BUSINESS ORGANIZATIONS CODE
TITLE 6. ASSOCIATIONS
CHAPTER 251. COOPERATIVE ASSOCIATIONS
SUBCHAPTER A. GENERAL PROVISIONS
§ 251.001. DEFINITIONS. In this chapter:
(1) "Cooperative basis" means that net savings, after
payment of any investment dividends or after provision for separate
funds has been made as required or authorized by law, the
certificate of formation, or bylaws, are:
(A) allocated or distributed to a member patron
or to each patron in proportion to patronage; or
(B) retained by the entity for:
(i) actual or potential expansion of the
entity's services;
(ii) the reduction of charges to patrons;
or
(iii) any other purpose consistent with the
entity's nonprofit character.
(2) "Invested capital" means funds invested in a
cooperative association by an investor with the expectation of
receiving an investment dividend.
(3) "Investment dividend" means the return on invested
capital or on membership capital derived from the net savings of the
cooperative association.
(4) "Membership capital" means the funds of a
cooperative association derived from members of the cooperative
association generally as a requirement of membership or in lieu of
patronage dividends. The term does not include deposits or loans
from members.
(5) "Net savings" means the total income of a
cooperative association less the costs of operation.
(6) "Patronage dividend" means a share of the net
savings distributed among members of the cooperative association on
the basis of patronage, as provided by the certificate of
formation.
(7) "Savings returns" means the amount returned by a
cooperative association to patrons of a cooperative association in
proportion to patronage or otherwise.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.002. APPLICABILITY OF NONPROFIT CORPORATION
PROVISIONS. (a) A provision of Title 1 and Chapters 20 and 22
governing nonprofit corporations applies to a cooperative
association.
(b) Notwithstanding Subsection (a), this chapter controls
over any conflicting provision of Title 1 and Chapters 20 and 22
governing nonprofit corporations.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.003. EXEMPTION. This chapter does not apply to a
corporation or association organized on a cooperative basis under a
statute of this state other than this chapter unless that other
statute specifically states that this chapter does apply.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
§ 251.051. ORGANIZATION MEETING. After a cooperative
association's certificate of formation is filed, the cooperative
association shall hold an organization meeting in accordance with
Section 22.104.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.052. AMENDMENT OF CERTIFICATE OF
FORMATION. (a) The board of directors of a cooperative
association may propose an amendment to the cooperative
association's certificate of formation by a two-thirds vote of the
board members. The members of a cooperative association may
petition to amend the certificate of formation as provided by the
bylaws.
(b) Not later than the 31st day before the date of the
meeting, the secretary shall:
(1) send notice of a meeting to consider a proposed
amendment to each member of the cooperative association at the
member's last known address; or
(2) post notice of a meeting to consider a proposed
amendment in a conspicuous place in all principal places of
activity of the cooperative association.
(c) The notice required by Subsection (b) must include the
full text of the proposed amendment and the text of the part of the
certificate of formation to be amended.
(d) To be approved, an amendment must be adopted by the
affirmative vote of two-thirds of the members voting on the
amendment.
(e) Not later than the 30th day after the date an amendment
is adopted by the members of a cooperative association, the
cooperative association shall file a certificate of amendment with
the secretary of state in accordance with Chapter 4. The
certificate of amendment must be:
(1) signed by an authorized officer of the cooperative
association; and
(2) in the form required by Section 3.052.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.053. BYLAWS. (a) Unless the certificate of
formation or bylaws of a cooperative association require a greater
majority, the bylaws may be adopted, amended, or repealed by a
majority vote of the cooperative association's members voting on
the matter.
