Chapter 193

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.

193.455(1)(b)2. 2. The effects of the action on communities in which the cooperative operates.

193.455(1)(b)3. 3. The effects of the action on members and stockholders.

193.455(1)(b)4. 4. The economy of this state.

193.455(1)(b)5. 5. The long-term and short-term interests of the cooperative and its patron members, including the possibility that these interests may be best served by the continued independence of the cooperative.

193.455(1)(b)6. 6. Any other factors the director considers pertinent.

193.455(2) (2) Reliance.

193.455(2)(a) (a) A director may rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by any of the following:

193.455(2)(a)1. 1. One or more officers or employees of the cooperative whom the director reasonably believes to be reliable and competent in the matters presented.

193.455(2)(a)2. 2. Counsel, public accountants, or other persons as to matters that the director reasonably believes are within the person’s professional or expert competence.

193.455(2)(a)3. 3. A committee established under s. 193.445 or 193.451 (1) on which the director does not serve, as to matters within its designated authority, if the director reasonably believes the committee to merit confidence.

193.455(2)(b) (b) Paragraph (a) does not apply to a director who has knowledge concerning the matter in question that makes the director’s reliance under par. (a) unwarranted.

193.455(3) (3) Presumption of assent. A director who is present at a meeting of the board when an action is approved by the board is presumed to have assented to the action approved, unless the director is prohibited by a conflict of interest from voting on the action or does any of the following:

193.455(3)(a) (a) Objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and fails to participate in the meeting after the objection.

193.455(3)(b) (b) Votes against the action at the meeting.

193.455 History History: 2005 a. 441.

193.461 193.461 Director conflicts of interest.

193.461(1) (1) Conflict voiding certain contracts and transactions. A contract or transaction between a cooperative and a director, as determined under sub. (2) (b) 1., or between a cooperative and a business entity of which at least one of the cooperative’s directors is a governor, director, manager, officer, or legal representative, as determined under sub. (2) (b) 2., or in which at least one of the cooperative’s directors has a material financial interest, as determined under sub. (2) (a), is void unless any of the following apply:

193.461(1)(a) (a) The contract or transaction was fair and reasonable as to the cooperative at the time it was authorized or ratified by the cooperative; the material facts as to the contract or transaction and as to the director’s interest are disclosed or known to the members before the contract or transaction is authorized or ratified by the cooperative; and the material facts as to the contract or transaction and as to the director’s interest are fully disclosed or known to the board or a committee established under s. 193.445 or 193.451 (1), and the board or committee in good faith authorizes or ratifies the contract or transaction. The interested director may not be counted in determining the presence of a quorum at a meeting where the contract or transaction may be authorized or ratified and may not vote on the authorization or ratification. The person asserting the validity of the contract or transaction has the burden of establishing that the contract or transaction was fair and reasonable as to the cooperative at the time it was authorized or ratified by the cooperative.

193.461(1)(b) (b) The contract or transaction is a distribution, or is a contract or transaction that is made available to all members or patron members as part of the cooperative’s business.

193.461(1)(c) (c) The contract or transaction results from a resolution fixing the compensation of a director or of another officer, employee, or agent of the cooperative.

193.461(2) (2) Material financial interest; transactions involving third parties.

193.461(2)(a) (a) For purposes of sub. (1), a director has a material financial interest in each organization in which that director, that director’s spouse, parent, child, or sibling, the spouse of that director’s child or sibling, or the sibling of that director’s spouse has a material financial interest.

193.461(2)(b) (b)

193.461(2)(b)1. 1. For purposes of sub. (1), a contract or transaction between a cooperative and a director or that director’s spouse, parent, child, or sibling, the spouse of that director’s child or sibling, or the sibling of that director’s spouse, is considered to be a transaction between the cooperative and the director.

193.461(2)(b)2. 2. For purposes of sub. (1), a contract or transaction between a cooperative and a business entity of which a director or that director’s spouse, parent, child, or sibling, the spouse of that director’s child or sibling, or the sibling of that director’s spouse, is a governor, director, manager, officer, or legal representative is considered to be a transaction between the cooperative and a business entity of which the director is a governor, director, manager, officer, or legal representative.

193.461 History History: 2005 a. 441.

193.465 193.465 Limitation of director’s liability in articles or bylaws. The articles or bylaws may eliminate or limit a director’s personal liability to the cooperative or its members for monetary damages for violating s. 193.455 (1) (a), except that neither the articles nor the bylaws may eliminate or limit the liability of a director for any of the following:

193.465(1) (1) A breach of the director’s duty of loyalty to the cooperative or its members.

193.465(2) (2) An act or omission not in good faith or that involves intentional misconduct or a knowing violation of law.

193.465(3) (3) A transaction from which the director derived an improper personal benefit.

193.465(4) (4) An act or omission occurring before the date on which the provision in the articles or bylaws eliminating or limiting liability becomes effective.

193.465(5) (5) A knowing violation of ch. 408, subject to s. 193.605, or illegal distributions of cooperative assets.

193.465 History History: 2005 a. 441.

193.471 193.471 Indemnification.

193.471(1) (1) Definitions. In this section:

193.471(1)(a) (a) “Official capacity” means any of the following:

193.471(1)(a)1. 1. A person’s capacity as an officer, employee, or agent of a cooperative or predecessor cooperative.

