The Vermont Statutes Online

Title 11C: Mututal Benefit Enterprises

Chapter 006: Member's Interest in Mutual Benefit Enterprise

• § 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.)