Chapter 185

185.01(2) (2) “Cooperative” means an association incorporated under this chapter.

185.01(3) (3) “Corporation” means all corporations not associations.

185.01(3m) (3m) “Department”, except in s. 185.45 (3) (c) and (4) (b), means the department of financial institutions.

185.01(4) (4) “Foreign cooperative” means an association incorporated under a cooperative law of another state which has members residing within this state and which is operating on the following cooperative basis:

185.01(4)(a) (a) No member of the foreign cooperative who is an individual is allowed more than one vote because of the amount of stock or membership capital the member owns therein; and

185.01(4)(b) (b) The foreign cooperative shall not deal in the products of or for nonmembers to an amount greater in value than such as are handled by it for members; and

185.01(4)(c) (c) The foreign cooperative distributes its proceeds according to either s. 185.45 or the law of the state of the foreign cooperative’s incorporation.

185.01(5) (5) “Member” means a person who has been qualified and accepted for membership in an association. If a cooperative has one or more classes of members not entitled to vote, “member” or “members”, as used in this chapter with respect to the right of a member to vote, voting procedure, the required proportion of member votes, actions that must or may be taken by members, the number of members required for a quorum and the eligibility of directors, means a member or members entitled to vote, unless the bylaws provide otherwise.

185.01(6) (6) “Membership stock” means any class of stock, continuous ownership of which is required for membership in a cooperative.

185.01(6m) (6m) “Patronage” means business done by a patron with a cooperative and, if the bylaws provide, labor performed for a cooperative by a patron.

185.01(7) (7) “Security” as used in ss. 185.23 and 185.24 means any indebtedness, capital stock or other equity interest in a cooperative’s assets.

185.01 History History: 1979 c. 110 s. 60 (13); 1983 a. 189; 1985 a. 30; 1993 a. 482; 1995 a. 27, 417; 2017 a. 76.

185.02 185.02 Purposes. Cooperatives may be organized under this chapter for any lawful purpose except banking and insurance, but subject to statutes relating to the organization of specified kinds of corporations.

185.02 History History: 1977 c. 29.

185.03 185.03 General powers. Unless otherwise provided by its articles, a cooperative may:

185.03(1) (1) Exist perpetually.

185.03(2) (2) Sue and be sued.

185.03(3) (3) Have a seal.

185.03(4) (4) Make contracts, incur liabilities and borrow money; issue certificates representing indebtedness, or representing equity interests in its assets; acquire property; dispose of, mortgage, pledge, lease or otherwise use in any manner any of its property, or any interest therein, wherever situated.

185.03(5) (5) Invest its funds, lend money for its purposes, and hold any property as security for repayment.

185.03(6) (6) Conduct its business and affairs and have offices and exercise its powers in the United States or in any foreign country.

185.03(7) (7) Elect officers and appoint agents, define their duties and fix their compensation.

185.03(8) (8) Make and alter bylaws, consistent with its articles and the laws of this state, for the administration and regulation of its affairs.

185.03(9) (9) Make donations for charitable, scientific, educational or religious purposes.

185.03(10) (10) Effect the forfeiture to the cooperative of unclaimed funds, including all forms of distributions or credits under s. 185.45 (2) (b) and (c), (3) (a) and (b) and (4) (b) and unclaimed stock, membership fees and deposits, if all of the following conditions are met:

185.03(10)(a) (a) No earlier than 3 years and no later than 5 years after the funds are first made available to their owners, the board declares the funds forfeited to the cooperative unless claimed by the date specified in par. (b).

185.03(10)(b) (b) After the declaration under par. (a), the cooperative gives notice that states that the funds shall be forfeited if not claimed by a specified date.

185.03(10)(c) (c) The date specified in the notice under par. (b) is a business day at least 60 days after the date of mailing of the notice.

185.03(10)(d) (d) The notice under par. (b) is mailed to the last-known address of each owner, and the name and address of each owner to whom notice is mailed or an Internet site address where this information is posted, together with a brief description of the reason for the notice, is published as a class 1 notice under ch. 985 on or before the date of mailing in a newspaper published in the municipality containing the service area of the cooperative.

