Proposed Bylaws of LBGC

 BYLAWS OF

LONG BEACH GROCERY COOPERATIVE, INC.



Article I

Organization

 

Section 1.1 - Name and status.  The name of the organization is Long Beach Grocery Cooperative, Inc. (referred to in these bylaws as "the Cooperative").  The Cooperative is a cooperative corporation under the laws of the State of California.

 

Section 1.2 - Purpose and mission.  The Cooperative is organized and shall be operated primarily for the mutual benefit of its owners as patrons of the Cooperative.  The Cooperative shall be operated exclusively on a cooperative and nonprofit basis.  The mission of the Cooperative is to ...

 

Section 1.3 - Cooperative principles.  The Cooperative shall be operated in accordance with the cooperative principles adopted by the 1995 General Assembly of the International Co-operative Alliance, such principles being: (i) voluntary and open membership without arbitrary discrimination; (ii) democratic governance; (iii) economic participation by members; (iv) autonomy and independence of the Cooperative; (v) providing education and training; (vi) cooperation with other cooperatives; and (vii) concern for community.

 

Section 1.4 - Nondiscrimination.  The Cooperative shall not arbitrarily discriminate on the basis of race, nationality, religion, age, gender, sexual orientation, disability, or political affiliation.

 

Article II

Ownership

 

Section 2.1 - Eligibility.  Ownership in the Cooperative shall be voluntary and open to any individual or organization whose intent is to make purchases from the Cooperative for his, her or its own use and who is willing to accept the responsibilities of ownership.  In the event that any doubts arise concerning eligibility within six months after the date of application, an application for ownership shall be subject to approval by the Board.

 

Section 2.2 - Admission.  Applicants will be admitted to ownership upon submitting required information and purchasing a share at an issuing price not to exceed three hundred dollars or such higher amount as may be permitted by the Corporate Securities Law of 1968.  On or before admission to ownership, each owner shall be provided a copy of these bylaws, including the appended explanation of the patronage dividend consent provision, and an ownership disclosure statement.  The share purchase requirement shall be appropriately reduced for low-income, student, seniors or military as determined by the board of directors.  The share purchase requirement shall be permitted to be paid in installments as determined by the board of directors.

 

Section 2.3 - Rights.  Except as otherwise provided in these bylaws, each member of the household of an individual owner or authorized agent of an organizational owner shall be entitled to make purchases from the Cooperative on terms generally available to owners.  Each owner, including an authorized agent of an organizational owner, shall be entitled to participate in the governance of the Cooperative as set forth in these bylaws.  Except as otherwise provided herein, persons who have subscribed for but not fully paid for a share shall be considered owners.  Owners shall be provided reasonably adequate and timely information as to the operational and financial affairs of the Cooperative.  

 

Section 2.4 - Responsibilities.  Each owner shall keep reasonably current in payment of the share purchase requirement described in Section 2.1 above, shall patronize the Cooperative on at least an occasional basis, and shall notify the Cooperative of any change to his or her name or address.

 

Section 2.5 - Inactive status.  An owner who becomes delinquent by one month in meeting the share purchase obligation, or who fails to patronize the Cooperative for one year, shall be placed into inactive status, provided the owner is given fair notice and an opportunity to respond in person or in writing no less than fifteen days before the effective date of the action.  His or her participation rights shall then be suspended.  An owner in inactive status may attain good standing upon recommencing current payment of financial obligations or reestablishing a patronage relationship with the Cooperative.  References in these bylaws to the rights and entitlements of owners shall be understood to refer only to owners in good standing.

 

Section 2.6 - Access to information.  One or more owners shall, upon request made in apparent good faith, be provided information concerning the operational and financial affairs of the Cooperative for a purpose reasonably related to such person's interest as an owner.  Any proper request necessitating information from the Cooperative's records of owners shall meet the requirements of the Consumer Cooperative Corporation Law and shall be accommodated by means other than direct access to such records.

 

Section 2.7 - Settlement of disputes.  In any dispute between the Cooperative and any of its owners or former owners which cannot be resolved through informal negotiation, it shall be the policy of the Cooperative to prefer the use of mediation whereby an impartial mediator may facilitate negotiations between the parties and assist them in developing a mutually acceptable settlement.  Neither party with a grievance against the other shall have recourse to litigation until the matter is submitted to mediation and attempted to be resolved in good faith.

