of such business. 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 stockholders; provided part of the stock subscribed for has been paid in cash.1 (L. 1913, ch. 145, § 9.)

1 Under the general corporation law, subscribers to stock have a right to vote, whether or not the stock is yet paid for, and this section does not limit that right. (Op. Atty. Gen. (1920) 81.)

§ 8848. Vote in writing. At any regularly called general or special meeting of the stockholders, a written vote received by mail from any absent stockholder, and signed by him, may be read in such meeting and shall be equivalent to a vote of each of the stockholders so signing: Provided, That he has been previously notified in writing of the exact motion or resolution upon which such vote is taken, and a copy of the same is forwarded with and attached to the vote so mailed by him. (L. 1913, ch. 145, § 10.)

§ 8849. Division of profits. The directors at any regular or special meeting, shall apportion the net earnings as follows:

1. By setting aside not less than 10 percent of the net profits per annum for reserve fund1 until an amount has accumulated in said reserve fund of not less than 50 percent of the paid-up capital stock. 2. By paying interest on the paid-up capital stock not exceeding 10 percent per annum.

3. Then by setting aside an amount of not less than 1 percent nor more than 5 percent of the net profits as an educational fund to be used in teaching cooperation.

4. The balance of such net earnings may be apportioned among the stockholders or stockholders and patrons as provided in the bylaws of the association in proportion to the amount of business transacted between the association and its stockholders; or stockholders and patrons.2

In productive associations such as creameries, canneries, elevators, factories, and such other associations of this class dividends shall be upon raw material furnished instead of goods purchased. But in case the association is both a productive and selling concern, the distributed dividend may be on both raw material delivered and goods purchased. (L. 1913, ch. 145, § 11; L. 1919, ch. 140; Supp. L. 1920, ch. 37; L. 1923, ch. 127; L. 1935, ch. 70.)

The history of this statute and of cooperative associations themselves, indicates that the reserve fund should be used to cover losses and maintain the value of capital stock at par. No part of the fund is to be apportioned to stockholders unless upon dissolution of the association, nor shall interest upon it be paid to them. (Op. Atty. Gen. (1926) 115.)

2 This section precludes the issuance of preferred stock; see annotation to section 8840.

§ 8850.-The cooperative or other corporations, companies, or associations heretofore or hereafter organized and doing business under prior statutes or which have attempted to organize and do business in this State, shall have the benefits of this act or laws hereafter enacted upon filing with the secretary of state a certificate in writing duly signed and sworn to by the president and secretary, that at a regular or duly called special meeting of the stockholders of such cooperative company, corporation, or association, a majority of the stockholders voting thereon have voted in favor of adopting the

provisions of the cooperative laws of this State: Provided, That at least 10 days prior to the date of such regular or duly called special stockholders' meeting a written notice containing an exact copy of the resolution to be voted on shall have been mailed to each and every stockholder at his last known post office address.

That all of the acts and proceedings had heretofore by any corporation, company, or association whether cooperative or not, under the provisions of section 12 of chapter 145 of the Session Laws of 1913, for the purpose of accepting the benefits of and being bound under the provisions of said act, are hereby legalized and confirmed notwithstanding any irregularities, clerical or otherwise, in such proceedings, and all such corporations, companies, and associations which have heretofore taken proceedings under said section 12 for the purpose therein stated are hereby declared to be duly and legally entitled to the benefits of all the provisions of said act and to be bound thereby.

1

It shall be unlawful for any person, association, company, corporation, exchange, society, union, or copartnership to adopt or use the word "cooperative" as a part of its title or business name unless it has complied with all the provisions of sections 8839 to 8853, inclusive, of the South Dakota Revised Code of 1919, and any violation of this section shall be a misdemeanor punishable by fine of not more than $1,000.2 (L. 1913, ch. 145, § 12; L. 1919, ch. 140.)

'It is not mandatory for a cooperative organized under this statute to use the word "cooperative" in its name. (Op. Atty. Gen. (1920) 87.)

2 This takes no note of sections 8837-8838 which constituted the 1911 cooperative statute. Though it does not seem to have been expressly repealed by the later act, its provisions are extremely brief and restricted in scope. They are amplified, if not superseded, by the later act.

§ 8851. May extend corporate existence. Any corporation organized for the purpose of conducting a farmer's elevator company, farmers grain and livestock company, or other company organized by farmers under the laws of this State and transacting such business at a place within the State fixed by its bylaws and articles of incorporation may, at any time within 1 year prior to the expiration of the period for which it was originally incorporated, extend its corporate existence for the period of 25 years from the expiration of the period named in its original articles of incorporation. (L. 1917, ch. 170, §1.)

§ 8852. Application for extension. Whenever the members of any such farmers' elevator company, or other farmers' company coming under the provisions of this chapter, shall at any annual meeting, by motion or resolution, which motion or resolution shall be recorded in the books of the secretary of such company, declare their desire to extend their corporate existence and authorize and direct its board of directors to make application therefor, it shall be the duty of the president and secretary thereof to file with the secretary of state a certified copy of such motion or resolution, accompanied by an application for such extension, signed and acknowledged by at least a majority of the members of the board of directors thereof. Such corporation shall also file with the secretary of state a statement, verified by the oath of the president and secretary, setting forth:

1. The number of stockholders in such corporation at the time of making such application;

2. The amount of stock authorized under its bylaws and the par value of each share of stock;

3. The general nature and character of its business;

4. The name and postoffice address of each member of the board of directors and each officer; and,

5. A copy of the financial statement or report made to the members of such corporation at the last annual meeting thereof. (L. 1917, ch. 170, 2.)