185.03(10)(e) (e) The cooperative dedicates any funds remaining unclaimed after the date specified in par. (b) to educational purposes, limited to providing scholarships or loans to students, or to charitable purposes, as the board determines, within one year after the date the funds are declared forfeited under par. (a).

185.03(11) (11) Cease its activities and surrender its franchise.

185.03(12) (12) Exercise all powers necessary or convenient to effect its purposes.

185.03(13) (13) In anticipation of or during an emergency, as defined in s. 185.07 (4) (a), through its board or members, do any of the following:

185.03(13)(a) (a) Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.

185.03(13)(b) (b) Unless emergency bylaws adopted under s. 185.07 (4) provide otherwise, give notice of a meeting of the board only to those directors whom it is practicable to reach, and give notice to them in any practicable manner.

185.03 History History: 1985 a. 30, 332; 2015 a. 117; 2017 a. 76; 2021 a. 5.

185.031 185.031 Refunds after forfeiture. Subsequent to a forfeiture under s. 185.03 (10), the owner of the forfeited funds may submit a claim to the board. If the board determines that the person owned the funds at the time of the forfeiture, it shall refund the funds to the person.

185.031 History History: 1985 a. 332.

185.033 185.033 Restriction on changes to articles.

185.033(1) (1) If the articles contain a prohibition on changes to the provision establishing the basis of distribution as provided in s. 185.05 (1) (j), no changes may be made to the provision including by amendment under s. 185.51 or 185.52, approval of a plan of division under s. 185.63, adoption of restated articles under s. 185.54, approval of a plan of merger or consolidation under s. 185.61 and conversion to a nonstock corporation under s. 181.1150.

185.033(2) (2) If, upon dissolution of a cooperative with articles containing a prohibition on changes in the basis of distribution, the distributions required are wholly or partly impossible of execution, the whole or part of the net proceeds shall be distributed as provided in s. 185.71 (3).

185.033 History History: 1985 a. 30; 1997 a. 79.

185.034 185.034 Definitions applicable to indemnification and insurance provisions. In ss. 185.034 to 185.042:

185.034(1) (1) “Cooperative” means a domestic cooperative and any domestic or foreign predecessor of a domestic cooperative where the predecessor cooperative’s existence ceased upon the consummation of a merger or other transaction.

185.034(2) (2) “Director or officer” means any of the following:

185.034(2)(a) (a) A natural person who is or was a director or officer of a cooperative.

185.034(2)(b) (b) A natural person who, while a director or officer of a cooperative, is or was serving at the cooperative’s request as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employee or agent of an association, corporation, limited liability company, partnership, joint venture, trust or other enterprise.

185.034(2)(c) (c) A natural person who, while a director or officer of a cooperative, is or was serving an employee benefit plan because his or her duties to the cooperative also imposed duties on, or otherwise involved services by, the person to the plan or to participants in or beneficiaries of the plan.

185.034(2)(d) (d) A natural person who is or was the chief executive, managerial employee of a cooperative, regardless of the person’s title.

185.034(2)(e) (e) Unless the context requires otherwise, the estate or personal representative of a director or officer.

185.034(3) (3) “Expenses” include fees, costs, charges, disbursements, attorney fees and any other expenses incurred in connection with a proceeding.

185.034(4) (4) “Liability” includes the obligation to pay a judgment, settlement, forfeiture, or fine, including any excise tax assessed with respect to an employee benefit plan, plus costs, fees, and surcharges imposed under ch. 814, and reasonable expenses.

185.034(5) (5) “Party” means a natural person who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding.

185.034(6) (6) “Proceeding” means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the cooperative or by any other person.

185.034 History History: 1987 a. 13; 1993 a. 112; 2003 a. 139.

185.035 185.035 Mandatory indemnification.

185.035(1) (1) A cooperative shall indemnify a director or officer, to the extent he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the cooperative.