 

Section 2.8 - Nontransferability.  Ownership rights and interests, including shares and deferred patronage dividends, may not be sold, assigned, or otherwise transferred.  Following termination of ownership, the Cooperative will upon request of the owner transfer the carrying value of such rights and interests, net of any authorized offsets, to the credit of another person designated by the requesting owner, provided that the transfer is for a price that does not exceed the carrying value of such rights and interests and that the person so designated is or becomes an owner of the Cooperative.  Any attempted transfer contrary to this section shall be wholly void and shall confer no rights on the intended transferee.

 

Section 2.9 - Withdrawal and expulsion.  An owner may withdraw at any time upon notice to the Cooperative.  An owner may be expelled by the Board for cause after being provided fair notice of the charges and an opportunity to respond in person or in writing no less than fifteen days before the effective date of the expulsion.  Upon termination of ownership, all rights and interests in the Cooperative shall cease except for rights to redemption of capital pursuant to Articles VII and VIII of these bylaws.

 

Article III

Meetings of Owners

 

Section 3.1 - Annual meeting.  An annual meeting of owners shall be held within ninety days after the close of each fiscal year to receive reports on the operations and finances of the Cooperative and to conduct such other business as may properly come before the meeting.

 

Section 3.2 - Special meetings.  Special meetings of owners may be called by the Board and shall be called by the President as soon as possible after the receipt of petitions signed by five percent of all owners, such petitions stating any proper business to be brought before the meeting.

 

Section 3.3 - Time and place.  The date, time and place of all meetings of owners shall be determined by the Board or, in the event that the Board fails to so act, by the Secretary.  Meetings shall be held at a place convenient to owners.

 

Section 3.4 - Notice.  Written notice of the time, place, and purpose or purposes of all meetings of owners shall be provided to each owner not less than twenty nor more than sixty days before the date of the meeting.  The notice of the annual meeting shall advise owners that a copy of the Cooperative's annual report containing such information as is required by section 12591 of the Consumer Cooperative Corporation Law will be provided upon request.  Notice shall also be posted at the Cooperative's store and on its website, but the inadvertent failure to do either or both shall not affect the validity of the meeting.  Any business conducted at a meeting other than that specified in the notice of the meeting shall be of an advisory nature only.

 

Section 3.5 - Record dates.  Unless otherwise determined by the Board, only persons who are owners at the close of business on the day immediately preceding the date of distribution of notices shall be entitled to notice and to vote with respect to the subject of such notice.

 

Section 3.6 - Quorum.  The presence in person or by ballot at the opening of the meeting of ________ owners or _____ percent of all owners, whichever is lesser, shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of owners.

 

Section 3.7 - Voting.  Unless otherwise required by these bylaws, each owner shall have one and only one vote on each matter submitted to a vote of owners.  Voting by proxy shall not be permitted.  Unless otherwise required by law or by these bylaws, issues shall be decided by a simple majority of votes cast except where one or more choices are to be made from several alternatives, in which case the alternative(s) receiving the most votes shall be considered approved.  Meetings of owners shall be conducted generally in accordance with reasonable and accepted rules of parliamentary procedure.  The Board shall institute policies and procedures to reasonably assure the integrity of the voting process.

 

Section 3.8 - Voting by written ballot.  Owners may, as authorized by the Board, vote by written ballot delivered to the Cooperative.  Ballots, together with the exact text of an issue for decision shall be included in the notice of the meeting to which they relate.  Ballots shall be submitted in a sealed plain envelope inside another envelope bearing the owner's name and any other required identifying information and shall be submitted in conformity with instructions contained in the notice.  Casting of a written ballot shall be equivalent to presence in person at a meeting, and ballots shall be counted together with votes cast at the meeting, if any.  In the case of balloting separate from a meeting, voting by ballot shall for all purposes be considered a meeting of owners.

 

Section 3.9 - Issues submitted by owners.  Notices of a meeting of owners shall include any proper issue submitted by petition of at least three percent of all owners.  Petitions must be received by the Cooperative not less than seventy-five days before the date of the meeting at which they are to be presented to a vote of owners.

 

Article IV

Board of Directors

 

Section 4.1 - Powers and duties.  Except as to matters reserved to owners by law or by these bylaws, the business and affairs of the Cooperative shall be managed under the direction and supervision of the Board of Directors (sometimes referred to in these bylaws as "the Board").  Such powers shall reside exclusively in the Board as a deliberative body; they may reside in individual directors only to the extent explicitly so delegated by the Board.  The duties of the Board shall include, but not be limited to, overseeing the operations and finances of the Cooperative, establishing policies to govern operational decisions, engaging a general manager and monitoring and evaluating his or her performance, securing good conditions of employment, and assuring that the purpose and mission of the Cooperative are properly carried out.

