FAQ

Short, direct answers with a pointer to the authority behind each.

• Are members of a cooperative personally liable for its debts?

  Not merely because they are members, but a member is liable for any unpaid subscription, unpaid membership fees, or a debt the member separately contracted with the cooperative.

• Can a cooperative sell membership interests to the public?

  A cooperative's state-law issuance powers do not replace separate state and federal securities registration or exemption analysis.

• Can a Minnesota 308B cooperative take outside investors?

  Yes, if the articles authorize nonpatron membership interests and the bylaws or a member control agreement set the conditions, subject to securities law and the minimum financial share reserved for patron members.

• Can I use the word "cooperative" in the name of my business?

  Chapter 308A restricts the word, and a 308B cooperative appears to qualify, but the restriction is not written in chapter 308B so ask counsel if the name matters.

• Can one person form a cooperative in Minnesota?

  One adult can be the organizer who files the articles, and a cooperative needs only one member, but the board must still meet the minimum size in the statute.

• Do I need a lawyer to form a cooperative in Minnesota?

  Chapter 308B does not say a lawyer must prepare or file the articles, but securities and tax questions are the places we recommend professional advice.

• Does a cooperative need an EIN?

  IRS general EIN requirements include businesses with employees and those operating as partnerships or corporations; applying directly to the IRS is free.

• How long does it take to form a cooperative in Minnesota?

  SOS lists typical online processing of 2 to 5 business days, in-person service by appointment while you wait, and nonexpedited mailed filing; drafting time is separate.

• How many directors does a Minnesota 308B cooperative need?

  At least five directors; a cooperative with 50 or fewer members may prescribe three or more in its articles or bylaws.

• How many members does a Minnesota 308B cooperative need?

  At least one: chapter 308B says a cooperative must have one or more members.

• How much does it cost to form a cooperative in Minnesota?

  The Secretary of State filing fee for chapter 308B articles of organization is $60 by mail or $80 online or in person, plus any lawyer, tax and securities costs.

• How often must a cooperative file with the Secretary of State?

  Every calendar year after the year of incorporation, by December 31, a 308B cooperative must file an annual renewal.

• Is a Minnesota 308B cooperative a nonprofit?

  Chapter 308B does not label cooperatives nonprofit or for-profit; its patron and nonpatron financial rights and patronage allocations are what set it apart, and tax status is a separate question.

• Is a Minnesota cooperative tax-exempt?

  Not automatically: forming a 308B cooperative does not make it tax-exempt, and the IRS treats exempt status for farmers' cooperatives as something you apply for.

• What happens if a cooperative misses its annual renewal?

  If the renewal is not filed by December 31, the Secretary of State must issue a certificate of involuntary dissolution, but the cooperative can reinstate retroactively by filing a registration and paying the reinstatement fee.

• What is a member control agreement?

  A member control agreement is a written agreement signed by all current members, and by those who have signed contribution agreements, that governs control and relations in the cooperative.

• What is a patron member?

  A patron member is a member holding a patron membership interest, which requires the holder to conduct patronage business for or with the cooperative.

• What is patronage in a cooperative?

  Patronage is business, transactions or services done for or with the cooperative, as the cooperative defines it; federal patronage-dividend tax rules are separate.

• What is the difference between chapter 308A and chapter 308B?

  Chapter 308A is the older Cooperative Law and chapter 308B is the Minnesota Cooperative Associations Act, which adds patron and nonpatron membership interests and its own capital and voting rules.