(b) Except as provided by this code, the bylaws may contain:
(1) requirements for admission to membership;
(2) requirements for disposal of a member's interest
on cessation of membership;
(3) the time, place, and manner of calling and
conducting meetings;
(4) the number or percentage of the members
constituting a quorum;
(5) the number, qualifications, powers, duties, and
term of directors and officers;
(6) the method of electing, removing, and filling a
vacancy of directors and officers;
(7) the division or classification, if any, of
directors to provide for staggered terms;
(8) the compensation, if any, of the directors;
(9) the number of directors necessary to constitute a
quorum;
(10) the method for distributing the net savings;
(11) a requirement that each officer or employee of
the cooperative association who handles funds or securities be
bonded;
(12) other discretionary provisions of this chapter,
Title 1, and Chapters 20 and 22; and
(13) any other provision incident to a purpose or
activity of the cooperative association.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER C. MANAGEMENT
§ 251.101. BOARD OF DIRECTORS. (a) Except as provided
by Subsections (b) and (c), a cooperative association is managed by
a board of directors in accordance with Chapter 22.
(b) The board shall contain at least five directors elected
by and from the cooperative association's members. A director:
(1) serves a term not to exceed three years as provided
by the bylaws; and
(2) holds office until the director is removed or the
director's successor is elected.
(c) The bylaws of a cooperative association may:
(1) apportion the number of directors among the units
into which the cooperative association may be divided; and
(2) provide for the election of the directors by the
respective units to which the directors are apportioned.
(d) An executive committee of the board of directors may be
elected in the manner and with the powers and duties specified by
the certificate of formation or bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.102. OFFICERS. (a) The directors of a
cooperative association shall annually elect, unless otherwise
provided by the bylaws, the following officers for the cooperative
association:
(1) a president;
(2) one or more vice presidents; and
(3) a secretary and treasurer or a
secretary-treasurer.
(b) Any two or more offices, other than the offices of
president and secretary, may be held by the same person.
(c) The officers of a cooperative association may be
designated by other titles as provided by the certificate of
formation or the bylaws of the cooperative association.
(d) A committee duly designated by the board of directors
may perform the functions of any office, and the functions of any
two or more officers may be performed by a single committee,
including the functions of both president and secretary.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.103. REMOVAL OF DIRECTORS AND OFFICERS. (a) A
director or officer of a cooperative association may be removed
from office in the manner provided by the certificate of formation
or bylaws of the cooperative association.
(b) If the certificate of formation or bylaws do not provide
for the person's removal, a director or officer may be removed with
cause by a vote of a majority of the members voting at a regular or
special meeting. The director or officer who is to be removed is
entitled to be heard at the meeting.
(c) Except as provided by the certificate of formation or
bylaws, a vacancy on the board of directors caused by removal shall
be filled by a director elected in the same manner provided by the
bylaws for the election of directors.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.104. REFERENDUM. (a) The certificate of
formation or bylaws of a cooperative association may provide for a
referendum on any action undertaken by the cooperative
association's board of directors if the referendum is:
(1) requested by petition of 10 percent or more of all
of the members of the cooperative association; or
(2) requested and approved by the vote of at least a
majority of the directors of the cooperative association.
(b) The proposition to be voted on in a referendum
authorized under Subsection (a) must be submitted to the members of
the cooperative association for consideration within the time
specified in the document authorizing the referendum.
(c) A right of a third party that has vested between the time
of the action and the time of the referendum is not impaired by the
referendum results.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER D. MEMBERSHIP
§ 251.151. ELIGIBILITY AND ADMISSION. A person, an
unincorporated group or other person organized on a cooperative
basis, or a nonprofit group may be admitted to membership in a
cooperative association only if the person meets the qualifications
for eligibility stated in the certificate of formation or bylaws of
the cooperative association.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.152. EXPULSION. (a) A member of a cooperative
association may be expelled by the vote of a majority of the
cooperative association's members voting at a regular or special
meeting.
(b) Not later than the 11th day before the date of the
meeting, the cooperative association shall give the member written
notice of the charges. The member is entitled to be heard at the
meeting in person or by counsel.
(c) If the cooperative association votes to expel a member,
the cooperative association's board of directors shall cause the
cooperative association to purchase the member's capital holdings
at par value if the purchase does not jeopardize the cooperative
association's solvency.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.153. SUBSCRIBERS. (a) A person is a subscriber
of a cooperative association only if the person is:
(1) eligible for membership in the cooperative
association under Section 251.151; and
(2) legally obligated to purchase a share or
membership in the cooperative association.