 

Section 4.2 - Number and qualifications.  The Board shall consist of nine individuals.  To be qualified as a director, a person shall have been a member of the household of an individual owner or an authorized agent of an organizational owner for at least six months prior to the commencement of the election of directors and shall not have any overriding conflict of interest with the Cooperative.  No employee shall be eligible to serve as a director.

 

Section 4.3 - Nominations, election and terms.  Directors may be nominated by the Board, by a nominating committee, or by petitions signed by at least twenty-five owners and submitted to the Cooperative at least sixty days before the date of the annual meeting.  Directors shall be elected by owners.  At or in connection with the first annual meeting after adoption of these bylaws and periodically thereafter as may be necessary, directors shall be elected for specific one, two or three year terms in order to assure that no more than three terms expire in each year.  At other times directors shall be elected for terms of three years.  Candidates receiving the highest number of votes shall be given the longest available terms.  Directors shall hold office until their successors are elected or until their offices are sooner terminated in accordance with these bylaws.

 

Section 4.4 - Compensation.  Directors may be compensated only as approved at a meeting of owners.  Directors may be reimbursed for reasonable expenses incurred in connection with the performance of authorized business of the Cooperative.

 

Section 4.5 - Standards of conduct.  Directors shall be responsible at all times for performing their duties in good faith, in a manner that they believe to be in the best interests of the Cooperative, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

 

Section 4.6 - Conflicts of interest.  Directors shall be under an affirmative duty to disclose their actual or potential conflicts of interest, either direct or indirect, in any matter under consideration by the Board or by a committee exercising any authority of the Board, and such interest shall be made a matter of record in the minutes of the meeting.  A director or member of a committee having such an interest shall be permitted to make a statement with regard to the matter but shall not be permitted to participate in the discussion or decision of the matter.

 

Section 4.7  Indemnification.  The Cooperative shall indemnify its directors and officers as required by, and may indemnify its directors and officers as permitted by, state law.  Indemnification payments shall be made on a priority basis but only in such increments and at such times as will not jeopardize the ability of the Cooperative to pay its other obligations as they become due.  Any indemnification payments or advances shall be reported to owners not latter than the next-scheduled meeting of owners.

 

Section 4.8  Committees.  The Board may appoint special or standing committees to advise the Board or to exercise such authority as the Board shall designate.  Such committees shall include at least one director.  The appointment of any committee shall not relieve the Board of its responsibilities in the oversight of the Coop.

 

Section 4.9 - Termination.  The term of office of a director may be terminated prior to its expiration in any of the following ways: (i) voluntarily by a director upon notice to the Secretary; (ii) automatically upon termination of ownership in the Cooperative; and (iii) by action at a meeting of owners.  A director who is absent from three Board meetings within a period of one year shall, unless excused by the Board for good cause, be presumed to have resigned.

 

Section 4.10 - Vacancies.  Any vacancy among directors occurring between annual meetings may be filled by the Board until the next annual meeting of owners, at which time owners shall elect a director to fill the unexpired term of the vacant director's position.

 

Article V

Meetings of the Board

 

Section 5.1 - Meetings.  Meetings of the Board shall be held no less frequently than once in each two-month period.  Meetings not called by the Board (special meetings) may be called by the President and shall be called by the Secretary upon request of any three directors.  

 

Section 5.2 - Notice.  Meetings called by the Board shall require no notice, it being the responsibility of absent directors to inquire as to the time of further scheduled meetings.  Special meetings shall require written or oral notice to all directors.  Written notice shall be delivered at least four days before the date of the meeting and oral notices shall be given in person or by a telecommunications device at least forty-eight hours before the time of the meeting.  Notices of meetings of the Board shall also be posted in a timely manner and in a conspicuous place in the Cooperative's store, but the inadvertent failure to do so shall not affect the validity of the meeting.

 

Section 5.3 - Waiver of notice.  Any notice of a meeting required under these bylaws may be waived in writing at any time before or after the meeting for which notice is required.  A person who attends a meeting other than for the sole purpose of objecting to the adequacy of the notice shall be deemed to have waived any objection to the notice.

 

Section 5.4 - Quorum.  The presence in person of a majority of directors shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board.

 

Section 5.5 - Decision making.  Decisions at meetings of the Board shall be made by consensus, whereby decisions are reached by common consent, with differing points of view being reconciled based upon the best interests of the Cooperative.  If diligent efforts have failed to produce a consensus and immediate action is required, then the issue may be decided by a twothirds majority vote.

 

Section 5.6 - Action without a meeting.  Any action required or permitted to be taken at a meeting of the Board may be taken without a meeting only if a written consent to the action is signed by all directors and filed with the minutes of meetings.

