COOPERATIVES Common Cooperative Traits • User-owner control : Each member gets one vote regardless of investment size, promoting democratic governance. This differs from proportional voting in some states. • Providing service at cost: After covering reserves, any net margin is returned to members as patronage refunds based on their usage, not capital investment. • Limited return on equity : Minnesota law permits but does not require dividends on capital stock; dividends paid depend on net income and may not accumulate.
Purpose and Types • Minn. Stat. Chapter 308A Cooperatives
• This is Minnesota’s original cooperative statute, governing traditional cooperatives. Cooperatives would file Minnesota Cooperative | Articles of Incorporation and annually file Minnesota Cooperative | Annual Renewal with the Office of the Minnesota Secretary of State Office. Fees for filings. • It prohibits equity investment by non-cooperative member s, meaning only users of the cooperative can hold ownership stakes. • Most agricultural cooperatives operate under this chapter to benefit from the federal Capper-Volstead Act antitrust exemption , which allows producers of agricultural products to collaborate legally in certain activities like collective marketing and pricing. • Cooperatives under Minn. Stat. Chapter 308A must meet strict one-member-one-vote rules and dividend limits to preserve this antitrust protection. • These cooperatives typically have a narrower scope for raising outside capital but enjoy important legal protections and have a long history in Minnesota. • Minn. Stat. Chapter 308B Cooperatives • Enacted in 2003, this newer statute provides more flexible equity and governance structures to encourage formation of value-added processing cooperatives and other co-op types including housing and health care co-ops. • Cooperatives would file Minnesota Cooperative | Articles of Incorporation and annually file Minnesota Cooperative | Annual Renewal with the Office of the Minnesota Secretary of State Office. Fees for filings. • Minn. Stat. Chapter 308B allows non-users to become investor-members , who can hold up to 85 percent of the cooperative’s profits and even own a large percentage of equity (up to almost 100 percent in theory). • This statute permits bloc voting where investor-members and patrons can have separate voting agreements. • However, Minn. Stat. Chapter 308B cooperatives generally do not qualify for the Capper- Volstead Act exemption and face more complexity related to tax and securities law.
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