(b) The certificate of formation or bylaws of a cooperative
association may state whether and the conditions under which voting
rights or other membership rights are granted to a subscriber of the
cooperative association.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.154. LIABILITY. (a) Except as provided by
Subsection (b), a member or subscriber of a cooperative association
is not jointly or severally liable for a debt of the cooperative
association. A subscriber is liable for any unpaid amount on the
subscriber's membership certificates or invested capital
certificates.
(b) A subscriber who assigns the subscriber's interest in
membership certificates or invested capital certificates is
jointly and severally liable with the assignee until the
appropriate certificates are fully paid.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER E. SHARES
§ 251.201. SHARE AND MEMBERSHIP CERTIFICATES: ISSUANCE
AND CONTENTS. (a) A cooperative association may not issue a
certificate for membership capital or for invested capital until
any par value of the certificate has been paid in full.
(b) Each certificate for membership capital issued by a
cooperative association must contain a statement of the
requirements of Sections 251.202(a) and (b), 251.254, and 251.255.
(c) Each certificate for invested capital issued by a
cooperative association must contain a statement of the
restrictions on transferability as provided by the cooperative
association's bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.202. TRANSFER OF SHARES AND MEMBERSHIP;
WITHDRAWAL. (a) A member who decides to withdraw from a
cooperative association shall make a written offer to sell the
member's membership certificates to the cooperative association's
board of directors.
(b) Not later than the 90th day after the date the directors
receive an offer under Subsection (a), the directors may cause the
cooperative association to purchase the holdings by paying the
member the par value of the certificates and the directors shall
cause the cooperative association to reissue or cancel the shares
after purchasing the holdings. The directors shall cause the
cooperative association to purchase the shares if a majority of the
cooperative association's members voting at a regular or special
meeting vote to require the purchase.
(c) An investor owning investor certificates must sell,
assign, or convey the certificates in accordance with the
cooperative association's bylaws. If an investor fails to sell,
assign, or convey investor certificates in accordance with the
bylaws, the cooperative association on written notice to its
directors shall repurchase the certificates by paying the investor
the par value of the certificate plus all accrued investment
dividends. The certificates must be repurchased not later than the
90th day after the date the cooperative association receives notice
of the failure.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.203. SHARE AND MEMBERSHIP CERTIFICATES;
RECALL. (a) The bylaws of a cooperative association may
authorize the cooperative association's board of directors to
recall during a specified time and in accordance with the bylaws the
membership certificates of a member who fails to patronize the
cooperative association. The board may use the reserve funds to
recall, at par value, the membership certificates of any member in
excess of the amount required for membership.
(b) After the board of directors of a cooperative
association recalls a membership certificate under Subsection (a),
membership in the cooperative association is terminated and the
board shall cause the cooperative association to reissue or cancel
the certificate. The board of directors may not recall membership
certificates if recalling the certificates would jeopardize the
cooperative association's solvency.
(c) The board of directors may use the reserve funds to
recall and repurchase the investment certificates of an investor at
par value plus any investment dividends due.
(d) The bylaws of a cooperative association may establish
specific procedures, terms, and conditions for recalls and
repurchases of investment certificates.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.204. CERTIFICATES; ATTACHMENT. The minimum
amount necessary for membership in a cooperative association, not
to exceed $50, is exempt from attachment, execution, or garnishment
for the debts of a member of a cooperative association. If a
member's holdings are subject to attachment, execution, or
garnishment, the directors of the cooperative association may admit
the purchaser to membership or may purchase the holdings at par
value.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER F. MEETINGS AND VOTING
§ 251.251. MEETINGS. (a) Regular meetings of members
of a cooperative association shall be held at least once a year as
prescribed by the cooperative association's bylaws.