 

Section 5.7 - Open meetings.  Meetings of the Board and all committees shall be open to owners, except that sessions of a meeting may be closed as to matters of a confidential or sensitive nature.

 

Article VI

Officers

 

Section 6.1 - Designation and qualifications.  The principal officers of the Cooperative shall consist of President, Vice President, Secretary and Treasurer.  Principal officers shall be directors.  The Board may designate other officers or assistant officers.

 

Section 6.2 - Election, terms and removal.  Officers shall be elected by the Board at its first meeting following the annual meeting of owners.  Officers shall serve for terms of one year or until election of their successors.  Officers may be removed and replaced by the Board at any time whenever the best interests of the Cooperative would thereby be served.

 

Section 6.3 - Duties.  In addition to signing or attesting to formal documents on behalf of the Cooperative as authorized by the Board, officers shall have the following duties and such additional duties as are determined by the Board:

(a)  The President shall be responsible for coordinating the activities of the Board, assuring the orderly conduct of all meetings, maintaining effective communication with the general manager, and shall present a report of operations at the annual meeting of owners.

(b)  The Vice President shall be responsible for performing the duties of the President in his or her absence or disability and assisting the President in the performance of his or her duties.

(c)  The Secretary shall be responsible for the recording and keeping of adequate minutes of all meetings of the Board and of owners, overseeing the issuance of notices required under these bylaws and executing affidavits of notice given, and authenticating records of the Cooperative.

(d)  The Treasurer shall be responsible for monitoring the maintenance of financial records, the compilation of financial reports, and the filing of required reports and returns, and shall present a financial report at the annual meeting of owners.

Article VII

Shares

 

Section 7.1 - Issuance and terms.  The Cooperative shall issue shares to evidence capital funds provided by owners.  Shares may be issued only to persons eligible for, and admitted to ownership in, the Cooperative.  Shares shall be considered issued upon full payment of no less than their issuing price and need not be evidenced by certificates.  [4] Shares shall be entitled to no dividend or other monetary return on contributed capital.

 

Section 7.2 - Permitted changes.  The share purchase requirement may, as determined by the Board, be permitted to be paid in installments and/or reduced to accommodate persons in needful circumstances.  The share purchase requirement shall be subject to increase for the reasonable capital needs of the Cooperative, provided that such increase applies equally to both existing and newly-admitted owners.

 

Section 7.3 - Redemption.  Upon request following termination of ownership, shares shall be redeemed when replacement capital is provided by other owners.  [2] Shares shall be redeemable at the lesser of their carrying value on the books of the Cooperative or their net book value less a reasonable processing fee, if any, as determined by the Board.  Redemption proceeds shall be subject to offset by amounts due and payable to the Cooperative by the owner.  No redemption shall be made when such payment would impair the ability of the Cooperative to meet its other obligations as they become due or would impair the claims of instruments having a higher priority than shares.  Reapplications for ownership after full or partial redemption shall be subject to full repayment of redemption proceeds.

 

Article VIII

Patronage Dividends

 

Section 8.1 - Distribution obligation.  The realized net earnings of the Cooperative attributable to the patronage of owners shall be allocated and distributed among owners in proportion to their patronage and in such a manner and at such a time as to constitute patronage dividends within the meaning of federal income tax law.  Unless otherwise required under federal income tax law all of the operations of the Cooperative shall be netted into a single allocation unit.

 

Section 8.2 - Reductions.  Any distributable net earnings of such a nominal amount as not to justify the expenses of distribution may, as determined by the Board, be excluded from distribution.  Net earnings may be reduced by such reasonable reserves for necessary business purposes as is determined by the Board.  A patronage dividend to which owners are entitled may be waived in whole or in part by vote of owners.

 

Section 8.3 - Consentofowners.  By obtaining or retaining ownership in the Cooperative, each owner shall thereby consent to take into account, in the manner and to the extent required by Section 1385 of the Internal Revenue Code, the stated dollar amount of any qualified written notice of allocation in the taxable year in which such notice is received.

 

Section 8.4 - Deferred amounts.  Payment of a portion of patronage dividends not to exceed eighty percent of the allocation may be deferred for the reasonable capital needs of the Cooperative, as determined by the Board.  Such amounts shall be credited to revolving capital accounts in the names of recipient owners and shall accrue no dividend or other monetary return on capital.  Deferred patronage dividends may be redeemed when determined by the Board to be no longer needed for capital purposes.  [4] At that time they shall be redeemed in the order of the oldest outstanding amounts and on a pro rata basis among such amounts, except that redemptions shall be payable only to owners who are then in good standing or become so within a six-month period of time.  Deferred patronage dividends may also be redeemed under compelling circumstances as determined by the Board.  They shall be subject to being offset by amounts otherwise due and payable to the Cooperative and by assessments resulting from tax audit adjustments.

