Cooperative corporations: worker cooperatives.

Existing law, the Consumer Cooperative Corporation Law, governs the organization and operation of consumer cooperative corporations. The law specifies the provisions that may be set forth in the articles of incorporation of a consumer cooperative. Existing law provides for, among other things, information to be included in a corporation's bylaws, definitions necessary for purposes of defining patrons, and requirements as to voting rights of members. Except as specified, existing law requires that the voting power of members having voting rights in a cooperative corporation be equal. Existing law also requires cooperative corporations to hold a meeting of members annually. Existing law makes the violation of specified provisions a crime. This bill would rename the law the Cooperative Corporation Law, and authorize a cooperative corporation to elect to designate itself as a worker cooperative in its articles of incorporation. The bill would require that 51% of the workers shall be worker-members or candidates. The bill would authorize a worker cooperative to apportion and distribute its net earnings and losses at the time and in the manner specified in the articles of incorporation or bylaws. The bill would require a worker cooperative to only make patronage distributions to the worker-member class. The bill would define the patrons of a worker cooperative as worker-members and authorize their patronage to be measured by work performed. The bill would authorize a worker cooperative to issue a membership, that is not divisible into partial memberships, having the rights, privileges, preferences, restrictions, or conditions as provided in the articles or bylaws. This bill would also authorize a worker cooperative to establish itself as a capital account cooperative in its articles or bylaws, in which case the entire net book value of the corporation would be reflected in member capital accounts, one for each member, and an unallocated capital account, if any, as specified. This bill would also authorize a worker cooperative to establish itself as a collective board worker cooperative, in which all worker-members serve on the board. A collective board worker cooperative would not be required to hold an annual meeting of members. This bill would authorize 2 or more worker cooperatives to consolidate, as specified, prescribe the actions to be taken upon the dissolution of a worker cooperative, and make other conforming changes. The Corporate Securities Law of 1968 generally regulates the offer and sale of securities in this state. That law requires the offer and sale of securities to be qualified with the Commissioner of Business Oversight, and exempts specified transactions or securities from qualification. That law makes it unlawful for a person in connection with the offer or sale of a security to engage in fraudulent or misleading acts or omissions. The shares or memberships by a corporation subject to the Consumer Cooperative Corporation Law are exempt from the qualification requirement, if the investment does not exceed $300. The bill would increase the investment limitation of the above-referenced exemption from qualification from $300 to $1,000.