(b) A special meeting of the members of a cooperative
association may be requested by a majority vote of the directors or
by written petition of at least one-tenth of the membership of the
cooperative association. The secretary shall call a special
meeting to be held 30 days after receipt of the request for a
special meeting.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.252. NOTICE OF SPECIAL MEETING. The notice of a
special meeting of the members of a cooperative association shall
state the purpose of the meeting.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.253. MEETINGS BY UNITS OF MEMBERSHIP. (a) The
certificate of formation or bylaws of a cooperative association may
provide for the holding of meetings by units of the membership of
the cooperative association and may provide for:
(1) a method of transmitting the votes cast at unit
meetings to the central meeting;
(2) a method of representation of units of the
membership by the election of delegates to the central meeting; or
(3) a combination of both methods.
(b) Except as otherwise provided by the certificate of
formation or bylaws, a meeting by a unit of the membership shall be
called and held in the same manner as a regular meeting of the
members.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.254. ONE MEMBER--ONE VOTE. (a) Except as
provided by Subsection (b), a member of a cooperative association
has one vote.
(b) If a cooperative association includes among its
membership another cooperative association or a group that is
organized on a cooperative basis, the voting rights of the
cooperative association member or group member may be prescribed by
the certificate of formation or bylaws of the cooperative
association.
(c) Any voting agreement or other device that is made to
evade the one-member-one-vote rule is not enforceable.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.255. NO PROXY. A member is not entitled to vote by
proxy.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.256. VOTING BY MAIL. (a) The certificate of
formation or bylaws of a cooperative association may contain the
procedures in Subsection (b) or (c), or both, for voting by mail.
(b) With notice of a meeting sent to members of the
cooperative association, the secretary may include a copy of a
proposal to be offered at the meeting. If a mail vote is returned to
the cooperative association within the specified number of days,
the mail vote shall be counted with the votes cast at the meeting.
(c) The secretary may send to a member of the cooperative
association who is absent from a meeting an exact copy of the
proposal considered at the meeting. If the vote is returned to the
cooperative association within the specified number of days, the
mail vote is counted with the votes cast at the meeting.
(d) The certificate of formation or bylaws may state whether
and to what extent mail votes are counted in computing a quorum.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.257. VOTING BY MAIL OR BY DELEGATES. (a) If a
cooperative association has provided for voting by mail or by
delegates, a provision of this chapter referring to votes cast by
members of the cooperative association applies to votes cast by
mail or by delegates.
(b) A delegate may not vote by mail.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER G. CAPITAL AND NET SAVINGS
§ 251.301. LIMITATIONS ON RETURN ON
CAPITAL. (a) Except as otherwise provided by the cooperative
association's bylaws, an investment dividend of a cooperative
association may not be cumulative and may not exceed eight percent
of investment capital.
(b) Total investment dividends distributed for a fiscal
year may not exceed 50 percent of the net savings for the period.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.302. ALLOCATION AND DISTRIBUTION OF NET
SAVINGS. (a) At least once each year the members or directors of
a cooperative association, as provided by the certificate of
formation or bylaws of the cooperative association, shall apportion
the net savings of the cooperative association in the following
order:
(1) subject to Section 251.301, investment dividends
payable from the surplus of the total assets over total liabilities
may be paid on invested capital or, if authorized by the bylaws, may
be paid on the membership certificates;
(2) a portion of the remainder, as determined by the
certificate of formation or bylaws, may be allocated to an
educational fund to be used in teaching cooperation;
(3) a portion of the remainder may be allocated to
funds for the general welfare of the members of the cooperative
association;
(4) a portion of the remainder may be allocated to
retained earnings; and
(5) the remainder shall be allocated at the same
uniform rate to each patron of the cooperative association in
proportion to individual patronage as follows:
(A) for a member patron, the proportionate amount
of savings return distributed to the member may be any combination
of cash, property, membership certificates, or investment
certificates; and
(B) for a subscriber patron, the patron's
proportionate amount of savings returns as provided by the
certificate of formation or bylaws may be distributed to the
subscriber patron or credited to the subscriber patron's account
until the amount of capital subscribed for has been fully paid.
