VeriMe Cooperative Bylaws
Approved 1 May 2025
Preamble
VeriMe Cooperative (the “Cooperative”) is a limited cooperative association organized under the Colorado Uniform Limited Cooperative Association Act, C.R.S. Title 7, Article 58 (“ULCAA”) and registered in Colorado, U.S.A. The Cooperative’s business shall be conducted on a cooperative basis for the mutual benefit of the Cooperative’s Members. The Cooperative may have offices in such places as the Board may from time to time determine or the purposes of the Cooperative may require.
The purpose of the Cooperative is to increase trust in digital infrastructure that supports scholarship and research; supply methods and services for supporting integrity and trust in digital research contributions; and ensure trust and integrity in research contributor digital identity worldwide.
The Cooperative adopts and subscribes to the seven International Cooperative Alliance Cooperative principles:
1. Voluntary and Open Membership.
2. Democratic Member Control.
3. Members' Economic Participation.
4. Autonomy and Independence.
5. Education, Training, and Information.
6. Cooperation among Cooperatives.
7. Concern for Community.
In addition, the Cooperative subscribes to the Principles of Open Scholarly Infrastructure:
● Transparent governance and living will
● Purpose-consistent revenue generation based on services and financial sustainability
● Open documentation of policies and processes, including where applicable software code, description of operational components, and use of existing open infrastructures and frameworks such as FAIR and CARE and persistent identifiers.
WHEREAS, the Articles of Organization, as amended from time to time (“Articles”), are hereby incorporated by reference into these Bylaws.
ARTICLE I. MEMBERSHIP; AUTHORIZED CAPITAL
1.1 Qualification for Membership. The Cooperative will have three classes of members: Worker Members, Researcher Members and Founder Members. The Board of Directors has the power to admit members and establish new classes of membership, subject to Colorado Law and these Bylaws.
1.1.1. Worker Members. Subject to acceptance by the Board in its sole discretion, any natural person (a “Person”) that meets the following eligibility requirements and applies for membership may be admitted to the Cooperative as a “Worker Member”:
1.1.1.1. Has worked for the Cooperative in a capacity as employee or contractor for at least twelve months (“Candidacy Period”);
1.1.1.2. Agrees to provide at least 500 hours of paid services to the Cooperative each year, subject to waiver by the Board in its sole discretion on a case-by-case basis;
1.1.1.3. Agrees to purchase or otherwise be awarded one membership in the Cooperative (“Worker Membership”) for the price required by the Cooperative, and updated by resolution of the Board, which may be in US dollars, or another currency accepted by the Board;
1.1.1.4. Agrees to undertake patronage responsibilities, which may be prescribed by these Bylaws, by the member agreement (“Worker Member Agreement”), by policies promulgated by the Board, or by other member agreements executed in the ordinary course of business;
1.1.1.5. Agrees to participate in Cooperative governance functions and responsibilities, as required or authorized by these Bylaws and the Board;
1.1.1.6. Agrees to maintain good standing as a Worker Member at all times, including agreeing to and abiding by the Code of Conduct and Team Handbook;
1.1.1.7. Agrees to execute such instruments and agreements as may reasonably be necessary or advisable for the Cooperative to carry out its lawful purpose(s);
1.1.1.8. Meets all other uniform conditions and qualification requirements as may be prescribed from time-to-time by the Board and stipulated in the Worker Member Agreement;
1.1.1.9. Agrees to at all times abide by the Articles, these Bylaws, the Worker Member Agreement, the terms of use, if any, and the rules and policies established and adopted from time to time by the Members or the Board; and
1.1.1.10. Agrees to the patronage distributions as set out in Section 5.3.4.
1.1.2. Researcher Members. Any natural person that meets the following eligibility requirements and applies for membership may be admitted to the Cooperative as a Researcher Member:
1.1.2.1. Holds a VeriMe account and has their identity verified by VeriMe;
1.1.2.2. Maintains their VeriMe account in good standing, including maintaining a current email address and payment information.
1.1.2.3. Agrees to purchase one membership in the Cooperative (“Researcher Membership”) for the price required by the Cooperative, and updated by the Board, which may be in US dollars, or another currency accepted by the Board and to pay annual dues established, as determined by the Board from time to time;
1.1.2.4. Undertakes such patronage responsibilities, which may be prescribed by these Bylaws, by the membership agreement (“Researcher Member Agreement”), by policies promulgated from time to time by the Board, including our Terms and Conditions of Use and Privacy Policy, and by other member agreements executed in the ordinary course of business;
1.1.2.5. Participates in Cooperative governance functions and responsibilities, as required by these Bylaws and the Board;
1.1.2.6. At all times maintains good standing as a Researcher Member, including agreeing to and abiding by the Code of Conduct;
1.1.2.7. Agrees to execute such instruments and agreements as may reasonably be necessary or advisable for the Cooperative to carry out its lawful purpose(s);
1.1.2.8. Meet such other uniform conditions and qualification requirements as may be prescribed from time-to-time by the Board;
1.1.2.9. At all times abide by the Articles, these Bylaws, the Researcher Member Agreement, and the rules and policies as may be established and adopted from time to time by the Members or the Board; and
1.1.2.10. Agrees to the patronage distributions as set out in Section 5.3.4.
1.1.3. Founder Member. Any natural person that meets the following eligibility requirements and applies for membership may be admitted to the Cooperative as a Founder Member
1.1.3.1. A person who provides services to the Cooperative during the pre-launch phase of product development. This effort may include technical architecture, entity design and registration, fundraising, partner development, market testing, etc. (“Candidacy Period”);
1.1.3.2. Prospective founders must onboard through invitation, be approved by existing Founders and agree to dedicate 1 month (167 hours) of unpaid effort to the Cooperative subject to waiver by the Board in its sole discretion on a case-by-case basis;
1.1.3.3. Agrees to purchase or otherwise be awarded one membership in the Cooperative (“Founder Membership”) for the price required by the Board, which may be in US dollars, another currency accepted by the Board, or a number of hours of service, as determined by the Board (“Founder Contribution”);
1.1.3.4. Undertakes such patronage responsibilities, which may be prescribed by these Bylaws, by the membership agreement (“Founder Member Agreement”), by policies promulgated from time to time by the Board including our Terms and Conditions of Use, and Privacy Policy, and by other member agreements executed in the ordinary course of business;
1.1.3.5. Participates in Cooperative governance functions and responsibilities, as required by these Bylaws and the Board;
1.1.3.6. At all times maintains good standing as a Founder Member including agreeing to and abiding by the Code of Conduct;
1.1.3.7. Agrees to execute such instruments and agreements as may reasonably be necessary or advisable for the Cooperative to carry out its lawful purpose(s);
1.1.3.8. Meets such other uniform conditions and qualification requirements as may be prescribed from time-to-time by the Board;
1.1.3.9. Agrees to at all times abide by the Articles, these Bylaws, the Researcher Member Agreement, and the rules and policies as may be established and adopted from time to time by the Members or the Board; and
1.1.3.10. Agrees to the patronage distributions as set out in Section 5.3.4.
1.1.4. Representation of Certain Members. A Member who is not a natural person must be represented by an individual, associate, officer, manager, or member of the Member-entity, who has been duly authorized by the Member in a writing delivered to the Board.
1.1.5. Admission to Membership. Membership will be granted to applicants upon payment of the required deposit and execution of necessary agreements as determined by the Board. The Board will admit any member who:
1.1.5.1. Applies for admission for the purpose of participating in the activities of the Cooperative, through any procedure established by a policy adopted by the Board;
1.1.5.2. Meets all the requirements for application and membership under these Bylaws, the Articles, the laws of the State of Colorado, and policies established by the Board from time to time;
1.1.5.3. Purchases at least one (1) membership (collectively “Membership Membership(s)” or “Membership(s)”), as applicable, in the Cooperative;
1.1.5.4. Agrees to pay and remain current on fees and dues to the Cooperative, if any, as prescribed by the Board (“Member Fees”); and
1.1.5.5. Executes the applicable membership agreement or such other agreement as the Board may require.
1.1.6. Methods of acceptance. The Board has the right to accept or reject membership applications by any legal means, and may waive the requirements in Sections 1.1.1, 1.1.2, and 1.1.3. An applicant becomes a Member after their application is accepted, membership payment is made as directed by the Board, and any necessary agreements are executed by both parties. Researcher Members will be admitted automatically upon completion of eligibility requirements and execution of appropriate documents; the Board can revoke the automatic admission if the admission results from fraudulent action, or is in violation of these Bylaws.