 

Section 8.5 - Net losses.  No portion of a net operating loss realized by the Cooperative shall be allocated to owners. The patronage portion of such losses shall be carried forward to offset patronage-sourced income of subsequent years.  The nonpatronage portion of such losses shall be carried back and forward to offset nonpatronage-sourced income of prior and subsequent years as required or permitted under federal income tax law.

 

Article IX

Fiscal and Miscellaneous matters

 

Section 9.1 - Fiscal year.  The fiscal year of the Cooperative shall begin on the first day of ___ in each year and end on the last day of ____ of the succeeding year [OR shall coincide with the calendar year].

 

Section 9.2 - Communication by electronic means.  Unless otherwise required by these bylaws, any notice, consent, ballot, petition, or other document required or permitted by these bylaws may be delivered by electronic means, provided that, in the case where such communication expressly or impliedly requires the signature of the person submitting the communication, means are in place to reasonably assure the authenticity of the signature.

 

Section 9.3 - Gift of proprietary interests.  An owner who holds any equity or other interest in the Cooperative which becomes subject to unclaimed property laws may make a gift of such interest either by affirmatively so designating in a communication to the Cooperative or by failing to claim the interest after the following procedures have been complied with: (i) at any time after the interest would otherwise escheat to the state, the Cooperative shall provide at least sixty days prior notice of the proposed transfer to the Cooperative by firstclass or second-class mail to the last known address of such person shown on the Cooperative's records and by publication in a newspaper of general circulation in the county in which the Cooperative has its principal office; and (ii) no written notice objecting to the proposed transfer is received by the Cooperative from such person or from someone acting on behalf of such person prior to the date of the proposed transfer.  A person who fails to make such claim or provide such notice of objection shall be deemed to have made a gift of such interest to the Cooperative as of the effective date of such transfer.

 

Section 9.4 - Loans prohibited.  The Cooperative shall not make a loan to, or guarantee the obligation of, a director officer.

 

Section 9.5- Liquidation.  Upon liquidation and dissolution of the Cooperative, its assets shall be distributed in the following manner and order: (i) by paying or making provision for payment of all liabilities and expenses of liquidation; (ii) by redeeming deferred patronage dividends, if any, which, if they cannot be paid in full, shall be paid in the order of the oldest outstanding amounts and on a pro rata basis among all amounts for each fiscal year; (iii) by redeeming shares at their carrying value on the books of the Cooperative which, if they cannot be paid in full, shall be paid on a pro rata basis among all outstanding amounts; and (iv) by distributing any remaining assets among current and former owners in proportion to their patronage during the five years immediately preceding the date of dissolution, or, if so determined by a vote of owners, to one or more cooperative or nonprofit organizations that may best further the purposes and mission of the Cooperative.

 

Article X

Interpretation and Amendment of Bylaws

 

Section 10.1 - Interpretation.  The Board of Directors shall have the power to interpret these bylaws, apply them to particular circumstances, and adopt policies in furtherance of them, provided that all such actions are reasonable and consistent with these bylaws.

 

Section 10.2 - Severability.  In the event that any provision of these bylaws is determined to be invalid or unenforceable under any statute or rule of law, then such provision shall be deemed inoperative to such extent and shall be deemed modified to conform with such statute or rule of law without affecting the validity or enforceability of any other provision of these bylaws.

 

Section 10.3 - Amendment.  These bylaws may be amended or repealed only at a meeting of owners, provided that the proposed amendments are stated or fully described in the notice of the meeting at which the amendments are to be adopted.

 

Appendix:

 

EXPLANATION OF PATRONAGE

DIVIDEND CONSENT PROVISION

 

Section 8.3 of the Cooperative's bylaws relates to when and how patronage dividends are required to be included in the taxable incomes of recipient owners.  Section 1385(b) of the Internal Revenue Code provides that a patronage dividend shall not be included in the taxable income of a recipient to the extent that such amount "is attributable to personal, living, or family items."  This exclusion from taxable income would apply to owners whose purchases from the Cooperative were for such personal use.  To such persons section 8.3 is therefore of no effect.  To all other owners section 8.3 represents their consent to include the amount of their patronage dividend in their taxable incomes for the year in which they receive their patronage dividend notice and check.  This consent would apply to owners who are organizations and others whose purchases from the Cooperative were for business or income-producing purposes.