§ 8853. Ceritficate of extension.-Upon the filing of such certified copy, application, and statement, and the payment by such company of the sum of $10 to the secretary of state, that officer shall, in the event he is satisfied that such company is solvent and conducting a lawful business, issue to such company a certificate under the seal of the State, stating the period of extension that has been granted and that the company has complied with the requirements of this chapter; and thereupon the corporate existence of such company shall continue to be in all respects the same company that it was under its original charter, with the same privileges, powers and duties, and subject to the same liabilities and restrictions, and to the laws of this State. (L. 1917, ch. 170, § 3.)

§ 8853-A.-Cooperative corporations and associations formed under the provisions of chapters 3 and 42 of part 17 of title 6 of the Revised Code of 1919, and all provisions amendatory thereto, may adopt bylaws not inconsistent with the laws of the United States or of the State. All bylaws adopted must be certified by a majority of the directors, and the secretary of the corporation or association, and legibly copied in a book kept in the office of the corporation or association, to be known as the "Book of Bylaws", and no bylaws shall take effect until so copied, and this book shall be open to the inspection of the public during the office hours of each business day. Bylaws may be adopted, repealed, or amended by a two-thirds affirmative vote of the stockholders or members present and voting at the annual meeting, provided 10 days written notice, setting forth the proposed bylaw or bylaws to be voted upon, shall have been given to the stockholders or members thereof, by mailing a copy of such notice to each stockholder or member at his last known address. If any bylaws be repealed, the fact of the repeal, with the date of the meeting at which the repeal was enacted, shall be stated in the book of bylaws and, until so stated, the repeal shall not take effect. In addition to the bylaws that may be adopted by a corporation under the provisions of article 3, chapter 1,3 part 17, title 6 of the Revised Code, a cooperative corporation or association may adopt a bylaw, as herein provided, defining the amount of stock or the number of stockholders or members necessary to constitute a quorum, notwithstanding the provisions of section 8792 of the Revised Code. (L. 1929, ch. 89.)

'The omitted sections (8837-8838). See the second annotation to section 8850.

The present statute herein.

2

Part of the general corporation law.

'Part of the general corporation law.

138958-37--13

VERMONT

Public Laws 1933, Chapter 239

§ 5791. Provisions as to cooperative associations.-A corporation formed under this chapter shall not have the word "cooperative" or any abbreviation thereof as part of its name, unless the articles of association contain all of the following provisions:

I. Each shareholder shall have one vote and only one in all matters pertaining to the management of the corporation; 1

1

II. The interest or dividend on the paid-up capital stock of the corporation shall not exceed 6 percent per annum;

III. There shall be set aside annually not less than 10 percent of the net profits of the corporation for a reserve fund until there is accumulated a fund of not less than 50 percent of the paid-up capital stock;

IV. The remainder of the earnings, or any part thereof, shall be distributed by a uniform dividend upon the amount of purchases or sales through the corporation by the shareholders, or the amount of raw material furnished to, or business done through, the corporation by the shareholders; such profits or earnings to be distributed as often as once in 12 months;

V. Not more than 10 percent of the capital stock of such corporation shall be owned by any one member;

VI. Certificates of stock in cooperative corporations shall contain a statement on the face thereof that the holder is entitled to only one vote thereon. (1929, No. 81; G. L. § 4897.)

1

The business corporation law (secs. 5811, 5812) provides that the articles or bylaws may "define the right of shareholders to vote by proxy"; and in the absence of such provisions, proxy voting shall be permitted.

182

VIRGINIA

Code 1936, Chapter 148

CREATION OF CORPORATIONS OTHER THAN PUBLIC SERVICE

§ 3855. Cooperative associations.-Any number of persons not less than five may, under the provisions of this chapter, associate themselves together as a cooperative association, society, company, or exchange, for the purpose of conducting any agricultural, dairy, mercantile, merchandise, brokerage, manufacturing, or mechanical business on the cooperative plan, and in addition to the information required to be set forth in its certificate of incorporation under section 3850, the word "cooperative" shall be a part of the name.1 The provisions of this chapter shall apply to cooperative associations created under this section, except so far as the same are in conflict with the following special provisions applicable only to such cooperative associations:

(a) No holder of common stock in any such association shall own shares of a greater par value than $1,000, except as hereinafter provided or be entitled to more than one vote.

(b) At any regular meeting or any regularly called special meeting at which at least a majority of all its stockholders shall be present or represented, such association may by a majority vote of the stockholders present or represented, subscribe for shares and invest its capital or reserve fund in the capital stock of any corporation or cooperative association, provided that it shall not so invest a total amount in excess of 25 per centum of the amount of its capital stock. (c) Whenever such association shall purchase the business of another association, person, or persons, 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. In case the cash value of such purchased business exceeds $1,000 the directors of the association are authorized to hold the shares in excess of $1,000 in trust for the vendor and dispose of the same to such persons and within such time, as may be mutually satisfactory to the parties in interest, and to pay the proceeds thereof as currently received to the former owners of said business. 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 stockholders: Provided, part of the stock subscribed for has been paid in cash.

(d) The net earnings and profits shall be apportioned, distributed, and applied as the association may at any general or special meeting direct. The association may in its bylaws prescribe the terms and