1.2 Membership Interest. A Member’s "Membership Interest" means that each member has the right to vote—either directly or by a representative—with one vote per member, and to share in the Cooperative’s upside based on the member’s Patronage Activities (as defined in Section 5.3.4.4 of these Bylaws), not on how much money they invested. Although the Cooperative is not required to issue membership or investment certificates, it will keep a record of all members and their investments through individual “Capital Accounts”, which can be provided upon request.
1.3 Multiple Memberships. Member may concurrently belong to multiple classes of membership, provided the Member meets all applicable eligibility requirements of each respective membership class and maintains membership of each class in good standing.
1.4 Responsibilities of Members. Members are expected to provide services as agreed in their membership agreement, participate in meetings and in decision-making and maintain 'good standing' by (i) engaging with the Cooperative products and services, (ii) attending at least one membership meeting per year, (iii) abiding by the cooperative principles, and (iv) staying current with member requirements should there be any, including but not limited to financial commitments
1.5 Grounds for ineligibility. Despite fulfilling the eligibility requirements for any given membership class, a Person will not be eligible for membership if the Members find, based on reasonable grounds, which must not include discrimination on the basis of sex, gender identity, sexual orientation, race, ethnicity, national origin, religion, ability/disability, or any other status protected by federal or state law, that the applicant's admission would prejudice the interests, hinder or otherwise obstruct, or conflict with, any purpose or operation of the Cooperative.
1.6 Certificates of Membership Interests in the Cooperative. The Cooperative may issue certificates representing memberships, but this is not required. If issued, these certificates will include restrictions on transferability and terms for redemption.
1.7 Restrictions on Transfer of Membership Interest.
1.7.1. No membership interest may be transferred unless it is sold back to the Cooperative, as outlined in Section 5.5. Any attempt to transfer or any transfer that occurs through legal means will be void unless the Board of Directors approves it in writing and it is recorded by the Cooperative.
1.7.2. If the membership is held by someone not eligible (for example, if the Member dies, their heirs are not entitled to become members in the Cooperative), the Cooperative can either (a) buy back the Membership Interest, including any unpaid allocations, or (b) move the Membership Interest to a non-membership capital account. The Cooperative will notify that person in writing. Those who are ineligible for membership cannot participate in decision-making as a Member, but they may be allowed to receive profits, income, or a return of contributions. If not eligible, Sections 1.10.4 and 1.10.5 will govern redemption of the transfer.
1.7.3. The Board may, in its sole discretion, redeem or transfer the membership interest of any ineligible person or entity. This will occur only once the holder is informed in writing. The ineligible person or entity will not have voting rights in the meantime. The Board may also redeem any unredeemed notices of allocation.
1.8 Withdrawal.
1.8.1. Worker Member Withdrawal. A Worker Member may withdraw from the Cooperative by providing thirty days' written notice to the Board or an authorized representative. The form of notice will be determined by the Board. A withdrawing Worker Member will still receive benefits and rights of their membership until the withdrawal takes effect. The Board's decision on redemption timing and method is final. The Board may also determine when and how a Worker Member's equity may be redeemed. The Worker Member is still bound by any agreements with the Cooperative. If a Worker Member withdraws for reasons other than death, dissolution, ineligibility, or violation of agreements, they may reapply for membership at any time. However, the Board has the authority to delay or change the timing and method of redeeming a Worker Member's equity.
1.8.2. Researcher Member Withdrawal. A Researcher Member can withdraw from the Cooperative by giving written notice to the Board of Directors no less than three days before the effective date of the termination. The Board may delay or decide the timing and method of redeeming the Researcher's equity. The Board has discretion to determine the timing and method of any redemption. The Researcher Member will still have all rights and benefits as a Researcher Member until the withdrawal is effective. However, the Board can postpone, suspend, or withdraw the redemption of the Researcher's equity. If a Researcher Member withdraws for reasons other than death, dissolution, ineligibility, or violation of agreements, they may reapply for membership at any time.
1.8.3. Founder Member Withdrawal. A Founder Member may withdraw from the Cooperative by providing thirty days' written notice to the Board or an authorized representative. The form of notice will be determined by the Board. A withdrawing Founder Member will still receive benefits and rights of their membership until the withdrawal takes effect. The Board has the authority to delay or change the timing and method of redeeming a Founder Member's equity. The Board's decision on redemption timing and method is final. The Board may also determine when and how a Founder Member's equity may be redeemed. The Founder Member is still bound by any agreements with the Cooperative. Founders may not reapply for membership as a Founder Member.
1.9 Termination of a Member.
1.9.1. Termination of Worker Members. A Worker Member may be suspended, expelled, or terminated from the Cooperative for any lawful reason. This can be done either by a vote of at least 50% of Worker Members or by the Board. The Board must act on the results of the Worker Member vote. If the Board approves the suspension, expulsion, or termination, the Member will be given 15 days' notice and a chance to be heard. Reasons for suspension, expulsion, or termination may include: (1) failure to meet patronage obligations, (2) violation of the Membership Agreement or Cooperative policies, (3) death, dissolution, or ineligibility for membership, or (4) disruptive behavior, including but not limited to failing to observe the Code of Conduct or Team Handbook provisions. The Board may immediately terminate membership and voting rights and expel the Member. Any outstanding charges, dues, or obligations must be paid by the Member.
1.9.2. Termination of Researcher Members. A Researcher Member may be suspended, expelled, or terminated from the Cooperative for any lawful reason by a vote of the Board. If the Board approves the suspension, expulsion, or termination, the Member will be given 15 days' notice and a chance to be heard. Reasons for suspension, expulsion, or termination may include: (1) failure to meet patronage obligations, (2) violation of the Membership Agreement or Cooperative policies, (3) death, dissolution, or ineligibility for membership, or (4) disruptive behavior, including but not limited to failing to observe the Code of Conduct. The Board may immediately terminate membership and voting rights and expel the Researcher Member. Any outstanding charges, dues, or obligations must be paid by the Member.
1.9.3. Termination of Founder Members. A Founder Member may be suspended, expelled, or terminated from the Cooperative for any lawful reason. This can be done either by an affirmative vote of at least 50% of all Worker and Founder Members voting together, or by the Board. The Board must act on the results of the Members’ vote. If the Board approves the suspension, expulsion, or termination, the Member will be given 15 days' notice and a chance to be heard. Reasons for suspension, expulsion, or termination may include: (1) failure to meet patronage obligations, (2) violation of the Membership Agreement or Cooperative policies, (3) death, dissolution, or ineligibility for membership, or (4) disruptive behavior, including but not limited to failing to observe the Code of Conduct. The Board may immediately terminate membership and voting rights and expel the Founder Member. The Founder will be compensated for all Board-approved out-of-pocket expenses.
1.9.4. Upon termination, the Member may keep any unallocated patronage distributions or returns, or other rewards representative of the Member's rights in the Cooperative, as outlined in the terms and conditions set by the Board, or elsewhere in these Bylaws.
1.9.5. Expiration of the Founder Class. Once each Founder Member has received, through payment or allocation, a total repayment of their Founder Contribution, the Founder Class will automatically expire. If a Founder is terminated, voluntarily or involuntarily, before having received that amount, then the difference between the amount received by the Founder and the Founder Contribution must be paid to the Founder either in preferred interest or promissory note, at the discretion of the Board (without a vote of the concerned Founder). If the termination happens before May 2026, then the Founder will only be entitled to 75% of the Founder Contribution.