(b) This section does not prevent a cooperative association
engaged in rendering services from disposing of the net savings
from the rendering of services in a manner that lowers the fees
charged for services or furthers the common benefit of the members.
(c) A cooperative association may adopt a system in which:
(1) the payment of savings returns that would
otherwise be distributed are deferred for a fixed period; or
(2) the savings returns distributed are partly in cash
or partly in shares, to be retired at a fixed future date, in the
order of the shares' serial numbers or issuance dates.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER H. REPORTS AND RECORDS
§ 251.351. RECORDKEEPING. A cooperative association
shall keep books and records relating to the cooperative
association's business operation in accordance with standard
accounting practices.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.352. REPORTS TO MEMBERS. (a) A cooperative
association shall submit a written report to its members at the
annual meeting of the cooperative association. The annual report
must contain:
(1) a balance sheet;
(2) an income and expense statement;
(3) the amount and nature of the cooperative
association's authorized, subscribed, and paid-in capital;
(4) the total number of shareholders;
(5) the number of shareholders who were admitted to or
withdrew from the association during the year;
(6) the par value of the association's shares;
(7) the rate at which any investment dividends have
been paid; and
(8) if the cooperative association does not issue
shares:
(A) the total number of members;
(B) the number of members who were admitted to or
withdrew from the association during the year; and
(C) the amount of membership fees received.
(b) The directors shall appoint a committee composed of
members who are not principal bookkeepers, accountants, or
employees of the cooperative association to review the cooperative
association.
(c) The committee appointed under Subsection (b) shall
report on the quality of the annual report required by this section
and the bookkeeping system of the cooperative association at the
annual meeting.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.353. ANNUAL REPORT OF FINANCIAL
CONDITION. (a) This section applies only to a cooperative
association that has at least 100 members or at least $20,000 in
annual business.
(b) Not later than the 120th day after the date on which the
association closes its business each year, a cooperative
association shall file in the association's registered office a
report of the association's financial condition stating:
(1) the name of the association;
(2) the address of the association's principal office;
(3) the name, address, occupation, and date of
expiration of the term of office of each officer and director;
(4) any compensation paid by the association to each
officer or director of the association;
(5) the amount and nature of the authorized,
subscribed, and paid-in capital;
(6) the total number of shareholders;
(7) the number of shareholders who were admitted to or
withdrew from the association during the year;
(8) the par value of the association's shares;
(9) the rate at which any investment dividends have
been paid; and
(10) if the association has no shares:
(A) the total number of members;
(B) the number of members who were admitted to or
withdrew from the association during the year; and
(C) the amount of membership fees received.
(c) The report required by Subsection (b) must:
(1) include a balance sheet and income and expense
statement of the cooperative association; and
(2) be signed by the president and secretary.
(d) A cooperative association that has at least 3,000
members or at least $750,000 in annual business shall file a copy of
the report required by this section with the secretary of state.
(e) A person commits an offense if the person signs a report
that is required by this section and contains a materially false
statement that the person knows is false. An offense under this
subsection is a misdemeanor punishable by:
(1) a fine of not less than $25 or more than $200;
(2) confinement in county jail for a term of not less
than 30 days or more than one year; or
(3) both the fine and confinement.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.354. FAILURE TO FILE REPORT. (a) If a
cooperative association required by Section 251.353 to file a copy
of a report with the secretary of state does not file the report
within the prescribed time, the secretary of state shall send
written notice of the requirement by registered mail to the
cooperative association. The notice must be sent to the
cooperative association's principal office not later than the 60th
day after the date the report becomes due.
(b) If a cooperative association is required by Section
251.353 to file a report at its registered office but not with the
secretary of state and fails to file the report within the
prescribed time, the secretary of state or any member of the
cooperative association may send written notice of the requirement
by registered mail to the cooperative association's principal
office.
