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§ 308B.601 Membership Interests

Statute text

Extracted from the Revisor of Statutes; first captured here October 15, 2026. Formatting and whitespace are normalized. Extraction can contain errors; the linked official text controls.

Subdivision 1. Amounts and divisions of membership interests.

The authorized amount and divisions of patron membership interests and, if authorized, nonpatron membership interests may be increased, decreased, established, or altered, in accordance with the restrictions in this chapter by amending the articles or bylaws at a regular members' meeting or at a special members' meeting called for the purpose of the amendment.

Subdivision 2. Issuance of membership interests.

Authorized membership interests may be issued on terms and conditions prescribed in the articles, bylaws, or if authorized in the articles or bylaws as determined by the board. The cooperative shall disclose to any person or entity acquiring membership interests to be issued by the cooperative, the organization, capital structure, and known business prospects and risks of the cooperative, the nature of the governance and financial rights of the membership interest being acquired and of other classes of membership and membership interests. The cooperative shall notify all members of the membership interests being issued by the cooperative. A membership interest may not be issued until the subscription price of the membership interest has been paid for in money or property with the value of the property to be contributed approved by the board.

Subdivision 3. Patron membership interests.

The patron membership interests collectively shall have not less than 60 percent of the cooperative's financial rights to profit allocations and distributions. If authorized in the original articles as filed, or articles or bylaws adopted by an affirmative vote of the patron members, or the articles or bylaws are amended by the affirmative vote of patron members, then the cooperative's financial rights to profit allocations and distributions to patron members collectively may be not less than 15 percent.

Subdivision 4. Transferring or selling membership interests.

After issuance by the cooperative, membership interests in a cooperative may only be sold or transferred with the approval of the board. The board may adopt resolutions prescribing procedures to prospectively approve transfers.

Subdivision 5. Nonpatron membership interests.

If authorized by the articles, the cooperative may solicit and issue nonpatron membership interests on terms and conditions determined by the board and disclosed in the articles, bylaws, or by separate disclosure to the members. Each member acquiring nonpatron membership interests shall sign a member control agreement or agree to the conditions of the bylaws, either of which shall describe the rights and obligations of the member as it relates to the nonpatron membership interests, the financial and governance rights, the transferability of the nonpatron membership interests, the division and allocations of profits and losses among the membership interests and membership classes, and financial rights upon liquidation. If the articles or bylaws do not otherwise provide for the allocation of the profits and losses between patron membership interests and nonpatron membership interests, then the allocation of profits and losses among nonpatron membership interests individually and patron membership interests collectively shall be allocated on the basis of the value of contributions to capital made according to the patron membership interests collectively and the nonpatron membership interests individually to the extent the contributions have been accepted by the cooperative. Distributions of cash or other assets of the cooperative shall be allocated among the membership interests as provided in the articles and bylaws, subject to the provisions of this chapter. If not otherwise provided in the articles or bylaws, distributions shall be made on the basis of value of the capital contributions of the patron membership interests collectively and the nonpatron membership interests to the extent the contributions have been accepted by the cooperative.

Subdivision 6. Cooperative first right to purchase membership interests.

The articles or bylaws may provide that the cooperative or the patron members, individually or collectively, have the first privilege of purchasing the membership interests of any class of membership interests offered for sale. The first privilege to purchase membership interests may be satisfied by notice to other members that the membership interests are for sale and a procedure by which members may proceed to attempt to purchase and acquire the membership interests. A membership interest acquired by the cooperative may be held to be reissued or may be retired and canceled.

Subdivision 7. Payment for nonpatron membership interests.

Subject to the provisions in the articles and bylaws, a member may dissent from and obtain payment for the fair value of the member's nonpatron membership interests in the cooperative if the articles or bylaws are amended in a manner that materially and adversely affects the rights and preferences of the nonpatron membership interests of the dissenting member. The dissenting member shall file a notice of intent to demand fair value of the membership interest with the records officer of the cooperative within 30 days after the amendment of the bylaws and notice of the amendment to members, otherwise the right of the dissenting member to demand payment of fair value for the membership interest is waived. If a proposed amendment of the articles or bylaws must be approved by the members, a member who is entitled to dissent and who wishes to exercise dissenter's rights shall file a notice to demand fair value of the membership interest with the records officer of the cooperative before the vote on the proposed action and shall not vote in favor of the proposed action, otherwise the right to demand fair value for the membership interest by the dissenting member is waived. After receipt of the dissenting member's demand notice and approval of the amendment, the cooperative has 60 days to rescind the amendment or otherwise the cooperative shall remit the fair value for the member's interest to the dissenting member by 180 days after receipt of the notice. Upon receipt of the fair value for the membership interest, the member has no further member rights in the cooperative.