193.471(1)(a)2. 2. A person’s capacity as a member of a committee of a cooperative under s. 193.445 or 193.451 (1) or of a committee of a predecessor cooperative.

193.471(1)(a)3. 3. With respect to a director, chief executive officer, member, or employee of a cooperative who, at the request of the cooperative, serves as a governor, director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, that person’s capacity as a governor, director, manager, officer, member, partner, trustee, employee, or agent, as applicable, of the other organization or employee benefit plan.

193.471(1)(a)4. 4. With respect to a person who was a director, chief executive officer, member, or employee of a predecessor cooperative and who, at the request of the predecessor cooperative, served as a governor, director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, that person’s capacity as a governor, director, manager, officer, member, partner, trustee, employee, or agent, as applicable, of the other organization or employee benefit plan.

193.471(1)(b) (b) “Potential litigant” means a person made or threatened to be made a party to a proceeding by reason of the person’s former or present official capacity.

193.471(1)(c) (c) “Predecessor cooperative” means a domestic or foreign cooperative that was the predecessor of a cooperative in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

193.471(1)(d) (d) “Proceeding” means a threatened, pending, or completed civil, criminal, administrative, arbitration, or investigative proceeding, including a proceeding by or in the right of the cooperative.

193.471(1)(e) (e) “Special legal counsel” means counsel who has not represented any of the following:

193.471(1)(e)1. 1. The cooperative or an affiliate.

193.471(1)(e)2. 2. The director, manager, member of a committee under s. 193.445 or 193.451 (1), or employee whose indemnification is in issue.

193.471(2) (2) Indemnification.

193.471(2)(a) (a) Subject to sub. (4), a cooperative shall indemnify a potential litigant against judgments, penalties, and fines applicable to a proceeding, against excise taxes assessed against the person with respect to an employee benefit plan, and against settlements and reasonable expenses, including attorney fees and disbursements, incurred by the potential litigant in connection with the proceeding, if, with respect to the acts or omissions of the potential litigant complained of in the proceeding, all of the following apply:

193.471(2)(a)1. 1. The potential litigant has not been indemnified against the same amounts by another person.

193.471(2)(a)2. 2. The potential litigant acted in good faith.

193.471(2)(a)3. 3. The potential litigant did not receive an improper personal benefit or commit an act for which liability cannot be eliminated or limited under s. 193.465 (2).

193.471(2)(a)4. 4. In the case of a criminal proceeding, the potential litigant had no reasonable cause to believe the acts or omissions were unlawful.

193.471(2)(a)5. 5. In the case of acts or omissions committed in an official capacity, as defined in sub. (1) (a) 1. or 2., the potential litigant reasonably believed that the acts or omissions were in the best interests of the cooperative or predecessor cooperative, as applicable, and, in the case of acts or omissions committed in an official capacity, as defined in sub. (1) (a) 3. or 4., the potential litigant reasonably believed that the conduct was not opposed to the best interests of the cooperative or predecessor cooperative, as applicable. If the acts or omissions relate to conduct as a director, officer, trustee, employee, or agent of an employee benefit plan, the conduct is not considered to be opposed to the best interests of the cooperative or predecessor cooperative if the potential litigant reasonably believed that the conduct was in the best interests of the participants or beneficiaries of the employee benefit plan.

193.471(2)(b) (b) The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of no contest or its equivalent does not, of itself, establish that the potential litigant did not meet the applicable criteria under par. (a).

193.471(3) (3) Advances. Subject to sub. (4), a potential litigant is entitled, upon written request to the cooperative, to payment or reimbursement by the cooperative of reasonable expenses, including attorney fees and disbursements, incurred by the potential litigant in advance of the final disposition of the proceeding if the potential litigant delivers to the cooperative a written statement that the potential litigant believes in good faith that the applicable criteria for indemnification under sub. (2) (a) have been satisfied and a written undertaking by the potential litigant to repay all amounts so paid or reimbursed by the cooperative if a court determines under sub. (6) (c) that the potential litigant is ineligible for indemnification. The written undertaking is an unlimited general obligation of the potential litigant but need not be secured, and the cooperative shall accept the written undertaking without reference to the potential litigant’s financial ability to make the repayment.

193.471(4) (4) Prohibition, conditions, and limitations on indemnification or advances. The articles or bylaws may prohibit indemnification or advances of expenses otherwise required by subs. (2) and (3). The articles or bylaws may impose limitations on indemnification or advances of expenses or conditions on indemnification or advances of expenses in addition to the conditions contained in subs. (2) and (3), if the limitations or conditions apply equally to all persons or to all persons within a given class. A prohibition, limitation, or condition contained in the articles or bylaws under this subsection does not apply to any person seeking indemnification or advancement of expenses under sub. (2) or (3) with respect to any acts or omissions of the person committed before the effective date of the provision in the articles or the date of adoption of the provision in the bylaws, as applicable, establishing the prohibition, limitation, or condition.

193.471(5) (5) Reimbursement to witnesses. This section does not require, or limit the ability of, a cooperative to reimburse expenses, including attorney fees and disbursements, incurred by a person in connection with an appearance as a witness in a proceeding at a time when the person is not a potential litigant.