(c) If the cooperative association does not file the report
before the 61st day after the date notice is sent under Subsection
(a) or (b), a member of the cooperative association or the attorney
general may seek a writ of mandamus against the cooperative
association and the appropriate officer or officers to compel the
filing of the report. The court shall require the cooperative
association or the officer who is determined to be at fault to pay
the expenses of the proceeding, including attorney's fees.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER I. WINDING UP AND TERMINATION
§ 251.401. VOLUNTARY WINDING UP AND
TERMINATION. (a) A cooperative association may wind up and
terminate its affairs in accordance with Chapter 11 and Sections
22.301-22.303.
(b) If a cooperative association is directed to wind up and
liquidate its affairs, three members of the cooperative association
elected by a vote of at least a majority of the members voting shall
be designated as trustees on behalf of the cooperative association
to:
(1) pay debts;
(2) liquidate the cooperative association's assets
within the time set in the trustees' designation or any extension of
time; and
(3) distribute the cooperative association's assets in
the manner provided by Section 251.403.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.402. EXECUTION OF CERTIFICATE OF TERMINATION. An
officer of a cooperative association or one or more of the persons
designated as a liquidating trustee under Section 251.401 shall
execute the certificate of termination on behalf of the cooperative
association.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.403. DISTRIBUTION OF ASSETS. Subject to Sections
11.052 and 11.053(a), the trustees designated under Section 251.401
shall distribute the cooperative association's assets in the
following order:
(1) by returning the par value of the investors'
capital to investors;
(2) by returning the amounts paid on subscriptions to
subscribers for invested capital;
(3) by returning the amount of patronage dividends
credited to patrons' accounts to the patrons;
(4) by returning to members their membership capital;
and
(5) by distributing any surplus in the manner provided
by the certificate of formation:
(A) among the patrons who have been members or
subscribers of the cooperative association during the six years
preceding the date of dissolution, on the basis of patronage during
that period;
(B) as a gift to any cooperative association or
other nonprofit enterprise designated in the certificate of
formation; or
(C) by a combination of both methods of
distribution.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.404. INVOLUNTARY TERMINATION. A suit for
involuntary termination of a cooperative association organized
under this chapter may be instituted for the causes and prosecuted
in the manner provided by Chapter 11. The assets of a cooperative
association that is involuntarily terminated shall be distributed
in accordance with Section 251.403.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER J. MISCELLANEOUS PROVISIONS
§ 251.451. EXEMPTION FROM TAXES. A cooperative
association organized under this chapter is exempt from the
franchise tax and license fees imposed by the state or a political
subdivision of the state, except that a cooperative association is
exempt from the franchise tax imposed by Chapter 171, Tax Code, only
if the cooperative association is exempt under that chapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 251.452. USE OF NAME "COOPERATIVE." (a) Only a
cooperative association governed by this chapter, a group organized
on a cooperative basis under another law of this state, or a foreign
entity operating on a cooperative basis and authorized to do
business in this state may use the term "cooperative" or any
abbreviation or derivation of the term "cooperative" as part of its
business name or represent itself, in advertising or otherwise, as
conducting business on a cooperative basis.
(b) A person commits an offense if the person violates
Subsection (a). An offense under this subsection is a misdemeanor
punishable by:
(1) a fine of not less than $25 or more than $200 for
the first month in which the violation occurs;
(2) a fine of not more than $200 for each month during
which a violation occurs after the first month;
(3) confinement in the county jail for not less than 30
days or more than one year; or
(4) a combination of those punishments.
(c) The attorney general may sue to enjoin a violation of
this section.
(d) If a court renders a judgment that a person who used the
term "cooperative" before September 1, 1975, is not organized on a
cooperative basis but is authorized to continue to use the term, the
business shall place immediately after its name the words "does not
comply with the cooperative association law of Texas" in the same
kind of type and in letters not less than two-thirds the size of the
letters used in the word "cooperative."
(e) Notwithstanding this section, The University
Cooperative Society, a domestic nonprofit corporation related to
The University of Texas, may continue to use the word "cooperative"
in its name.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