1.10 Rights and Interest on Withdrawal or Termination.
1.10.2 A Worker and Founder Member's withdrawal from membership does not automatically resign or terminate their employment or contract with the Cooperative. However, resigning or being terminated as an employee or contractor automatically terminates their membership, as stated in Section 1.9.
1.10.3 Termination of membership automatically removes an individual, if applicable, as a Board Director or an officer.
1.10.4 When a Member withdraws or their membership is terminated by the Board in accordance with the Membership Agreement, their rights and interests in the Cooperative will end. They will receive payment for the value of their Equity Interest in the Cooperative, as outlined in and calculated according to ARTICLE V.
1.10.5 Within 120 days of a Member's withdrawal or termination, the Cooperative may distribute the Equity Interest to them in cash, in-kind, promissory note, cryptocurrency, rewards certificates, or a combination as determined by the Board, as more specifically described in ARTICLE V, or in the Membership Agreements. The Board may delay or modify this distribution if it would harm the Cooperative's financial health. The Board may also submit a proposal to the voting Members for approval of this distribution.
1.11 Consent to Tax Treatment. By becoming a Member, each individual agrees to report any Patronage Dividends received from qualified written notices of allocation on their personal income tax returns, in accordance with Section 1385(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) in the taxable year in which the Member receives the qualified written notices of allocation. Members are responsible for their own tax liabilities and must indemnify and forever hold harmless the Cooperative for any claims arising from their patronage or membership in the Cooperative.
1.12 Record of Members. As may be required by law, a record of the Worker and Founder Members and their full names and addresses, and any other identification information may be requested to fulfill the Cooperative’s legal obligations, including tax information, when appropriate. Each Member must notify the Board immediately of any change in the Member's personal and tax information. If any distributions are authorized by the Board to be made to the Researcher Members, then the payment of those amounts may be conditioned to the Researcher Member providing their valid U.S. tax number.
ARTICLE II. MEETINGS OF MEMBERS
2.1 Meetings of Members. Cooperative meetings may take place in person, by telephone or internet conference, or by any other electronic means that allow effective communication, as specified in these Bylaws.
2.2 Regular Annual Membership Meeting. An annual regular membership meeting shall be held at a date, time, and place determined by the Board and specified in the proper notice. All lawful business may be discussed at these meetings, except for amendments to the Articles or these Bylaws, which require prior notice. The Board shall prepare and post, prior to the meeting, a list of active members eligible to vote during the meeting, also known as the "Membership List".
2.3 Special Membership Meetings. The Board or designated officers may call a Special Membership Meeting at any time. Members can also request a meeting by submitting a written petition signed by the appropriate percentage of members calculated according to Section 2.5.1 and subsections. The petition must state the specific business to be discussed and propose a date and location for the meeting, which should be within 10 to 60 days. The location must be convenient for all Members and may be held exclusively online. During the meeting, only the business stated in the notice can be discussed. The Board may have a policy for the petition format. The Membership List will be shared during the meeting.
2.4 Notice of Meeting of the Members.
2.4.1. Written notice of general meetings must be delivered to all Members in Good Standing at least thirty days in advance, specifying the place, date, time, and purpose of the meeting. Notice may be given personally, by mail, email, or text. General membership meetings must take place at least once a year.
2.4.2. Written notice of special meetings of the Members, stating the place, day, and hour of the meeting and the purpose for which the meeting is called must be delivered not less than seven business days hours before the meeting, either personally, by mail, email or text, by or at the direction of any Member or person calling the meeting to each Member of record entitled to make a decision. The Board may decide by 75% majority vote that a shorter notice period is appropriate under the circumstances.
2.4.3. By attending a meeting, a Member:
(i) waives objection to lack of notice or defective notice of the meeting unless the Member, at the beginning of the meeting, objects to the holding of the meeting or the transacting of business at the meeting.
(ii) And waives objection to consideration at the meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the Member objects to considering the matter when it is presented.
2.4.4. Written Consent in Lieu of Meeting. Decisions that normally require a meeting can be made by written consent instead. Each member must sign a document that explains the action, and the decision becomes effective once every eligible member has signed—unless the document states a different effective date.
2.5 Quorum.
2.5.1. Except for transactions of business specifically requiring a different quorum by law, quorum for any regular or special meeting of Members must be determined based on the number of Members on the Record Date, as defined under C.R.S. § 7-58-203, according to the following scale:
2.5.1.1. For up to 10,000 Members: 10% of Members shall constitute a quorum.
2.5.1.2. For 10,001 to 100,000 Members: 5% of Members shall constitute a quorum.
2.5.1.3. For 100,001 to 250,000 Members: 2% of Members shall constitute a quorum.
2.5.1.4. For over 250,000 Members: 1% of Members shall constitute a quorum.
2.5.2. If a meeting must be taken that will only concern the Worker Members or Founder Members, then quorum shall be the simple majority of both classes combined.
2.5.3. In the event a quorum is not present or is lost during the meeting, the meeting may be recessed or adjourned from time to time without further notice by a majority of those present until a quorum is obtained. Any business may be transacted at the resumption of the recessed meeting that might have been transacted at the originally called meeting.
2.6 Voting.
2.6.1. One Member, One Vote. The Members are entitled to vote on all matters brought before the Members, whether as a whole, or as a class, including Board elections. At all Membership meetings, each eligible Member, whether holding one or more memberships (as a result of being eligible and accepted in more than one membership class) shall be entitled to one (1) vote on each matter, provided such Member is in good standing, in accordance with all policies duly adopted by the Board. A member is good standing is one that regularly fulfills the obligations of their membership and those specifically applicable to their membership class.
2.6.2. Proxy and Cumulative Voting. Voting by proxy is permitted, as provided in policies of the Board. Cumulative voting is prohibited at any and all meetings of the Cooperative.
2.6.3. Voting by Electronic Means. All voting procedures may take place electronically, in the form established by a policy of the Board, or a policy of the Members, which has been confirmed by the Board. Voting shall remain open for at least the minimum period of notice (depending on the type of meeting, whether annual or special), and in any case, no less than seven (7) days.
2.6.4. To facilitate Member voting the Cooperative will also implement the following methodologies:
2.6.4.1. Rolling Quorum for Member Voting. For votes conducted by ballot without a meeting pursuant to C.R.S. § 7-58-503.5, quorum will be satisfied by cumulative Member participation over the full duration of the voting period. The voting period must remain open for no fewer than 7 days and no more than 30 days.
2.6.4.2. Member-Initiated Referendum.
2.6.4.2.1. Any action adopted by the Members may be submitted to the general Membership for referendum by valid petition. A valid petition must be signed by a number of Members equal to or greater than the number of affirmative votes required to approve the original decision. Such petitions must be submitted within the same number of days available for the notice of the meeting that approved the decision, and no more than 60 days of public notice of the decision.
2.6.4.2.2. Upon validation of the petition by the Secretary, the Board shall initiate a vote of the full Membership within thirty (30) days. The challenged decision shall be suspended until the outcome of the vote is determined. The outcome of the referendum shall be binding if at least the same number of Members participate in the vote as participated in the original action, and a majority of such votes oppose the original action.
2.6.4.3. Delegate Voting System. To facilitate broader membership participation as the Cooperative grows, the Cooperative may, by resolution of the Board or by vote of the Members, adopt a delegate system pursuant to C.R.S. § 7-58-208(4). Under such system, geographic, demographic, or interest-based districts shall be defined, and Members within each district shall elect Delegates to vote on their behalf. The number and structure of Delegate seats shall be proportionate and representative of the Membership, and all Delegate elections shall ensure open nominations, equal voting rights, and fair access for candidates.
2.6.5. All votes, whether in person or electronic, at annual or special meetings, will be subject to the quorum requirements of Section 2.5 and 2.6.4.1, unless otherwise provided for in these Bylaws.
