2020 Illinois Compiled Statutes
Chapter 805 - BUSINESS ORGANIZATIONS
805 ILCS 317/ - Limited Worker Cooperative Association Act.

(805 ILCS 317/1)

Sec. 1. Short title. This Act may be cited as the Limited Worker Cooperative Association Act.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/5)

Sec. 5. Findings. The General Assembly finds and declares all of the following:

• (1) the cooperative form of doing business provides an efficient and effective method for persons to transact business, offer, and obtain goods and services, and it is in the best interests of the people of the State of Illinois to promote, foster, and encourage the utilization of cooperatives in appropriate instances;
• (2) the Co-operative Act and Agricultural Co-Operative Act have provided for the promotion, fostering, and encouragement of consumer and producer cooperatives; have made distribution of agricultural products between producer and consumer more efficient; have stabilized the marketing of agricultural products; and have provided for the organization and incorporation of cooperative corporations, all as contemplated at the time of the original adoption;
• (3) it is in the best interests of the people of the State of Illinois to preserve the provisions of the Co-operative Act as it has been in force and interpreted in the State and to continue the provisions thereof for agriculture, but also to expand the provisions of Illinois cooperative law to provide greater direction and flexibility in its provisions and to enable all types of industries and enterprises to avail themselves of the benefits of the cooperative form of doing business in accordance with the provisions of this Act;
• (4) a worker cooperative has the purpose of creating and maintaining sustainable jobs and generating wealth in order to improve the quality of life of its worker-members, dignify human work, allow workers' democratic self-management, and promote community and local development in this State;
• (5) the purpose of this Act is to create a new business entity better suited for worker cooperatives and multi-stakeholder cooperatives, and to create more visibility and financing options for cooperatives. This Act is intended to provide a definition of worker cooperative for purposes of this Act, and not for purposes of other laws.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/10)

Sec. 10. Definitions. In this Act:

"Candidate" means a worker who is being considered for membership in a worker cooperative, as defined in the cooperative association's articles or bylaws.

"Collective worker cooperative" means a limited cooperative association that only has one class of members consisting of worker-members who manage all of the affairs of the limited cooperative association.

"Community investor" means a person who is not a member and who holds a share or other proprietary interest in a limited cooperative association.

"Distribution" 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.

"Member" means any person who, pursuant to a specific provision of a limited cooperative association's articles or bylaws, has the right to vote for the election of a director or directors, or possesses proprietary interests in the limited cooperative association.

"Multi-stakeholder cooperative" means a cooperative organized under this Act that has different classes of members whose rights and proprietary interests shall be determined by the articles or bylaws. At least 51% of the members shall be worker-members or candidates. A multi-stakeholder cooperative is a worker cooperative for purposes of this Act.

"Worker cooperative" means a limited cooperative association formed under this Act that includes a class of worker-members who are natural persons whose patronage consists of labor contributed to or other work performed for the limited cooperative association. Election to be organized as a worker cooperative does not create a presumption that workers are employees of the corporation for any purposes. A worker cooperative formed under this Act may include additional classes of members whose rights and proprietary interests shall be determined by the articles or bylaws. At least 51% of the workers shall be worker-members or candidates.

"Worker" means a natural person contributing labor or services to a worker cooperative.

"Worker-member" means a member of a worker cooperative who is a natural person and also a patron of a worker cooperative.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/15)

Sec. 15. Purpose of limited cooperative association.

(a) A limited cooperative association is an entity distinct from its members.

(b) A limited cooperative association may be organized for any lawful purpose, whether or not for profit.

(c) An association organized under this Act elects to be a worker cooperative with the State of Illinois. Election to be organized as a worker cooperative does not create a presumption that workers are employees of the corporation for any purposes.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/20)

Sec. 20. Formation of limited cooperative association.

(a) A limited cooperative association must be organized by one or more organizers. Organizers need not be members or worker-members of the worker cooperative.

(b) To form a limited cooperative association, one or more organizers of the association shall deliver or cause to be delivered articles to the Secretary of State for filing.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/25)

Sec. 25. Articles of organization.

(a) The articles of organization of a limited cooperative association shall state:

• (1) the domestic entity name of the limited cooperative association;
• (2) the purposes for which the limited cooperative association is formed, which may be for any lawful purpose;
• (3) the registered agent name and registered agent address of the association's initial registered agent;
• (4) the street address and, if different, mailing address of the association's initial principal office;
• (5) the true name and street address and, if different, mailing address of each organizer; and
• (6) any other provision, not inconsistent with law, that the worker-members, members, or organizers elect to set out in the articles for the regulation of the internal affairs of the worker cooperative, including any provisions that, under this Act, are required or permitted to be set out in the bylaws of the worker cooperative.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/30)

Sec. 30. Organization of limited cooperative association.

(a) After a limited cooperative association is formed:

• (1) if initial directors are named in the articles, 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
• (2) if initial directors are not named in the articles, 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.

(b) Unless the articles otherwise provide, the initial directors may cause the limited cooperative association to accept members, including those necessary for the association to begin business.

(c) Initial directors need not be members.

(d) 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.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/35)

Sec. 35. Bylaws.

