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statement of the purposes of the association and shall designate the city, town, or village where its principal place of business shall be located. The articles shall also state the amount of authorized capital stock, the number of shares subscribed, and the par value of each. No shareholder in any corporation organized under this subchapter shall be personally liable for any debt of the corporation. (L. 1915, ch. 144, § 2.)

'When the charter of a cooperative union states that one of its objects is "to assist our members in buying and selling", the cooperative is authorized to establish and operate a store, customers of which, however, must be strictly limited to members of the cooperative unless the charter limitation is amended. (Op. Atty. Gen. (1923-24) 70.)

§ 5245. Certificate of incorporation. The original articles of incorporation of corporations organized under this subchapter, or a true copy thereof, verified as such by the affidavits of two of the signers thereof, shall be filed with the secretary of state. A like verified copy of such articles and certificate of the secretary of state, showing the date when such articles were filed with and accepted by the secretary of state, within 30 days of such filing and acceptance, shall be filed with and recorded by the clerk of the superior court of the county in which the principal place of business of the corporation is to be located, and no corporation shall, until such articles be left for record, have legal existence. The clerk of court shall forthwith transmit to the secretary of state a certificate stating the time when such copy was recorded. Upon a receipt of such certificate, the secretary of state shall issue a certificate of incorporation. (L. 1915, ch. 144, § 3.) § 5246. Fees for incorporation.-For filing the articles of incorporation of corporations organized under this subchapter, there shall be paid the secretary of state $10 and his fees allowed by law, and for the filing of an amendment to such articles, $5 and his fees allowed by law: Provided, That when the authorized capital stock of such corporations shall be less than $1,000, such fee for filing either the articles of incorporation or amendments thereto shall be $2. For recording copy of such articles, the clerk of court shall receive a fee1 of 50 cents, to be paid by the persons presenting such papers for record. (L. 1915, ch. 144, § 4.)

1 The enactment of a new fee bill with the provision that the clerk of the court could charge $5 for "recording certificate of incorporation of corporations" (ch. 45, P. L. 1929) does not apply to mutual (cooperative) associations, but only to general corporations. (Op. Atty. Gen. (1928-30) 233.)

The qualification, "plus the fees allowed by law" is to be understood. (Op. Atty. Gen. (1928-30) 107.)

§ 5247. Bylaws adopted.-At the time of making the articles of incorporation the incorporators shall make bylaws which shall provide: 1. The name of the corporation.

2. The purposes for which it is formed.

3. Qualifications for membership.

4. The date of the annual meeting; the manner in which members shall be notified of meetings; the number of members which shall constitute a quorum at the meetings, and regulations as to voting.

5. The number of members of the board of directors; powers and duties; the compensation and duties of officers elected by the board of directors.

6. In the case of selling agencies or productive societies, regulations for grading.

7. In the case of selling agencies or productive societies, regulations governing the sale of products by the members through the organization.

8. The par value of the shares of capital stock.

9. The conditions upon which shares may be issued, paid in, transferred, and withdrawn.1

10. The manner in which the reserve fund shall be accumulated. 11. The manner in which the dividends shall be determined and paid to members.

12. Associations, societies, companies or exchanges, organized hereunder to engage in the telephone or electric light business upon a mutual basis, shall adopt a bylaw limiting the patrons and subscribers to members of the association. (L. 1915, ch. 144, § 5; L. 1925, ch. 179, § 4.)

1 One who gave his note to a corporation to cover the price of stock subscribed for was held liable for payment of such note even though it stated that it was to be null and void if the corporation did not do business upon a cooperative basis, and the corporation did fail to do so. The condition in the note was invalid because not known or agreed to by the other stockholders. To uphold it and permit the subscriber to thus avoid payment, would wrongfully enhance the burden of those stockholders who had paid in full. (Warren County Coop. Assn. Co. v. Boyd, 171 N. C. 184, 88 S. E. 153 (1916).)

Note: The company involved in this case was organized in 1914 under the general corporation law and prior to the enactment of the cooperative statute. The court stated that, since the provisions of the cooperative statute were not applicable to the case, it had not considered them, though it saw no reason why the later statute would in any way change its decision.

§ 5248. General corporation law applied; dealing in products of nonmembers. All mutual associations shall be maintained in accordance with the general corporation law, except as otherwise provided for in this subchapter. And no corporation or association hereinafter organized under this subchapter for doing business in this State shall be permitted to deal in the products of nonmembers to an amount greater in value than such as are handled by it for members. (L. 1915, ch. 144, § 17; L. 1925, ch. 179, § 1; L. 1931, ch. 447, § 2.)