2.7 Order of Business. All Membership meetings of the Cooperative shall be presided upon in accordance with these Bylaws. The Board shall designate the presiding officer of the meeting. The officer presiding over Membership meetings shall have the discretion to adopt and enforce formal governance procedures and rules. The following order of business shall be used as a guide insofar as is applicable and desirable:
1) Determination of quorum
2) Proof of due notice of meeting
3) Reading and disposition of minutes
4) Financial report
5) Report of the Board
6) Reports of Committees
7) Nominations for vacancies on the Board
8) Elections
9) Unfinished business
10) New business
11) Adjournment
ARTICLE III. DIRECTORS; OFFICERS
3.1 Number and Qualifications of Directors; Committees; Working Groups.
3.1.1 At all times the Board must consist an odd number of no fewer than three (3) and no more than eleven (11) natural persons, who are each at least eighteen (18) years of age, save in the case where the Cooperative has fewer than three (3) Members, in which case the number of Directors should equal the number of Members, but never be fewer than one Director. Officers may be Directors of the Cooperative as required or authorized by law.
3.1.2 The initial Board (“Initial Board”, and each member of the Initial Board an “Initial Director”) will be appointed by resolution of the Organizer until the annual meeting of the Cooperative in the year 2027 (the “Initial Term”). If additional Directors are needed during the Initial Term, they shall be appointed by a simple majority vote of the Initial Directors then serving.
3.1.3 The Initial Directors who are also Members can be re-elected to serve on future elected Boards under the rules stated here.
3.1.4 Composition of Subsequent Elected Boards. After the Initial Term concludes, the Board shall consist of Directors elected or appointed from designated classes as follows:
At least half of the Directors must be elected by and from the Researcher Member Class. This group should strive to be globally representative, with individuals from at least 3 continents; and a majority of individuals should be employed by or affiliated with non-profit institutions.
At least two (2) Director seats shall be elected by and from the Worker Member Class
One (1) Director seat shall be elected by and from the Founder Class. This seat will expire either with the expiration of the Founder Class, or in 2030, whichever happens first. Founders cannot run for a seat on the Board as a Worker Member for as long as they hold a Founder Membership.
One (1) Director seat shall be appointed by a majority vote of the Board to represent the “Subscribers”. Subscribers are organizations that have signed the Subscriber Agreement, have agreed to the Code of Conduct, and utilize the Cooperative services through purchase of access, providing critical infrastructure support and potential strategic input without holding membership rights.
One (1) Director seat will be reserved for the CEO. The CEO may hold an officer role but will not be the chair of the Board.
3.1.4.1 In the event this composition does not yield an odd number of Directors, the Board shall add an additional seat elected by and from the Worker Member Class to achieve the required odd number. However, if doing so will result in the Researcher Member Class no longer occupying half of the seats, then the additional seat must come from the Researcher Member Class.
3.1.4.2 In situations other than 3.1.4.1 above, the number of Directors on the Elected Board may be increased by a two-thirds (67%) super-majority vote of all then-current Directors on the Board or by a petition and corresponding two-thirds (67%) super-majority vote of Members present and voting on the matter, subject to the limitations set out in Section 3.1 above. The number of Directors may be reduced by a two-thirds (67%) super-majority vote of the Members, subject to the limitation set out in Section 3.1.1 above. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Director’s term of office expires.
3.2 Term. After the Initial Term, Directors will be elected for a term of two (2) years, except that the terms of Directors will be staggered so that the terms of no more than half of then existing Director seats will expire in any one year and the initial term of a Director elected to fill a vacancy shall be only for the remaining period of the unexpired term. Directors may be re-elected for no more than three consecutive terms, and may be re-elected after two years without serving.
3.3 Nomination of Directors. The Board shall request nominations for Directors from Members between 30 and 90 days before the election. Nominated individuals must be willing to fulfill Director responsibilities and attend meetings and training sessions. They must also familiarize themselves with the Cooperative's governing documents, structure, goals, policies, and procedures. The Board shall appoint one of its Directors as Chair of the Nominating Committee, who shall coordinate the Nominations process in alignment with Section 3.1.4.
3.4 Election of Directors. The Initial Board is as set out in Section 3.1.2 and will not be elected in terms of this Section 3.4. On elected Boards, each board seat (collectively the “Board Seats”) shall be filled as set out in this Section 3.4. Election of Directors will take place at the annual meeting of the Members, or at another date, if the Board determines it is in the best interests of the Cooperative to do so. The Board will determine whether elections will be held in person, or by email, electronic ballots, or by other electronic or digital means.
3.4.1 Commencing Board Duties. Newly-elected Directors shall become part of the Board at the first meeting of the Board following their election. To be elected, a nominee for a Board Seat must either (i) receive a simple majority of the Members present and entitled to vote for the Board seat in an uncontested election, or (ii) be one of the candidates receiving the highest number of votes of all Members present and entitled to vote to prevail in a contested election (an election is contested if there are more nominees than vacant seats). In the event of a tie, a run-off election shall decide the winner of such election.
3.4.2 Appointment. Appointed Directors will be selected by the elected Directors within no more than 30 days from the beginning of the elected Director’s term.
3.5 Officers. The officers of the Cooperative shall be the Chair, the Secretary, and the Treasurer, and may include such other offices, including one or more Vice Chairs, as the Board may from time to time appoint or elect. All officers must be Members. Any two or more offices may be held by the same individual other than the offices of Chair and Secretary. No instrument to be signed by more than one officer may be signed by one person in more than one capacity.
3.5.1 The officers of the Cooperative (other than the CEO) shall be recommended by the Chair and elected at the first board meeting after the annual meeting of the Members or at such other time as the Board may deem necessary. This Board meeting must take place no later than 30 days after the annual meeting of the Members where the Board election took place.
3.5.2 Officers shall be elected for a one-year term, unless otherwise specified by these bylaws, and each shall serve until a successor shall have been elected and qualified, or until earlier death, resignation, or removal.
3.5.3 Any officer may resign at any time by giving written notice of such resignation to the Chair or Secretary of the Cooperative.
3.5.4 The Board, in its sole discretion, shall have the power to remove any Officer of the Cooperative with or without cause, by a simple majority vote of the Directors not serving as the Officer subject to removal.
3.5.5 Any vacancy in any office arising at any time from any cause may be filled for the unexpired term by a majority vote of the Directors at a meeting at which a quorum is present.
3.6 Powers and Duties of Officers.
3.6.1 Chair. The Chair represents the Board to Cooperative Members and communicates the Board’s position. The Chair shall preside at all meetings of the Board and lead the Board in its governance functions. The Chair works with the Executive Committee, Committee chairs to set priorities and create agendas for the meetings of the Board and its committees. The Chair shall lead a regular review of Board effectiveness, act as supervisor and conduct an annual review of the CEO and recommend Officers for Board approval. The Chair shall perform such other duties as may be assigned by the Board.
3.6.2 Vice Chair. The Cooperative may appoint one or more Vice Chairs, as determined by the Board. The Vice Chair(s) will assist the Chair and preside at meetings in the absence of the Chair or in the event of Chair recusal. The Vice Chair(s) shall perform such other duties as may be assigned by the Board.
3.6.3 Chief Executive Officer. The Cooperative may appoint a CEO, who shall be the Cooperative’s chief executive and operating officer and, subject to the control of the Board, shall have general charge and supervision of the day-to-day business and operations of the Cooperative. The CEO shall be a voting member of the Board. The CEO shall perform such other duties as may be assigned by the Board.
3.6.4 Secretary. The Secretary shall perform all the duties incident to the office of Secretary, subject to control of the Board, including ensuring (a) the provision of notice of Board meetings, (b) the recording of minutes for Board meetings and their timely circulation to the Board, (c) maintenance of corporate records and compliance with legal and filing requirements associated with those records, and (d) elections take place in accordance with the Bylaws and policies adopted by the Board. The Secretary shall do and perform such other duties as may be assigned by the Board.