(a) Bylaws shall include:

• (1) a statement of the capital structure of the limited cooperative association;
• (2) 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, including:
• (A) a statement concerning the manner in which profits and losses are allocated and distributions are made among members and, if community investors are authorized, the manner in which profits and losses are allocated and how distributions are made among investor members and between members and community investors;
• (B) a statement designating voting and other governance rights of each class or other type of members' interests and, if relevant, community investors, including which members have voting power and any restriction on voting power;
• (3) a statement of the method for admission of members;
• (4) 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;
• (5) a statement concerning:
• (A) 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
• (B) the manner in which profits and losses are allocated and distributions are made with respect to those persons; and
• (6) a statement of the number and terms of directors or the method by which the number and terms are determined; and
• (7) a statement addressing members' contributions.

(b) Bylaws may contain any other provision for managing and regulating the affairs of the association.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/40)

Sec. 40. Members.

(a) To begin business, a limited cooperative association must have at least 3 members unless the sole member is a cooperative.

(b) A person becomes a member:

• (1) as provided in the articles or bylaws;
• (2) as the result of a merger or conversion under Section 65; or
• (3) with the consent of all the members.

(c) A member, solely by reason of being a member, may not act for or bind the limited cooperative association.

(d) Unless the articles provide otherwise, a debt, obligation, or other liability of a limited cooperative association is solely that of the association and is not the debt, obligation, or liability of a member solely by reason of being a member.

(e) The total voting membership body shall constitute the assembly of the limited cooperative association.

(f) The assembly shall meet annually at a time provided in the articles or bylaws or set by the board of directors not inconsistent with the articles and bylaws.

(g) Failure to hold an annual assembly meeting does not affect the validity of any action by the limited cooperative association.

(h) A limited cooperative association shall notify each member of the time, date, and place of a members' meeting at least 10 and not more than 60 days before the meeting; except that, if the notice is of a meeting of the members in one or more districts or classes of members, the notice shall be given only to members in those districts or classes.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/45)

Sec. 45. Voting.

(a) The articles or bylaws may allocate voting power among members on the basis of one or a combination of the following:

• (1) one member, one vote;
• (2) if a member is a cooperative, the number of its members; or
• (3) on the basis of use or patronage unless the cooperative has elected to be a worker cooperative.

(b) If the articles or bylaws allocate voting power on the basis of use or patronage and a member would be denied a vote because the member did not use the limited cooperative association or conduct patronage with it during the period on which the allocation of voting power is determined, the articles or bylaws must provide that the member shall nevertheless be allocated a vote equal to at least the minimum voting power allocated to members who used the association or conducted patronage with it during the period.

(c) The articles or bylaws may provide for the allocation of member voting power by districts or class or any combination thereof.

(d) Community investors are not entitled to vote unless the articles or bylaws provide otherwise.

(e) At no time shall the members have less than a majority of the voting power of the limited cooperative association.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/50)

Sec. 50. Board of directors.

(a) A limited cooperative association must have a board of directors of at least 3 individuals, unless the limited cooperative association is a collective worker cooperative. Subsections (b) through (e) do not apply to collective worker cooperatives.

(b) The affairs of a limited cooperative association must be managed by, or under the direction of, the board of directors unless the board delegates those duties to the assembly of the limited cooperative association. The board may adopt policies and procedures that do not conflict with the articles, bylaws, or this Act.

(c) An individual is not an agent for a limited cooperative association solely by being a director.

(d) A debt, obligation, or other liability of a limited cooperative association is solely that of the association and is not a debt, obligation, or 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.

(e) Directors shall be elected for terms determined by the bylaws by a majority vote of the assembly.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/55)

Sec. 55. Assembly.

(a) A limited cooperative association must have an assembly as constituted by the body of voting members.

(b) An individual is not an agent for a limited cooperative association solely by being a member of the assembly.

(c) A debt, obligation, or other liability of a limited cooperative association is solely that of the association and is not a debt, obligation, or liability of a member of the assembly solely by reason of being a voting member. An individual is not personally liable, directly or indirectly, for an obligation of an association solely by reason of being a voting member.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/60)

Sec. 60. Dissolution. A limited cooperative association may be dissolved only by either (1) a two-thirds vote of the assembly, or (2) a vote of the assembly of a supermajority threshold stated in the bylaws that is more than two-thirds. The vote shall be in accordance with Section 55, and upon dissolution its business and activities must be wound up in the manner provided under the Limited Liability Company Act for a limited liability company.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/65)

Sec. 65. Conversion. A limited cooperative association may convert into any form of entity permitted if the board of directors of the limited cooperative association adopts a plan of conversion and the assembly adopts such a plan by a two-thirds majority vote.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/70)

Sec. 70. Exemption from securities laws. Any security, patronage refund, per unit retain certificate, or evidence of membership issued or sold by a cooperative association as an investment in its capital to the members of a cooperative association formed under this Act or a similar law of any other state and authorized to transact business or conduct activities in this State is exempt from the registration requirements of the Illinois Securities Law of 1953. Such securities, patronage refunds, per unit retain certificates, or evidence of membership may be sold lawfully by the issuer or its members or salaried employees without the necessity of being registered as a broker or dealer under the Illinois Securities Law of 1953.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/90)

Sec. 90. (Amendatory provisions; text omitted).

(Source: P.A. 101-292, eff. 1-1-20; text omitted.)

(805 ILCS 317/95)

Sec. 95. (Amendatory provisions; text omitted).

(Source: P.A. 101-292, eff. 1-1-20; text omitted.)

(805 ILCS 317/99)

Sec. 99. Effective date. This Act takes effect January 1, 2020.

(Source: P.A. 101-292, eff. 1-1-20.)