§ 5249. Other corporations admitted.-All mutual corporations, companies, or associations heretofore organized and doing business under prior statutes, or which attempted to so organize and do business, shall have the benefit of all of the provisions of this subchapter, and be bound thereby on filing with the secretary of state a written declaration, signed and sworn to by the president and secretary, to the effect that the mutual company or association has by a majority vote of its shareholders decided to accept the benefits of and to be bound by the provisions of this subchapter. No association organized under this subchapter shall be required to do or perform anything not specifically required herein, in order to become a corporation. (L. 1915, ch. 144, § 16; L. 1925, ch. 179, § 1.)

§ 5250. Certificate for stock fully paid.-Certificates of stock shall not be issued to any subscriber until fully paid, but the bylaws of the association may allow subscribers to vote as shareholders; Provided, Part of the stock subscribed for has been paid in cash. (L. 1915, ch. 144, § 11.)

§ 5251. Ownership of shares limited. No shareholder in any such association shall own shares of a greater aggregate par value than 20 percent of the paid-in capital stock, except as hereinafter provided, or be entitled to more than one vote. A mutual association shall reserve the right of purchasing the stock of any member whose stock is for sale, and may restrict the transfer of stock to such persons as are made eligible to membership in the bylaws. (L. 1915, ch. 144, § 9; L. 1925, ch. 179, § 1.)

§ 5252. Shares issued on purchase of business.-Whenever an association, created under this act, shall purchase the business of another association or person, it may pay for the same in whole or in part by issuing to the selling association or person shares of its capital stock to an amount which at par value would equal the fair market value of the business so purchased, and in such case the transfer to the association of such business at such valuation shall be equivalent to payment in cash for the shares of stock so issued. (L. 1915, ch. 144, § 10.)

§ 5253. Absent members voting. At any regularly called general or special meeting of the shareholders a written vote received by mail from any absent shareholders, and signed by him, may be read in such meeting, and shall be equivalent to a vote of such of the shareholders so signing: Provided, He has been previously notified in writing of the exact motion or resolution upon which such vote is taken, and a copy of same is forwarded with and attached to the vote so mailed by him. In case of sickness or other unavoidable absence of a member, he shall be allowed to vote by proxy in writing; but no member shall vote more than one such proxy. (L. 1915, ch. 144, § 12.)

§ 5254. Directors and other officers. Every such association shall be managed by a board of not less than five directors. The directors shall be elected by and from the stockholders of the association at such time and for such term of office as the bylaws may prescribe, and shall hold office for time for which elected and until their successors are elected and shall enter upon the discharge of such duties as are prescribed in the bylaws; but a majority of the stockholders shall have the power at any regular or special stockholders' meeting, legally called, to remove any director or officer for cause, and fill the vacancy, and thereupon the director or officer so removed shall cease to be a director or officer of the association. The officers of every such association shall be a president, one or more vice presidents, a secretary and treasurer, who shall be elected annually by the directors, and each of the officers must be a director of the association. The office of secretary and treasurer may be combined, and when so combined the person filling the office shall be secretary-treasurer. (L. 1915, ch. 144, § 6.)

§ 5255. Nature of business authorized.-An association created under this subchapter shall have power to conduct any agricultural, horticultural, forestry, dairy, mercantile, mining, manufacturing, telephone, electric light, power, storage, refrigeration, flume, irrigation, water, sewerage, or mechanical business, on the mutual plan. 1915, ch. 144, § 8; L. 1925, ch. 179, §§ 1, 3.)

(L.

'In the North Carolina Code of 1935, annotated, the term "mechanical" appears here instead of "mercantile". This is obviously a misprint, as the original act (Pub. Laws, 1915, ch. 144, sec. S) carries the word "mercantile," as does the first section (5242) of this statute in listing the same purposes as this section.

§ 5256. Amendment of articles.-The association may amend its articles of incorporation by a majority vote of its shareholders at any regular shareholders meeting, or any special shareholders' meeting called for that purpose, on 10 days notice to the shareholders. The power to amend shall include the power to increase or diminish the amount of capital stock and the number of shares: Provided, The amount of the capital stock shall not be diminished below the amount of the paid-up capital at the time the amendment is adopted. Within 30 days after the adoption of an amendment to its articles of incorporation, an association shall cause a copy of such amendment adopted to be recorded in the office of the secretary of state and of the clerk of court of the county where the principal place of business is located. (L. 1915, ch. 144, § 7.)

