Title 11C, Title 11C: Mutual Benefit Enterprises

§ 516. Action without a meeting (a) Unless the organic rules require that action be taken only at a members’ meeting, any action that may be taken by the members may be taken without a meeting if each member entitled to vote on the action consents in a record to the action. (b) C…

§ 517. Districts and delegates; classes of members (a) The organic rules may provide for the formation of geographic districts of patron members and: (1) for the conduct of patron member meetings by district and the election of directors at the meetings; or (2) that districts may…

§ 601. Member’s interest A member’s interest: (1) is personal property; (2) consists of: (A) governance rights; (B) financial rights; and (C) the right or obligation, if any, to do business with the mutual benefit enterprise; and (3) may be in certificated or uncertificated form.…

§ 602. Patron and investor member’s interests (a) Unless the organic rules establish investor members’ interests, a member’s interest is a patron member’s interest. (b) Unless the organic rules otherwise provide, if a mutual benefit enterprise has investor members, while a person…

§ 603. Transferability of member’s interest (a) The provisions relating to the transferability of a member’s interest are subject to Title 9A. (b) Unless the organic rules otherwise provide, a member’s interest other than financial rights is not transferable. (c) Unless a transfe…

§ 604. Security interest and set-off (a) A member or transferee may create an enforceable security interest in its financial rights in a mutual benefit enterprise. (b) Unless the organic rules otherwise provide, a member may not create an enforceable security interest in the memb…

§ 605. Charging orders for judgment creditor of member or transferee (a) On application by a judgment creditor of a member or transferee, a court may enter a charging order against the financial rights of the judgment debtor for the unsatisfied amount of the judgment. A charging …

§ 701. Authority In this article, “marketing contract” means a contract between a mutual benefit enterprise and another person who need not be a patron member: (1) requiring the other person to sell or to deliver for sale or marketing on the person’s behalf a specified part of th…

§ 702. Marketing contracts (a) If a marketing contract provides for the sale of products, commodities, or goods to a mutual benefit enterprise, the sale transfers title to the enterprise upon delivery or at any other specific time expressly provided by the contract. (b) A marketi…

§ 703. Duration of marketing contract The initial duration of a marketing contract may not exceed 10 years, but the contract may be self-renewing for additional periods not exceeding five years each. Unless the contract provides for another manner or time for termination, either …

§ 704. Remedies for breach of contract (a) Damages to be paid to a mutual benefit enterprise for breach or anticipatory repudiation of a marketing contract may be liquidated, but only at an amount or under a formula that is reasonable in light of the actual or anticipated harm ca…

§ 801. Board of directors (a) A mutual benefit enterprise shall have a board of directors of at least three individuals unless the enterprise has fewer than three members. If the enterprise has fewer than three members, the number of directors may not be fewer than the number of …

§ 802. No liability as director for mutual benefit enterprise’s obligations A debt, obligation, or other liability of a mutual benefit enterprise is solely that of the enterprise and is not a debt, obligation, or liability of a director solely by reason of being a director. An in…

§ 803. Qualifications of directors (a) Unless the organic rules otherwise provide, and subject to subsection (c) of this section, each director of a mutual benefit enterprise shall be an individual who is a member of the enterprise or an individual who is designated by a member t…

§ 804. Election of directors and composition of board (a) Unless the organic rules require a greater number: (1) the number of directors that shall be patron members may not be fewer than: (A) one if there are two or three directors; (B) two if there are four or five directors; (…

§ 805. Term of director (a) Unless the organic rules otherwise provide and subject to subsections (c) and (d) of this section and subsection 303(c) of this title, the term of a director expires at the annual members’ meeting following the director’s election or appointment. The t…

§ 806. Resignation of director A director may resign at any time by giving notice in a record to the mutual benefit enterprise. Unless the notice states a later effective date, a resignation is effective when the notice is received by the enterprise. (Added 2011, No. 84 (Adj. Ses…

§ 807. Removal of director Unless the organic rules otherwise provide, the following rules apply: (1) Members may remove a director with or without cause. (2) A member or members holding at least 10 percent of the total voting power entitled to be voted in the election of a direc…

§ 808. Suspension of director by board (a) A board of directors may suspend a director if, considering the director’s course of conduct and the inadequacy of other available remedies, immediate suspension is necessary for the best interests of the enterprise and if the director i…

§ 809. Vacancy on board (a) Unless the organic rules otherwise provide, a vacancy on the board of directors shall be filled: (1) notwithstanding subdivision 804(a)(2) and subsection 804(b) of this title, within a reasonable time by majority vote of the remaining directors until t…

§ 810. Remuneration of directors Unless the organic rules otherwise provide, the board of directors may set the remuneration of directors and of nondirector committee members appointed under subsection 817(a) of this title. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 20…