History: 2003 c 105 art 1 s 54

Notes & interpretation Not part of the law

Verified against sources: October 15, 2026Last edited: October 16, 2026

In plain language#

This is the foundation of a 308B cooperative's ownership structure. A membership interest bundles financial rights, the right to assign them, governance rights and the like (see the definition in § 308B.005). This section says how the authorized amounts are set, how interests are issued, and how much of the economics must stay with patrons.

The headline rule: patron membership interests collectively must hold at least 60 percent of the cooperative's financial rights to profit allocations and distributions. That floor may be lowered to 15 percent if the original articles as filed authorize it, or if articles or bylaws are adopted or amended by the affirmative vote of the patron members. These are distinct authorization routes; the original-articles route does not itself require a later patron-member vote.

This is a rule about financial rights attached to membership interests. § 308B.721 separately sets 50 percent floors for annual profit allocations and distributions, each reducible to 15 percent under its own authorization language. Do not substitute either section's number or conditions for the other.

Subdivision by subdivision#

  • Subd. 1. The authorized amount and divisions of patron (and, if authorized, nonpatron) membership interests may be increased, decreased, established or altered, within the chapter's limits, by amending the articles or bylaws at a regular members' meeting or a special meeting called for that purpose.
  • Subd. 2 (issuing). Interests are issued on terms in the articles or bylaws, or, if they authorize it, as the board determines. The cooperative must disclose to anyone acquiring interests its organization, capital structure, and known business prospects and risks, plus the nature of the governance and financial rights of the interest being acquired and of the other classes. It must notify all members of interests being issued. An interest may not be issued until the subscription price is paid in money or property, with the value of any property approved by the board.
  • Subd. 3. The 60 percent / 15 percent rule described above.
  • Subd. 4. After issuance, an interest may be sold or transferred only with board approval. The board may adopt resolutions that prospectively approve transfer procedures.
  • Subd. 5 (nonpatron interests). If the articles authorize, the cooperative may solicit and issue nonpatron interests on terms the board determines and discloses in the articles, bylaws or a separate disclosure. Each such member signs a member control agreement or agrees to the bylaws conditions describing rights and obligations: financial and governance rights, transferability, division of profits and losses among interests and classes, and rights on liquidation. If the articles or bylaws do not otherwise allocate profits and losses between patron interests (collectively) and nonpatron interests (individually), allocation follows the value of accepted capital contributions; distributions follow the articles and bylaws, or, if silent, accepted capital contributions.
  • Subd. 6 (first right). The articles or bylaws may give the cooperative or the patron members a first privilege to buy interests offered for sale; it may be satisfied by notice to members and a purchase procedure. An interest the cooperative acquires may be held to be reissued, or retired and canceled.
  • Subd. 7 (dissenting nonpatron holders). Subject to the articles and bylaws, a nonpatron holder may dissent and obtain fair value if the articles or bylaws are amended in a way that materially and adversely affects the rights and preferences of the nonpatron interests. Deadlines: notice of intent to the records officer within 30 days after the amendment and notice to members (or, where members must approve the amendment, before the vote, and without voting in favor). After the demand and approval, the cooperative has 60 days to rescind the amendment; otherwise it must pay fair value within 180 days after receiving the notice. On payment, the member has no further rights.

How it works in practice#

  • Raising money from members or outside investors is a securities question as well as a 308B question; see Understand securities rules before raising money and Raise member equity and capital. The disclosure duty in subd. 2 is a chapter-308B requirement and does not replace securities-law compliance. Restrictions on transfer are covered by § 308B.625, and side agreements among members by § 308B.627.
  • If you want investor-heavy economics, put the 15 percent authorization in the original articles (Write the articles of organization) or plan for a patron-member vote later.
  • The subd. 7 deadlines are short and run on specific triggers; the "records officer" is the officer to notify. Bylaws should name who holds that role.

Sources

  • P1 Minnesota Statutes, Chapter 308B (Cooperative Associations), Office of the Revisor of Statutes, State of Minnesota. revisor.mn.gov (primary; accessed October 15, 2026)

capitalmembership-classesmemberssecurities

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