§ 5257. Apportionment of earnings.-The directors, subject to revision by the association at any general or special meeting, shall apportion the earnings by first paying dividends on the paid-up capital stock, not exceeding 6 percent per annum, then setting aside not less than 10 percent of the net profits for a reserve fund, until an amount has been accumulated in the reserve fund equal to 30 percent of the paid-up capital stock, and not less than 2 percent thereof for an educational fund to be used in teaching cooperation, and the remainder of the net profits by uniform dividends upon the amount of purchases of shareholders and upon the wages and salaries of employees, and one-half of such uniform dividends to nonshareholders on the amount of their purchase, which may be credited to the account of such nonshareholders on account of capital stock of the association; but in selling agencies such as fruit, truck, peanuts, and cotton growers' associations, and in productive associations such as creameries, canneries, warehouses, factories and the like, dividends shall be prorated on raw materials delivered instead of on goods purchased. In case the association is both a selling and productive concern, or a service and distributing association the dividends may be on both raw material delivered and on goods or service purchased by patrons. (L. 1915, ch. 144, § 13; L. 1925, ch. 177, § 5.)

§ 5258. Time of distribution. The profits or net earnings of such associations shall be distributed to those entitled thereto, at such times as the bylaws shall prescribe, which shall be as often as once in 12 months. (L. 1915, ch. 144, § 14.)

§ 5259. Reports to secretary of state. Every association organized under the provisions of this subchapter shall annually, on or before the first day of March of each year, make a report to the secretary of state; such report shall contain the name of the company, its principal place of business in this State, and generally a statement as to its business, showing total amount of business transacted, amount of capital stock subscribed for and paid in, number of shareholders, total expenses of operation, amount of indebtedness or liabilities, and its profits and losses. A copy of such report shall also be filed with the division of markets and rural organization conducted by the "Joint Committee for Agriculture Work" of the State board of agriculture and the North Carolina State College of Agriculture and Engineering as provided in the chapter on agricul ture. (L. 1915, ch. 144, § 15.)

NORTH DAKOTA

Compiled Laws (Supplement, 1913-25) as Amended Laws 1929, Page 119, Laws 1931, Pages 191, 192

CHAPTER 13-COOPERATIVE ASSOCIATIONS

§ 4609a1. Definitions. For the purpose of this act, the words, "company," "corporation", or "association" shall be construed to mean the same, and a cooperative company, corporation or association is defined to mean a company, corporation or association which authorized the distribution of its earnings in part or wholly, on the basis of, or in proportion to the amount of property bought from or sold to members, or to members and to other customers or of labor performed, or other services rendered to the association. (L. 1915, ch. 92, § 1; L. 1917, ch. 97, § 1; L. 1921, ch. 43, § 1.)

§ 4609a2. How formed; purposes. A cooperative association may be formed for the purpose of conducting any one or more of the following lines of business: Agricultural, grain elevators, dairy, mercantile, mining, manufacturing, mechanical, telephone; upon complying with the provisions of this act, and the provisions of chapter 12 of the Civil Code, Compiled Laws 1913 and acts amendatory thereof and supplementary thereto; except as herein otherwise provided, and except as to provisions thereof inconsistent with the provisions of this act. (L. 1921, ch. 43, § 2.)

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§ 4609a3. Articles of incorporation.-Any number of persons, not less than 15, may form a cooperative association. They shall make and subscribe written articles of incorporation in duplicate, and acknowledge the same before any officer authorized to take the acknowledgment of deeds.

One copy shall be retained for the records of the association, the other copy shall be filed with and recorded by the secretary of state. The secretary of state shall issue a certificate of incorporation, upon receipt of the articles of incorporation and the payment of the fees provided. (L. 1915, ch. 92, § 2; L. 1921, ch. 43, § 3.)

1A corporation which incorporated under an earlier cooperative statute but through technical errors failed to comply with all the organizational requirements of that statute, was held to be a cooperative where its bylaws disclosed its business to be of a cooperative nature and it had filed with the secretary of state a declaration adopting a later cooperative statute. The secretary of state, therefore, in filing an amendment increasing its capital stock was allowed to charge only the fees provided for by the cooperative statute and not the fees provided for by the general corporation law. (Equity Coop. Packing Co. v. Hall, 42 N. Dak. 523, 173 N. W. 796 (1919).)

§ 4609a4. Fees. For filing and recording articles of incorporation and issuing certificate of filing and acceptance, there shall be paid to the secretary of state $10; for issuing certificate of incorporation

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