3.6.5 Treasurer. The Treasurer is charged with overseeing the management and reporting of the Cooperative’s finances to the Board and financial policies in partnership with the CEO. Whenever required by the Board, the Treasurer shall render or cause to be rendered a statement of the Cooperative’s accounts. The Treasurer shall at all reasonable times exhibit or cause to be exhibited the Cooperative’s books and accounts to any officer or Director of the Cooperative and shall perform all duties incident to the office of Treasurer, subject to the control of the Board. If there is no Vice Chair then in office, the Treasurer shall assume the powers and duties of the Vice Chair. The Treasurer shall perform such other duties as may be assigned by the Board.
3.7 Committees and Working Groups.
3.7.1 Standing Committees. The Cooperative shall have an Executive Committee, an Audit & Risk Committee, a Nominating Committee, and such other standing committees as the Board may create from time to time by resolution adopted by a majority of the entire Board. Standing Committees may have delegated authority to make decisions on behalf of the Board (such as the Executive Committee and the Audit & Risk Committee) or may be advisory in nature (such as the Nominating Committee) with final decision making retained by the Board. Standing committees may consist of Directors and non-Directors; provided, however (i) the majority of members and the chair of such committees shall be Directors, and (ii) such committees with delegated Board authority shall only have Directors as voting members (with any non-Directors shall participate as non-voting members). Each Committee shall have the authority granted by the Board in these Bylaws, in a charter adopted by the Board, and/or by resolution. However, no Committee shall have the authority to: (a) fill vacancies in the Board; (b) amend or repeal the Bylaws or adopt new Bylaws; (c) amend or repeal any resolution of the Board which by its terms shall not be so amendable or repealable; or (d) approve or adopt, or recommend to the Members, any action or matter expressly required by Delaware law to be recommended to Members for approval. Any action taken by such Committees between meetings of the Board shall be reported to the Board at its next meeting. At any time that a Standing Committee is not populated, the Board shall assume the responsibilities for such Committee.
3.7.2 Ad Hoc Committees and Working Groups. The Board shall have the authority to create ad hoc committees or working groups not having or exercising the authority of the Board to provide guidance or recommendations to the Board or the Cooperative on specific issues or endeavors from time to time as it deems appropriate. Such committees or working groups shall have only the duties specifically delegated to them by the Board.
3.7.3 Committee Procedures. General procedures of the committees shall be governed by rules fixed by the Board in committee charters. All committee members shall serve at the pleasure of the Board.
3.8 Removal of Directors and Officers.
3.8.1 At a meeting called expressly for that purpose, as well as any other proper purpose, a Director may be removed in the manner provided in this Section 3.9.
3.8.2 Removal of a Director by the Board. The Board may remove one or more Directors with or without cause. Causes for removal are determined by a simple majority of all Directors not subject to removal. Causes for removal of a Director by the Board include, but are not limited to the following:
3.8.2.1 a Director does not meet the qualifications for Board membership set forth in these Bylaws;
3.8.2.2 a Director does not comply with the Articles or these Bylaws, specifically including the General Standard of Conduct set out in Section 3.20; or
3.8.2.3 a Director fails to attend three (3) consecutive regular Board meetings without cause.
3.8.3 Removal of Initial Directors. Prior to the transition to the elected Board per Section 3.1.4 the Initial Directors may only be removed by (i) simple majority vote of the Board, under Section 3.8.2, or (ii) 75% majority vote of the Members present and voting (not included the affected Initial Director’s vote), if the Director consistently fails to uphold the values of the Cooperative.
3.8.4 Removal of a Director by Members. Members may remove one or more Directors other than the Initial Directors with cause. A petition executed any electronic means accepted by the Board, signed by at least a simple majority vote of the Members required for quorum (calculated according to section 2.5.1) shall initiate a vote to remove such Director, in accordance with this Section. No petition shall seek removal of more than one (1) Director.
3.8.5 Any Director subject to a removal petition under any provisions of this Section shall be promptly informed in writing by the Board and shall have the opportunity, in person (including by electronic means) and by counsel, to be heard and present evidence at the meeting called for the vote. The persons seeking a Director's removal shall have the same privilege.
3.9 Vacancies. Whenever a vacancy occurs in the Board, except from the expiration of a term of office, the remaining Directors shall, as soon as practicable, appoint a replacement to fill the vacancy until the expiration of the term of the vacant position.
3.10 Referendum on Policy Matter. Upon demand of at least twenty-five percent (25%) of the entire Board, made immediately at the same meeting at which the original motion was passed and so recorded, any matter of policy that has been approved or passed by the Board must be referred to the Members for ratification at the next regular or special meeting of the Members, and a special meeting may be called for that purpose.
3.11 Board Meetings. Regular meetings shall be held by the Board at least once per fiscal year or more frequently, at such place (including online) and time, and by any means, as the Board may determine.
3.12 Special Meetings. Special meetings of the Board shall be held whenever called by an officer or by a simple majority of Directors at a time and place specified in the notice (including online meetings). Any and all business may be transacted at any special meeting. A meeting of the Board may be held at any time or place with or without notice upon the consent of all the Directors.
3.13 Board Meeting Notice. The Board shall give written notice of each meeting at least 10 days in advance for regular meetings and 3 days in advance for special meetings, unless the Board sets a regular schedule. Directors can waive notice, but attending a meeting with the sole purpose of objecting to its legitimacy does not waive notice.
3.14 Electronic Meetings. Directors and committees can participate in Board meetings via conference call or online platforms, as long as all members can effectively communicate. If physical attendance is required by law, electronic participation is acceptable unless expressly prohibited.
3.15 Quorum; Voting. A quorum of two-thirds (67%) of all Directors is required for a Board meeting. If a quorum is lost, the meeting may continue. Each Director has one (1) vote, except when there is a financial self-interest that could affect their ability to act in the best interest of the Cooperative. In such cases, the Director may only vote if the remaining unbiased Directors approve and believe it is in the Cooperative's best interest. All decisions require a simple majority vote of the Board. In case of a tie, the Chair shall cast the tie-breaking vote.
3.16 Assent to Action. A Director is considered to have assented to an action of the Board unless:
3.16.1 The Director votes against it or abstains and causes the abstention to be recorded in the minutes of the meeting;
3.16.2 The Director objects at the beginning of the meeting and does not later vote for it;
3.16.3 The Director has his/her/their dissent recorded in the minutes;
3.16.4 The Director does not attend the meeting at which the vote is taken; or
3.16.5 The Director gives notice of his/her/their objection in writing to the Board chair within twenty-four (24) hours after the meeting.
3.17 Action without a Meeting. Actions of the Board may be taken without a meeting if the action is agreed to by all Directors and is evidenced by one or more written consents signed, or electronically submitted via email or e-signature by all Directors and filed with the corporate records reflecting the action taken.
3.18 Remuneration and Expense Reimbursement. The Board may determine Directors' compensation and reimburse them for necessary expenses. Director expense procedures will be set by the Board. Directors may also receive compensation as outlined in their Membership Agreement or employment contract.
3.19 Policy on Conflict of Interest. To ensure adherence by Board members and officers to the highest ethical standards in all matters affecting the Cooperative, the Board shall from time to time adopt a conflict of interest policy. This policy shall govern all interactions between the Cooperative and Board members and officers respectively, and shall be designed to identify conflicts of interest and require full disclosure by the individual involved of any conflict or potential conflict. All Board members and officers will be required to sign the policy on an annual basis.
3.20 General Standards of Conduct for Directors and Officers. Each Director shall discharge their duties as a Director, including duties as a member of a committee, and each officer with discretionary authority shall discharge officer duties under that authority in good faith, with care, and in a manner reasonably believed to be in best interests of the Cooperative, in accordance with the Code of Conduct, Conflict of Interest Policies, and Article IV of the Articles of Organization.
ARTICLE IV. DUTIES OF DIRECTORS AND MANAGEMENT
4.1 Management of Business. The Board will be responsible for ensuring the Cooperative business operations are in alignment with Cooperative Alliance Cooperative principles and the Cooperatives stated values and principles. The Board will be responsible for setting the strategic priorities for the Cooperative and oversight of the Cooperative's operations until such time as a Chief Executive Officer is hired. The Board will create rules and regulations to manage the business and guide Members, employees, contractors, Subscribers, and agents. The Board will be responsible for ensuring an adequate accounting system is adopted, and proper records are maintained.
4.2 Employment of Chief Executive Officer and Others. The Board may employ a Chief Executive Officer (“Chief Executive Officer” or “CEO”) who shall be a natural person, define the Chief Executive Officer’s duties, compensation, negotiate employment contracts, and perform an annual performance evaluation. The Board shall authorize the employment of such auditors, agents, and counsel as from time to time it deems necessary or advisable in the interest of the Cooperative and prescribe their duties. The Board shall have general oversight and supervisory responsibility for the Chief Executive Officer’s performance and shall have the ultimate authority to hire, fire, discipline or remove the Chief Executive Officer, subject to the terms of any agreements between the Chief Executive Officer and the Cooperative or the Board.
4.3 Management. Managers may be appointed by the CEO to oversee and implement everyday operations of the Cooperative and strive to treat Members fairly. The CEO may also hire external entities as managers.
4.4 Reports of Business Activity and Finances. The Board will present a detailed report of the cooperative's business at each meeting, including financial statements and information on assets, liabilities, and cash flow. This will provide Members with a clear understanding of the cooperative's financial position. The Board will ensure that Board resolutions, annual financials, and an annual report are shared publicly and archived.
4.5 Review of Financials. The Board shall have the Cooperative’s financial statements reviewed by a qualified professional at least at the end of each fiscal year and at other times as it deems necessary.
4.6 Depository. The Board has the power to choose banks to hold the Cooperative's funds and decide how to receive, deposit, and disburse them. The Board Chair, Treasurer, CEO and other persons as designated by Board resolution are authorized to open bank accounts, sign checks, and make changes to banks, signatories, and check format as needed.
4.7 Agreements with Members. The Board shall have the power to carry out all agreements of the Cooperative with its Members in every way advantageous to the Cooperative, representing the Members collectively.
4.8 Nepotism. No immediate relative of any Director shall be regularly employed by the Cooperative unless approved in writing by a vote of a simple majority of disinterested Directors. Immediate relative is defined as parent, sibling, spouse, common law domestic partner, child, or child’s spouse or children.
ARTICLE V. CAPITAL
5.1 Investments in Equity Capital. Members are not obligated to contribute more capital, but may do so in cash, property, loans, or services. This may lead to unequal capital accounts, but will not impact decision-making or patronage allocations. Profits allocated to Members will be considered capital contributions. The Cooperative may notify Members in writing and issue additional evidence of contributions as desired.
5.2 Notice of Records. The Cooperative will maintain records of each Member's contributions.
5.3 Computation of Net Margins. The Cooperative's Net Margins, calculated upon the basis of each fiscal year, shall be computed as follows:
5.3.1 Gross Revenue. This includes all income from regular operations and other sources, except loans, contributions and investments in the capital of the Cooperative.
5.3.2 Deductions from Gross Revenue. The Cooperative will deduct:
5.3.2.1 All costs and expenses which can be legally excluded or deducted from the Cooperative’s Gross Revenue for the purpose of determining the amount of any net margins of the Cooperative, which will include the repayment of loans to third parties.
5.3.2.2 Reserves. The Board may establish reserves for bad debts, working capital, debt retirement, distributions of membership, membership equity retirement, and other necessary expenses. Unless allocated among the Members entitled to participate in allocations of the Cooperative's net margins, (a) the Cooperative must include the amounts credited to the reserves when computing its taxable income, and (b) the tax liability on those reserved will be deducted from the Cooperative’s Net Margins. These reserves will not be distributed to members unless the Cooperative dissolves.
5.3.2.3 Contributions to Surplus. Any remaining net margins, after taxes, from non-member-related sources, will be retained as a surplus fund for future use. This fund will only be distributed upon dissolution of the Cooperative.
5.3.2.4 Cooperative's Net Margins. “Net Margins” is the balance which remains after the deductions indicated are excluded from the Gross Revenue. It includes the net margins of Members who are entitled to participate in the allocation of the net margins of the Cooperative's profits.
5.3.3. Net Losses. If the cooperative experiences a loss, the Board will determine how to account for it in a fair and equitable manner for all members. This may include carrying the loss forward or backward, canceling equity account balances, or using surplus funds. The Board may decide on how to allocate the loss, but this is not required to do so. Members are not personally liable for the cooperative's debts, losses, or obligations beyond their membership interest and invested capital.
5.3.3.1. In making its determination the Board may authorize actions including, but not limited to:
5.3.3.1.1. allocating the loss on an equitable basis to some or all of the Members of the Cooperative by debiting capital account balances, by charging Members directly, or by charging Members using non-qualified notices of allocation;
5.3.3.1.2. carrying the loss back or forward to offset earnings of the Cooperative or particular segments of its operations in prior or future years;
5.3.3.1.3. canceling or debiting any or all outstanding capital account balances shown on the books of the Cooperative; or
5.3.3.1.4. charging the loss against appropriate reserve or surplus accounts.
5.3.3.2. The Board may, but is not required to, submit a recommendation as to apportionment and allocation of any loss to a vote of the Members at a meeting of the Members duly called and properly held. A vote of a simple majority of the Members present or voting by mail or by email at such a meeting shall be binding upon all the Members entitled to share in allocations of the Cooperative's Net Margins. To the maximum extent provided by law, no Member shall be liable for the debts of the Cooperative in an amount exceeding his/her/their/its Membership and any equity capital invested in the Cooperative.
5.3.4. Patronage Distributions.
5.3.4.1. The Cooperative will distribute its Net Margins, which belong to and are held for its qualifying Members, at least once a year based on their patronage. The Board may also allocate them periodically.
5.3.4.2. Each Member’s respective allocated share of the Cooperative’s Net Margins may be computed as determined by the Board (i) according to the membership classes’ Profits/Loss Interest (defined below in Section 5.3.4.5) and (ii) then, within each class, upon the basis of each Member's respective Patronage Activity (as defined below in Section 5.3.4.4).
5.3.4.3. The Cooperative will inform each Member of their total allocation of Net Margins, including cash and credited amounts to their capital account, within 8.5 months after the end of each fiscal year through a qualified written notice of allocation (as defined in 26 U.S.C. 1388). Members must follow the guidelines outlined in Section 1.11 of these Bylaws and relevant tax laws, regulations, and private letter rulings when handling their allocation.
5.3.4.4. “Patronage Activity” shall mean the aggregate value of the Cooperative’s goods and services purchased from or contributed by each Member during the applicable fiscal period. The Board shall have the authority to develop, review, and revise the methodology by which to calculate the Cooperative’s aggregate Patronage Activity and each Member’s respective allocable share of Patronage Activity. Each Member’s allocable share of the Cooperative’s Net Margin and Net Losses (if Net Losses are allocated) shall be made according to each Member’s relative share of the aggregate Patronage Activity.
5.3.4.4.1. Patronage Activity for Worker and Founder Members: The Patronage Activity of the Workers and Founder Members will be the work and services provided to the Cooperative, calculated in hours and further described in each of the classes’ membership agreements, and policies of the Board.
5.3.4.4.2. Patronage Activity for Researcher Members: The Patronage Activity of the Researcher Members will be generally defined as periodically verifying their identity and keeping their profile and connections current in the Cooperative’s platforms.
5.3.4.4.3. Without limiting the Board’s and the Membership’s authority to expand or limit the definition of Patronage Activity for each membership class, the Board may adopt policies designating activities which shall be considered Patronage Activities which entitle the Members to rewards, distributions, benefits, rebates, or allocations. Substantive changes to the definition of Patronage Activities can only take effect after notices have been given to the classes with a reasonable opportunity to provide feedback/input.