185.035(2) (2) 

185.035(2)(a) (a) In cases not included under sub. (1), a cooperative shall indemnify a director or officer against liability incurred by the director or officer in a proceeding to which the director or officer was a party because he or she is a director or officer of the cooperative, unless liability was incurred because the director or officer breached or failed to perform a duty he or she owes to the cooperative and the breach or failure to perform constitutes any of the following:

185.035(2)(a)1. 1. A willful failure to deal fairly with the cooperative, its members or stockholders in connection with a matter in which the director or officer has a material conflict of interest.

185.035(2)(a)2. 2. A violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful.

185.035(2)(a)3. 3. A transaction from which the director or officer derived an improper personal profit.

185.035(2)(a)4. 4. Willful misconduct.

185.035(2)(b) (b) Determination of whether indemnification is required under this subsection shall be made under s. 185.036.

185.035(2)(c) (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this subsection.

185.035(3) (3) A director or officer who seeks indemnification under this section shall make a written request to the cooperative.

185.035(4) (4) Indemnification under this section is not required if the director or officer has previously received indemnification or allowance of expenses from any person, including the cooperative, in connection with the same proceeding.

185.035 History History: 1987 a. 13.

185.035 Annotation Cooperative indemnification. La Rowe and Weine. WBB Sept. 1988.

185.036 185.036 Determination of right to indemnification. Unless otherwise provided by the articles or bylaws or by written agreement between the director or officer and the cooperative, the director or officer seeking indemnification under s. 185.035 (2) shall select one of the following means for determining his or her right to indemnification:

185.036(1) (1) By majority vote of a quorum of the board consisting of directors not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the board and consisting solely of 2 or more directors not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee.

185.036(2) (2) By independent legal counsel selected by a quorum of the board or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full board, including directors who are parties to the same or related proceedings.

185.036(3) (3) By a panel of 3 arbitrators consisting of one arbitrator selected by those directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected.

185.036(4) (4) By a majority vote of a quorum of the members. Members who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not vote in making the determination.

185.036(5) (5) By a court under s. 185.039.

185.036(6) (6) By any other method provided for in any additional right to indemnification permitted under s. 185.038.

185.036 History History: 1987 a. 13.

185.037 185.037 Allowance of expenses as incurred. Upon written request by a director or officer who is a party to a proceeding, a cooperative may pay or reimburse his or her reasonable expenses as incurred if the director or officer provides the cooperative with all of the following:

185.037(1) (1) A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the cooperative.

185.037(2) (2) A written undertaking, executed personally or on his or her behalf, to repay the allowance and, if required by the cooperative, to pay reasonable interest on the allowance to the extent that it is ultimately determined under s. 185.036 that indemnification under s. 185.035 (2) is not required and that indemnification is not ordered by a court under s. 185.039 (2) (b). The undertaking under this subsection shall be an unlimited general obligation of the director or officer and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured.

185.037 History History: 1987 a. 13.

185.038 185.038 Additional rights to indemnification and allowance of expenses.

185.038(1) (1) Except as provided in sub. (2), ss. 185.035 and 185.037 do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under any of the following:

185.038(1)(a) (a) The articles or bylaws.

185.038(1)(b) (b) A written agreement between the director or officer and the cooperative.

185.038(1)(c) (c) A resolution of the board.

185.038(1)(d) (d) A resolution, after notice, adopted by a majority vote of members who are entitled to vote.

185.038(2) (2) Regardless of the existence of an additional right under sub. (1), the cooperative may not indemnify a director or officer, or permit a director or officer to retain any allowance of expenses unless it is determined by or on behalf of the cooperative that the director or officer did not breach or fail to perform a duty he or she owes to the cooperative which constitutes conduct under s. 185.035 (2) (a) 1., 2., 3. or 4. A director or officer who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not participate in a determination under this subsection.

185.038(3) (3) Sections 185.034 to 185.042 do not affect a cooperative’s power to pay or reimburse expenses incurred by a director or officer in any of the following circumstances: