§ 601. Member’s interest
A member’s interest:
(1) is personal property;
(2) consists of:
(A) governance rights;
(B) financial rights; and
(C) the right or obligation, if any, to do business with the mutual benefit enterprise;
and
(3) may be in certificated or uncertificated form. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)
§ 602. Patron and investor member’s interests
(a) Unless the organic rules establish investor members’ interests, a member’s interest
is a patron member’s interest.
(b) Unless the organic rules otherwise provide, if a mutual benefit enterprise has investor
members, while a person is a member of the enterprise, the person:
(1) if admitted as a patron member, remains a patron member;
(2) if admitted as an investor member, remains an investor member; and
(3) if admitted as a patron member and an investor member remains a patron and an investor
member if not dissociated in one of the capacities. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)
§ 603. Transferability of member’s interest
(a) The provisions relating to the transferability of a member’s interest are subject
to Title 9A.
(b) Unless the organic rules otherwise provide, a member’s interest other than financial
rights is not transferable.
(c) Unless a transfer is restricted or prohibited by the organic rules, a member may transfer
its financial rights in the mutual benefit enterprise.
(d) The terms of any restriction on transferability of financial rights shall be:
(1) set forth in the organic rules and the member records of the enterprise; and
(2) conspicuously noted on any certificates evidencing a member’s interest.
(e) A transferee of a member’s financial rights, to the extent the rights are transferred,
has the right to share in the allocation of profits or losses and to receive the distributions
to the member transferring the interest to the same extent as the transferring member.
(f) A transferee of a member’s financial rights does not become a member upon transfer
of the rights unless the transferee is admitted as a member by the mutual benefit
enterprise.
(g) A mutual benefit enterprise need not give effect to a transfer under this section
until the enterprise has notice of the transfer.
(h) A transfer of a member’s financial rights in violation of a restriction on transfer
contained in the organic rules is ineffective as to a person having notice of the
restriction at the time of transfer. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)
§ 604. Security interest and set-off
(a) A member or transferee may create an enforceable security interest in its financial
rights in a mutual benefit enterprise.
(b) Unless the organic rules otherwise provide, a member may not create an enforceable
security interest in the member’s governance rights in a mutual benefit enterprise.
(c) The organic rules may provide that a mutual benefit enterprise has a security interest
in the financial rights of a member to secure payment of any indebtedness or other
obligation of the member to the enterprise. A security interest provided for in the
organic rules is enforceable under and governed by 9A V.S.A. article 9.
(d) Unless the organic rules otherwise provide, a member may not compel the mutual benefit
enterprise to offset financial rights against any indebtedness or obligation owed
to the enterprise. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)
§ 605. Charging orders for judgment creditor of member or transferee
(a) On application by a judgment creditor of a member or transferee, a court may enter
a charging order against the financial rights of the judgment debtor for the unsatisfied
amount of the judgment. A charging order issued under this subsection constitutes
a lien on the judgment debtor’s financial rights and requires the mutual benefit enterprise
to pay over to the creditor or receiver to the extent necessary to satisfy the judgment
any distribution that would otherwise be paid to the judgment debtor.
(b) To the extent necessary to effectuate the collection of distributions pursuant to
a charging order under subsection (a) of this section, the court may:
(1) appoint a receiver of the share of the distributions due or to become due to the judgment
debtor under the judgment debtor’s financial rights, with the power to make all inquiries
the judgment debtor might have made; and
(2) make all other orders that the circumstances of the case may require to give effect
to the charging order.
(c) Upon a showing that distributions under a charging order will not pay the judgment
debt within a reasonable time, the court may foreclose the lien and order the sale
of the financial rights. The purchaser at the foreclosure sale obtains only the financial
rights that are subject to the charging order, does not thereby become a member, and
is subject to section 603 of this title.
(d) At any time before a sale pursuant to a foreclosure, a member or transferee whose
financial rights are subject to a charging order under subsection (a) of this section
may extinguish the charging order by satisfying the judgment and filing a certified
copy of the satisfaction with the court that issued the charging order.
(e) At any time before sale pursuant to a foreclosure, the mutual benefit enterprise or
one or more members whose financial rights are not subject to the charging order may
pay to the judgment creditor the full amount due under the judgment and succeed to
the rights of the judgment creditor, including the charging order. Unless the organic
rules otherwise provide, the enterprise may act under this subsection only with the
consent of all members whose financial rights are not subject to the charging order.
(f) This title does not deprive any member or transferee of the benefit of any exemption
of laws applicable to the member’s or transferee’s financial rights.
(g) This section provides the exclusive remedy by which a judgment creditor of a member
or transferee may satisfy the judgment from the member’s or transferee’s financial
rights. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)