell, lease, transfer, or otherwise dispose of all or substantially all of the cooperative’s property in the usual and regular course of the cooperative’s business.

193.443(2) (2) Other sales. The board may sell, lease, transfer, or otherwise dispose of all or substantially all of the cooperative’s property not in the usual and regular course of the cooperative’s business if all of the following apply:

193.443(2)(a) (a) The cooperative’s accountant has given the board an opinion that the cooperative cannot continue as an ongoing business and is under financial duress.

193.443(2)(b) (b) The board has given notice to the members of the impending or potential disposition prior to the disposition.

193.443(2)(c) (c) The board has determined that failure to proceed with the disposition would be adverse to the interests of the members and the cooperative.

193.443(3) (3) Security interests. The board may grant a security interest in all or substantially all of the cooperative’s property whether or not in the usual and regular course of the cooperative’s business.

193.443(4) (4) Transfer to certain affiliates. The board may transfer any or all of the cooperative’s property to a business entity all the ownership interests of which are owned by the cooperative.

193.443(5) (5) Asset securitization. For purposes of debt financing, the board may transfer any or all of the cooperative’s property to a special purpose entity owned or controlled by the cooperative for an asset securitization.

193.443 History History: 2005 a. 441.

193.445 193.445 Audit committee. The board shall establish an audit committee, consisting of members who will ensure an independent review of the cooperative’s finances, to review the financial information and accounting reports of the cooperative. The board shall present audited financial statements to the members unless all of the following apply:

193.445(1) (1) The articles or bylaws permit financial statements that are not audited.

193.445(2) (2) The financial statements clearly state that they are not audited and a statement is included in the financial statement describing the difference between the financial statements and audited financial statements that are prepared according to generally accepted accounting processes.

193.445 History History: 2005 a. 441.

193.451 193.451 Committees.

193.451(1) (1) Generally; special litigation committee. The board, by resolution, may establish committees having the authority of the board in the management of the business of the cooperative to the extent described in the resolution. The board, by resolution, may establish a special litigation committee of specified duration under this subsection, consisting of one or more independent directors or other independent persons, to consider the legal rights of and remedies available to the cooperative and whether those rights should be enforced and those remedies should be pursued. Any committee established under this subsection, other than a special litigation committee, is subject at all times to the direction and control of the board. The board may amend a resolution establishing a special litigation committee.

193.451(2) (2) Membership. A committee established under sub. (1) shall consist of one or more individuals. Unless the articles or bylaws provide otherwise, committee members need not be directors.

193.451(3) (3) Committee procedure. The procedures for a board meeting apply to a meeting of a committee established under sub. (1) and to committee members to the same extent as those procedures apply to a board meeting and directors.

193.451(4) (4) Minutes. The chairperson of a committee established under sub. (1) shall ensure that minutes, if any, of committee meetings are provided, upon request, to members of the committee and to any director.

193.451(5) (5) Standard of conduct for directors. Establishment of, delegation of authority to, and action by a committee under sub. (1) does not alone constitute compliance by a director with s. 193.455 (1).

193.451(6) (6) Duties of committee members; limitation of liability. Sections 193.455, 193.461, and 193.465 apply to members of committees established under sub. (1) to the same extent as those sections apply to directors.

193.451 History History: 2005 a. 441.

193.455 193.455 Conduct and liability of directors.

193.455(1) (1) Standard and liability.

193.455(1)(a) (a) A director shall discharge the duties of the office of director in good faith, in a manner the director reasonably believes to be in the best interests of the cooperative, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. A director who so performs his or her duties may not be held liable by reason of being or having been a director.

193.455(1)(b) (b) In discharging his or her duties to the cooperative and in determining what he or she believes to be in the best interests of the cooperative, a director may consider any of the following:

193.455(1)(b)1. 1. The effects of the action on employees, suppliers, creditors, and customers of the cooperative.