5.3.4.5. “Patronage Distributions” means the percentage interest of each class of Members in the allocable Net Margins of the Cooperative. The classes of Membership provided in these Bylaws are entitled to the following percentage allocations of Net Margins as determined by the Board of Directors on a periodic basis:
5.3.4.5.1. Until each Founder Member has received a complete distribution of their Patronage Contribution, a minimum of 60% of the Net Margins must be allocated to the Founder Class. The remaining 40% will be divided equally among the Worker Class and Researcher Class.
5.3.4.5.2. The Researcher Class will receive distributions in the form of points or credits directly into their account (“Cooperative Points”), which may be exchanged for goods and services in the Cooperative platform marketplace, including annual Cooperative dues.
5.3.5. Qualified and Nonqualified Allocations. The Board may decide to make allocations in the form of qualified or nonqualified written notices of allocation.
5.3.6. Qualified Notice of Allocation, Payment and Reinvestment. The Board may issue a qualified written notice of allocation of the Cooperative's Net Margins to its Members, providing them with their allocated portion. If the Board choose to do so, then within the first 8.5 months following the Cooperative's fiscal year, the Board may authorize a cash payment of at least 20% of each Member's allocation, with the remaining balance being credited to each Member’s capital account. This credit will be deemed a reinvestment by the Member in the Cooperative's equity capital.
5.4 Lien. A member's investment in the cooperative may be subject to a lien to secure payment of any debts owed to the cooperative.
5.5 Equity Redemption.
5.5.1. Equity Interest: the Equity Interest of each membership class is defined as follows:
5.5.1.1. Worker Members. The Worker Member’s “Equity Interest” is the amount paid by the Worker Member for their membership, plus the allocated but un-distributed Patronage Distributions of those Members which have been set in the Member’s capital account, less any declared and allocated losses or other legally required adjustments.
5.5.1.2. Researcher Members. If any allocations or dividends are declared but un-distributed to Researcher Members, then the Researcher Member’s “Equity Interest” shall be the allocated but un-distributed patronage distributions or dividends of those Members which have been set in the Researcher Member’s capital account, less any declared and allocated losses or other legally required adjustments. If the Researcher Members only receive Cooperative Points, then they have no equity interest in the Cooperative.
5.5.1.3. Founder Members. The Founder Member’s “Equity Interest” is the Founder Contribution, plus the allocated but un-distributed Patronage Distributions of those Members which have been set in the Member’s capital account, less any declared and allocated losses or other legally required adjustments.
5.5.2. In the event of termination of membership, the Equity Interest of each Member will be treated as follows:
5.5.2.1. Worker Members. Upon separation from the Cooperative, Worker Members are entitled to receive their Equity Interest, in the form and time determined by the Board, through individual decision or redemption policy, as long as the factors considered as objective and not in retaliation to the Worker Member.
5.5.2.2. Researcher Members. Members are not entitled to repayment of their original purchase price for their membership in the Cooperative. However, if the Researcher Members only received allocation of Cooperative Points, then these can be used by the Member for three years after their separation from the Cooperative and cannot otherwise be cashed out upon separation from the Cooperative; after this period, the Cooperative Points will expire.
5.5.2.3. Founder Members. Founder Members are entitled to their entire Equity Interest, provided that they remain in good standing with the Cooperative for at least 12 months from the execution of their membership agreement. Otherwise, the Founder will only be entitled to the amounts indicated in Section 1.9.5.
5.5.3. The Cooperative cannot acquire, recall, distribute, or redeem any equity capital if doing so would result in the Cooperative being unable to pay its debts or having insufficient assets. However, in certain circumstances and with the approval of secured creditors, the Boad may authorize the redemption of equity capital. This may occur upon a Member's death, termination of employment, withdrawal, or termination from the Cooperative, or as outlined in an equity retirement policy, if the Cooperative adopts one. All categories of equity capital and individuals will be treated equally in these situations.
5.5.4. If the Board decides that the Cooperative has more equity capital than necessary, it may choose to retire a percentage of it. This will only happen after all payments and approvals are in place. Every holder of equity capital regardless of when they made their investment, will receive an equitable percentage of their total investment. However, no equity capital will be repaid until the Member has invested at least $20.
5.5.5. When a Member leaves the Cooperative by choice, being expelled, or passing away, the Cooperative will buy back the Member's capital account according to the Cooperative's policies. These policies may change at any time, as decided by the Board.
5.5.6. Members have no rights or interests in any reserve funds, surplus accounts, or equity capital allocated as non-qualified written notices of allocation. These may only be distributed upon the Cooperative's dissolution, according to these Bylaws and any legal requirements set by the Cooperative.
5.5.7. The Board may establish policies and practices for redeeming equity capital, taking into account the Cooperative's assets and their liquidity. This will determine the availability of funds for equity redemption.
5.6 Borrowed Capital. The Cooperative may borrow additional capital from members or other sources and issue notes or certificates of indebtedness with terms and interest rates determined by the Board. Members are not entitled to any interest on their investments in equity capital, unless otherwise agreed upon by the Board.
5.7 Commingling of Capital; No Interest. Investments in equity capital may be commingled with other assets of the Cooperative and no interest or dividends will be paid on them to members and investors, if any.
ARTICLE VI. DISSOLUTION; LIQUIDATION; COOPERATIVE SALE; WINDING DOWN
In the event of the Cooperative's dissolution, liquidation, sale, or sale of its assets, all debts and liabilities will be paid in accordance with their respective priorities. After this, any remaining funds will be distributed to Members in the form of equity capital based on the following priorities: first, to discharge any outstanding debts and liabilities; second, to repay any outstanding indebtedness owed to Members; and finally, to distribute the remaining funds among Members, without consideration of the time of their investment. This distribution will be made on a pro-rata, pari passu basis, as long as there are funds available for such purposes as follows:
6.1 First, to all Founders, to the extent of the Founders’ Equity Interest;
6.2 Second, to all Worker Members, to the extent of the Worker Members’ Equity Interest;
6.3 Then, to all Researcher Members, to the extent of any declared but un-distributed patronage dividends or distributions, if any; and
6.4 Then, the remaining proceeds will be paid as follows:
6.4.1. To past and present Researcher Members and current Worker Members proportionally in accordance with their respective share of the aggregate Patronage Activity; or
6.4.2. If at least two-thirds of the Members so choose, then fifty percent (50%) of remaining proceeds will be paid to the past and present Researcher Members and current Worker Members proportionally in accordance with their respective share of the aggregate Patronage Activity during the immediately preceding two (2) years, and the remaining as set in Section 6.4 below.
6.5 If the Members adopt the preference in Section 6.4.2 above, then 50% of the remaining residual proceeds may go to one or more non-affiliated organization(s), existing or to be created, whose values and purposes are aligned with those for which the Cooperative was created. The decision to distribute the residual proceeds to such organization(s) must be made using the quorum and voting threshold for membership voting; however, if the Members vote to enforce this Section 6.5, then the Board may, but is not required to, make the final decision selecting the beneficiary organization(s). The Board may not use the lack of appointment of a beneficiary organization is a means of preventing the enforcement of this provision by the Members.
6.6 If certain assets are not liquid, the trustees may assign them to causes that align with the Cooperative's mission. The trustees will not be liable to other members or equity holders for any claims on these assigned assets.
ARTICLE VII. UNCLAIMED MONEY
If the Cooperative is unable to pay a claim because the recipient's whereabouts or mailing address is unknown, the claim will be removed as a liability on the Cooperative's books after three years. Before doing so, the Cooperative will send a written notice to the recipient's last known address. If the funds are not claimed within three years from the notice, then the claim will be extinguished. Any recovered funds will be placed in a reserve or surplus account, after deducting taxes.
