The Vermont Statutes Online

Title 11C: Mututal Benefit Enterprises

Chapter 005: Members

• § 501. Members

  To begin business, a mutual benefit enterprise shall have at least two patron members unless the sole member is a cooperative. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 502. Becoming a member

  A person becomes a member:

  (1) as provided in the organic rules;

  (2) as the result of a merger or conversion under article 16 of this title; or

  (3) with the consent of all the members. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 503. No power as member to bind enterprise

  A member solely by reason of being a member may not act for or bind the mutual benefit enterprise. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 504. No liability as member for enterprise’s obligations

  Unless the articles of organization otherwise provide, a debt, obligation, or other liability of a mutual benefit enterprise is solely that of the enterprise and is not the debt, obligation, or liability of a member solely by reason of being a member. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 505. Right of member and former member to information

  (a) Not later than 10 business days after receipt of a demand made in a record, a mutual benefit enterprise shall permit a member to obtain, inspect, and copy in the enterprise’s principal office required information listed in subdivisions 114(a)(1) through (8) of this title during regular business hours. A member need not have any particular purpose for seeking the information. The enterprise is not required to provide the same information listed in subdivisions 114(a)(2) through (8) of this title to the same member more than once during a six-month period.

  (b) On demand made in a record received by the mutual benefit enterprise, a member may obtain, inspect, and copy in the enterprise’s principal office required information listed in subdivisions 114(a)(9), (10), (12), (13), (16), and (18) of this title during regular business hours if:

  (1) the member seeks the information in good faith and for a proper purpose reasonably related to the member’s interest;

  (2) the demand includes a description with reasonable particularity of the information sought and the purpose for seeking the information;

  (3) the information sought is directly connected to the member’s purpose; and

  (4) the demand is reasonable.

  (c) Not later than 10 business days after receipt of a demand pursuant to subsection (b) of this section, a mutual benefit enterprise shall provide, in a record, the following information to the member that made the demand:

  (1) if the enterprise agrees to provide the demanded information:

  (A) what information the enterprise will provide in response to the demand; and

  (B) a reasonable time and place at which the enterprise will provide the information; or

  (2) if the enterprise declines to provide some or all of the demanded information, the enterprise’s reasons for declining.

  (d) A person dissociated as a member may obtain, inspect, and copy information available to a member under subsection (a) or (b) of this section by delivering a demand in a record to the mutual benefit enterprise in the same manner and subject to the same conditions applicable to a member under subsection (b) of this section if:

  (1) the information pertains to the period during which the person was a member in the enterprise; and

  (2) the person seeks the information in good faith.

  (e) A mutual benefit enterprise shall respond to a demand made pursuant to subsection (d) of this section in the manner provided in subsection (c) of this section.

  (f) Not later than 10 business days after receipt by a mutual benefit enterprise of a demand made by a member in a record, but not more often than once in a six-month period, the enterprise shall deliver to the member a record stating the information with respect to the member required by subdivision 114(a)(17) of this title.

  (g) A mutual benefit enterprise may impose reasonable restrictions, including nondisclosure restrictions, on the use of information obtained under this section. In a dispute concerning the reasonableness of a restriction under this subsection, the enterprise has the burden of proving reasonableness.

  (h) A mutual benefit enterprise may charge a person that makes a demand under this section reasonable costs of copying, limited to the costs of labor and material.

  (i) A person who may obtain information under this section may obtain the information through an attorney or other agent. A restriction imposed on the person under subsection (g) of this section or by the organic rules applies to the attorney or other agent.

  (j) The rights stated in this section do not extend to a person as transferee.

  (k) The organic rules may require a mutual benefit enterprise to provide more information than required by this section and may establish conditions and procedures for providing the information. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 506. Annual meeting of members

  (a) Members shall meet annually at a time provided in the organic rules or set by the board of directors not inconsistent with the organic rules.

  (b) An annual members’ meeting may be held inside or outside this State at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules.

  (c) Unless the organic rules otherwise provide, members may attend or conduct an annual members’ meeting through any means of communication if all members attending the meeting can communicate with each other during the meeting.

  (d) The board of directors shall report or cause to be reported at the enterprise’s annual members’ meeting the enterprise’s business and financial condition as of the close of the most recent fiscal year.

  (e) Unless the organic rules otherwise provide, the board of directors shall designate the presiding officer of the enterprise’s annual members’ meeting.

  (f) Failure to hold an annual members’ meeting does not affect the validity of any action by the mutual benefit enterprise. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 507. Special meeting of members

  (a) A special meeting of members may be called only:

  (1) as provided in the organic rules;

  (2) by a majority vote of the board of directors on a proposal stating the purpose of the meeting;

  (3) by demand in a record signed by members holding at least 20 percent of the voting power of the persons in any district or class entitled to vote on the matter that is the purpose of the meeting stated in the demand; or

  (4) by demand in a record signed by members holding at least 10 percent of the total voting power of all the persons entitled to vote on the matter that is the purpose of the meeting stated in the demand.

  (b) A demand under subdivision (a)(3) or (4) of this section shall be submitted to the officer of the mutual benefit enterprise charged with keeping its records.

  (c) Any voting member may withdraw its demand under subdivision (a)(3) or (4) of this section before receipt by the mutual benefit enterprise of demands sufficient to require a special meeting of members.

  (d) A special meeting of members may be held inside or outside this State at the place stated in the organic rules or selected by the board of directors not inconsistent with the organic rules.

  (e) Unless the organic rules otherwise provide, members may attend or conduct a special meeting of members through the use of any means of communication if all members attending the meeting can communicate with each other during the meeting.

  (f) Only business within the purpose or purposes stated in the notice of a special meeting of members may be conducted at the meeting.

  (g) Unless the organic rules otherwise provide, the presiding officer of a special meeting of members shall be designated by the board of directors. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 508. Notice of members’ meeting

  (a) A mutual benefit enterprise shall notify each member of the time, date, and place of a members’ meeting at least 15 and not more than 60 days before the meeting.

  (b) Unless the articles of organization otherwise provide, notice of an annual members’ meeting need not include any purpose of the meeting.

  (c) Notice of a special meeting of members shall include each purpose of the meeting as contained in the demand under subdivision 507(a)(3) or (4) of this title or as voted upon by the board of directors under subdivision 507(a)(2) of this title.

  (d) Notice of a members’ meeting shall be given in a record unless oral notice is reasonable under the circumstances. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 509. Waiver of member’s meeting notice

  (a) A member may waive notice of a members’ meeting before, during, or after the meeting.

  (b) A member’s participation in a members’ meeting is a waiver of notice of that meeting unless the member objects to the meeting at the beginning of the meeting or promptly upon the member’s arrival at the meeting and does not thereafter vote for or assent to action taken at the meeting. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 510. Quorum of members

  Unless the organic rules otherwise require a greater number of members or percentage of the voting power, the voting member or members present at a members’ meeting constitute a quorum. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 511. Voting by patron members

  Except as provided by subsection 512(a) of this title, each patron member has one vote. The organic rules may allocate voting power among patron members as provided in subsection 512(a) of this title. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 512. Determination of voting power of patron member

  (a) The organic rules may allocate voting power among patron members on the basis of one or a combination of the following:

  (1) one member, one vote;

  (2) use or patronage;

  (3) equity; or

  (4) if a patron member is a cooperative, the number of its patron members.

  (b) The organic rules may provide for the allocation of patron member voting power by districts or class or any combination thereof. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 513. Voting by investor members

  If the organic rules provide for investor members, each investor member has one vote unless the organic rules otherwise provide. The organic rules may provide for the allocation of investor member voting power by class, classes, or any combination of classes. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 514. Voting requirements for members

  If a mutual benefit enterprise has both patron and investor members, the following rules apply:

  (1) The total voting power of all patron members may not be less than a majority of the entire voting power entitled to vote.

  (2) Action on any matter is approved only upon the affirmative vote of at least a majority of:

  (A) all members voting at the meeting unless more than a majority is required by articles 4, 12, 15, and 16 of this title or the organic rules; and

  (B) votes cast by patron members unless the organic rules require a larger affirmative vote by patron members.

  (3) The organic rules may provide for the percentage of the affirmative votes that shall be cast by investor members to approve the matter. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 515. Manner of voting

  (a) Unless the organic rules otherwise provide, voting by a proxy at a members’ meeting is prohibited. This subsection does not prohibit delegate voting based on district or class.

  (b) If voting by a proxy is permitted, a patron member may appoint only another patron member as a proxy and, if investor members are permitted, an investor member may appoint only another investor member as a proxy.

  (c) The organic rules may provide for the manner of and provisions governing the appointment of a proxy.

  (d) The organic rules may provide for voting on any question by ballot delivered by mail or voting by other means on questions that are subject to vote by members. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 516. Action without a meeting

  (a) Unless the organic rules require that action be taken only at a members’ meeting, any action that may be taken by the members may be taken without a meeting if each member entitled to vote on the action consents in a record to the action.

  (b) Consent under subsection (a) of this section may be withdrawn by a member in a record at any time before the mutual benefit enterprise receives a consent from each member entitled to vote.

  (c) Consent to any action may specify the effective date or time of the action. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 517. Districts and delegates; classes of members

  (a) The organic rules may provide for the formation of geographic districts of patron members and:

  (1) for the conduct of patron member meetings by district and the election of directors at the meetings; or

  (2) that districts may elect district delegates to represent and vote for the districts at members’ meetings.

  (b) A delegate elected under subdivision (a)(2) of this section has one vote unless voting power is otherwise allocated by the organic rules.

  (c) The organic rules may provide for the establishment of classes of members, for the preferences, rights, and limitations of the classes, and:

  (1) for the conduct of members’ meetings by classes and the election of directors at the meetings; or

  (2) that classes may elect class delegates to represent and vote for the classes in members’ meetings.

  (d) A delegate elected under subdivision (c)(2) of this section has one vote unless voting power is otherwise allocated by the organic rules. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)