§ 811. Meetings (a) A board of directors shall meet at least annually and may hold meetings inside or outside this State. (b) Unless the organic rules otherwise provide, a board of directors may permit directors to attend or conduct board meetings through the use of any means of …

§ 812. Action without meeting (a) Unless prohibited by the organic rules, any action that may be taken by a board of directors may be taken without a meeting if each director consents in a record to the action. (b) Consent under subsection (a) of this section may be withdrawn by …

§ 813. Meetings and notice (a) Unless the organic rules otherwise provide, a board of directors may establish a time, date, and place for regular board meetings, and notice of the time, date, place, or purpose of those meetings is not required. (b) Unless the organic rules otherw…

§ 814. Waiver of notice of meeting (a) Unless the organic rules otherwise provide, a director may waive any required notice of a meeting of the board of directors in a record before, during, or after the meeting. (b) Unless the organic rules otherwise provide, a director’s partic…

§ 815. Quorum (a) Unless the articles of organization provide for a greater number, a majority of the total number of directors specified by the organic rules constitutes a quorum for a meeting of the directors. (b) If a quorum of the board of directors is present at the beginnin…

§ 816. Voting (a) Each director shall have one vote for purposes of decisions made by the board of directors. (b) Unless the organic rules otherwise provide, the affirmative vote of a majority of directors present at a meeting is required for action by the board of directors. (Ad…

§ 817. Committees (a) Unless the organic rules otherwise provide, a board of directors may create one or more committees and appoint one or more individuals to serve on a committee. (b) Unless the organic rules otherwise provide, an individual appointed to serve on a committee of…

§ 818. Standards of conduct and liability (a) A director shall discharge his or her duties as a director, including the director’s duties as a member of a committee: (1) in good faith; (2) with the care that an ordinarily prudent person in a like position would exercise under sim…

§ 819. Definitions For purposes of this section and sections 819a through 819c of this title: (1) “Control,” including the term “controlled by,” means: (A) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other go…

§ 819a. Judicial action (a) A transaction effected or proposed to be effected by the enterprise, or by an entity controlled by the enterprise, may not be the subject of equitable relief or give rise to an award of damages or other sanctions against a director of the enterprise in…

§ 819b. Directors’ action (a) Directors’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 819a(b)(1) of this title if the transaction has been authorized by the affirmative vote of a majority but no fewer than two of the qua…

§ 819c. Members’ action (a) Members’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 819a(b)(2) of this title if a majority of the votes cast by the holders of all of the voting power of the members is in favor of the trans…

§ 820. Other considerations of directors In determining what the director reasonably believes to be in the best interests of the enterprise, a director may consider: (1) the interests of the enterprise’s employees, suppliers, creditors, and customers; (2) the economy of the State…

§ 821. Right of director or committee member to information A director or a member of a committee appointed under section 817 of this title may obtain, inspect, and copy all information regarding the state of activities and financial condition of the mutual benefit enterprise and…

§ 822. Appointment and authority of officers (a) A mutual benefit enterprise has the officers: (1) provided in the organic rules; or (2) established by the board of directors in a manner not inconsistent with the organic rules. (b) The organic rules may designate or, if the rules…

§ 823. Resignation and removal of officers (a) The board of directors may remove an officer at any time with or without cause. (b) An officer of a mutual benefit enterprise may resign at any time by giving notice in a record to the enterprise. Unless the notice specifies a later …

§ 901. Article definitions In this article: (1) “Enterprise” includes any enterprise or foreign predecessor entity of an enterprise in a merger or other transaction in which the predecessor’s existence ceased upon the consummation of the transaction. (2) “Director” means an indiv…

§ 902. Authority to indemnify (a) Except as provided in subsection (d) of this section, an enterprise may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if: (1) the director conducted h…

§ 903. Mandatory indemnification Unless limited by its articles of organization, an enterprise shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a dir…

§ 904. Advance for expenses (a) An enterprise may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) the director furnishes the enterprise a written affirmation of his or her…

§ 905. Court-ordered indemnification A director of the enterprise who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice the…

§ 906. Determination and authorization of indemnification (a) Except as provided in section 904 of this title, an enterprise may not indemnify a director under section 902 of this title prior to the final resolution of a proceeding, whether by judgment, order, settlement, convict…

§ 907. Indemnification of officers, employees, and agents Unless an enterprise’s articles of organization limit indemnification of an officer, employee, or agent of the enterprise: (1) an officer of the enterprise who is not a director is entitled to mandatory indemnification und…

§ 908. Insurance An enterprise may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the enterprise or who, while a director, officer, employee, or agent of the enterprise, is or was serving at the request of the e…

§ 909. Application of article (a) A provision treating an enterprise’s indemnification of or advance for expenses to directors that is contained in its articles of organization, bylaws, a resolution of its members or board of directors, or in a contract or otherwise is valid only…