ARTICLE VIII. FISCAL YEAR
The fiscal year of this Cooperative shall commence on January 1 each year and shall end on the following December 31.
ARTICLE IX. MERGER, SALE, CONSOLIDATION, OR EQUITY CAPITAL EXCHANGE
9.1 Board and Member Approval of Merger, Sale, Dissolution, Consolidation, or Equity Capital Exchange. Except as otherwise provided in Section 9.2, if the Cooperative is a party to a plan of merger, sale of all or substantially all of the Cooperative’s assets, consolidation, dissolution, or unit or equity capital exchange, such plan shall first be approved by a seventy-five percent vote (75%) super majority of all the Directors on the Board and a 75% vote of all Members present and voting, subject to the quorum structure provided in Section 2.5.1. The provisions of ARTICLE VI shall apply to any proceeds which may result from such merger, sale of all or substantially all of the Cooperative’s assets, consolidation, dissolution, or share or equity capital exchange.
9.2 Merger of Cooperative Subsidiary. The Board may approve, in its sole discretion, by an affirmative two-thirds (67%) vote of the Members present and voting, and without further membership approval or consent, a plan of merger of a subsidiary of the Cooperative into the Cooperative if the Cooperative owns one hundred percent (100%) of the voting units, memberships, or interests in the subsidiary and the Cooperative has the right to vote on behalf of the subsidiary; except, that if, as a result of the merger, the voting shares, memberships or other interests of the members of the Cooperative would be materially altered, then the Members shall have the right to vote on the plan of merger in a manner consistent with the provisions of Section 9.1 above.
ARTICLE X. DISTRIBUTION OF BYLAWS
After adoption of these Bylaws or an amendment, a copy of these Bylaws or the amendment, as the case may be, shall be provided or made available to each Member and other person qualified to share in the Cooperative's Net Margins and to each person who later becomes a Member or person qualified to share in the Cooperative's Net Margins as shown on the books of record of the Cooperative.
ARTICLE XI. RIGHT TO INFORMATION; CONFIDENTIALITY
The Members agree to respect the confidentiality of the Cooperative and its Members. The Cooperative will maintain the information it is legally required to maintain, either directly or through third-party data processors. The Cooperative will not share this information with Members or other individuals or entities unless required by law. The Cooperative strives to balance the privacy interest of its Members with their rights to access information; the Cooperative will entertain requests for information on non-public information as appropriate and may adopt processes for approval of such requests
ARTICLE XII. NOTICES
Unless specified otherwise, all notices and other communications given or made pursuant to these Bylaws shall be in an electronic form and shall be deemed effectively delivered when sent by confirmed electronic mail if sent during normal business hours of the recipient, and if not so confirmed or when sent by electronic mail not requiring confirmation, then on the next business day.
ARTICLE XIII. DISPUTE RESOLUTION; GOVERNING LAW; VENUE; JURISDICTION; JURY TRIAL WAIVER
If not otherwise provided for in agreements between the Members and the Cooperative, and among Members, disputes between Members, or a Member and the Cooperative concerning any matter arising out of the relationship or transactions between Members or the Member and the Cooperative, which cannot be resolved through direct, amicable, frank, open and honest communication, upon request of either party, shall be set for mediation, to be conducted by a single member of the Dispute Resolution Committee, selected by the mutual agreement of the disputing parties. If the parties to a dispute are unable to agree with respect to the selection of a mediator, the Dispute Resolution Committee shall select a mediator, from among the Committee.
As a matter of last resort, if each and all prior attempts at dispute resolution, as required by these Bylaws, fail to resolve the dispute the party aggrieved by the final decision of the Board may within sixty (60) days thereafter bring appropriate action in any court of proper jurisdiction regarding such matter or transaction. These Bylaws shall be governed by and construed in accordance with the laws of the State of Colorado including all matters of construction, validity and performance. Members and the Cooperative agree that any action or proceeding commenced under or with respect to these Bylaws shall be brought only in the district courts of the City and County of Denver, State of Colorado, U.S.A. and the parties irrevocably consent to the jurisdiction of such courts and waive any right to alter or change venue, including by removal. EACH MEMBER AND THE COOPERATIVE WAIVE ITS RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY SUIT, CLAIM, CAUSE OF ACTION OR OTHER ACTION TO ENFORCE ANY TERM OR CONDITION OF THESE BYLAWS OR OTHERWISE ARISING OUT OF OR RELATED TO THESE BYLAWS.
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ANNEX
This annex is intended to clarify the provisions of Article V of these Bylaws. They do not replace those provisions, and if there’s a conflict between this Annex and the provisions of Article V, Article V will prevail.
Glossary
Capital Account: An account is set up on the co-op’s books for each member that is used to track the equity capital (also known as “ownership interest”). This is called a Capital Account.
Capital Contributions: Members invest in the co-op by making Capital Contributions to help finance the co-op’s operations, to build reserves or to support growth. Contributions can be made in cash or services that are given a dollar value to represent the contribution. Unlike patronage dividends/distributions, which are earned through use or patronage of the co-op, capital contributions are made intentionally by members, often as a condition of membership or to meet capital needs of the co-op. For example, the membership price, or the amounts paid for membership stock are considered capital contributions. Membership dues are typically not considered capital contributions.
Patronage Equity: In addition to Capital Contributions, Patronage Equity is another type of capital that represents the un-distributed Patronage Distributions or dividends allocated to members by the co-op based on the members’ Patronage Activity with the co-op and recorded in the Capital Accounts, minus any losses or adjustments. Allocations of patronage distributions that have been paid to the members in cash are not recorded as Patronage Equity on the co-ops books as the co-op is not retaining those funds but instead allocating the funds to the members.
Equity Interest: Equity Interest refers to all the capital held by members (both Capital Contributions and Patronage Equity) and recorded in a members’ Capital Accounts in various forms, such as cash, property, loans, or services. In most co-op bookkeeping, the two types of capital are recorded separately and shown on the co-ops balance sheet statements as two types of capital. This allows the co-op to track patronage-based equity versus initial or general capital contributions.
Net Margins: The balance remaining after all legally deductible costs and expenses are subtracted from the cooperative's gross revenue. Net margins are used to determine the profits available for allocation among members.
Gross Revenue: Total income from the cooperative's regular operations and other sources, excluding loans, contributions, and investments in the cooperative's capital.
Patronage Activity: The value of the cooperative’s goods and services purchased from or contributed by each member during a fiscal period. This activity determines each member's share of the net margins.
Patronage Distributions: The percentage interest of each membership class in the allocable net margins of the cooperative (not all portions of the net margins can be allocated, for example, capital gains from sale of equipment would be an example of gain is not allocable net margins). Returns are distributed based on the member's patronage activity.
Qualified Notice of Allocation: A formal notice that informs members of their share of the cooperative's net margins, which may include a cash payment and a credit to their capital account. It must have the following information:
States the amount of Patronage Distributions allocated to them.
Specifies that a portion of the dividend is being paid in cash (or check or property), and
Specifies that the remainder is being retained by the cooperative as a retained patronage allocation (e.g., equity credit in the member's name).
For the notice to be qualified (per I.R.C. 1388), it must:
Be made within 8.5 months after the close of the cooperative’s fiscal year.
Provide that at least 20% of the total patronage dividend is paid in money or property (not just credits).
Be accompanied by a statement telling the member they must include the full amount (cash + retained) as income on their tax return in the year it was issued.
10. Nonqualified Notices of Allocation: Allocations that do not qualify for certain tax benefits and are only distributed upon the cooperative's dissolution.
A nonqualified notice of allocation is a written notice to a patron that:
Allocates a patronage dividend, but
Does not meet the IRS requirements for a qualified notice (like the 20% cash distribution rule), and
Is not included in the member’s income until a later point — typically when the co-op actually pays it out in cash or redeems the retained equity.
11. Reserves: Financial resources set aside by the board for specific purposes like bad debts or working capital, which are included in the cooperative's taxable income.