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Liability of directors.

Idem.

Stock deemed personal property.

Lien on.

Stock of indebted holder, sale, etc., of.

When stock reissued.

poration shall be jointly and severally liable to any creditor of such corporation, in an action founded on this statute, to the amount of the sum refunded to him or them respectively. SEC. 2. If the directors of any such corporation shall declare and pay a dividend when the corporation is insolvent, or any dividend, the payment of which would render it insolvent, knowing such corporation to be insolvent, or that the payment of such dividend would render it so, the directors assenting thereto, shall be jointly and severally liable in an action founded on this statute, for all debts from such corporation at the time of paying or declaring such dividend. SEC. 3. If any corporation organized under, or subject to this act shall violate any of its provisions, the directors ordering or assenting to such violation, shall be jointly and severally liable in an action founded on this statute, for all debts contracted after such violation as aforesaid, to the extent of three times the amount paid in on the stock standing in the name of such director in any such corporation. The board of directors shall exercise good faith in the conduct of the affairs of the corporation, and shall do no acts nor pay any salaries or bonuses which would tend to impair the company's business or to destroy the value of any part of its capital stock or securities; and the courts shall have full power to afford the protection provided for herein upon proper application thereto.

SEC. 4. The stock of every corporation shall be deemed personal property and shall be subject to the provisions of act number one hundred three of the Public Acts of nineteen hundred thirteen, known as the uniform stock transfer act, as to all matters and things therein prescribed; and as to matters not therein prescribed in relation to the transfer of stock, the said corporation shall have the power to make its by-laws and other regulations. Such corporation shall at all times have a lien upon all stock or property of its mem-. bers invested therein, for all debts due from them to such corporation.

SEC. 5. Any corporation which has a lien upon the stock of any stockholder therein as provided by the preceding section, may give notice to such stockholder that unless he shall pay his indebtedness to said corporation within thirty days from the time of giving such notice, then such corporation will proceed to sell and transfer the stock of such stockholder in said corporation, and upon default of payment said corporation may sell the stock of such indebted stockholder in the same manner and by the same procedure as is hereinbefore provided for the sale of the stock of a subscriber who has not paid up his subscription, and any such corporation may prescribe by its by-laws the manner of giving the notice required by this section.

SEC. 6. Whenever the purchaser of said stock shall have complied with the conditions of said sale, the corporation

shall issue new certificates of stock to such purchaser, or to his order, and shall cancel upon the books of the corporation the certificates of such indebted stockholders, and the new certificates so issued shall entitle the holders thereof to all the privileges, rights, and interests of a stockholder in such corporation.

assigned as

SEC. 7. Whenever any stockholder in any such corporation When stock shall have made a transfer or assignment of his stock as se- security. curity for his indebtedness to a third party, and afterwards shall become a debtor to such corporation, such corporation may sell the equity of redemption of such stock in the same manner as is provided for the sale of stock on which it has a lien, and shall credit the amount received from such sale to such indebted stockholder. Such corporation may require the party holding the transfer or assignment of such stock, to give a statement to the treasurer of such corporation, under oath, of the amount for which said stock was pledged; and if said party shall not give such a statement at or before the time such sale is to take place, he shall forfeit all claim and lien on such stock or any part thereof, and such corporation may sell the same as herein provided.

not affected.

SEC. 8. Nothing contained in the three preceding sections Lien, etc., shall affect any lien or right acquired by any other party by virtue of any attachment or levy of execution upon the stock of any stockholder in any such corporation.

ity for.

SEC. 9. The stockholders of all corporations shall be indi- Labor, liabilvidually liable for all labor performed for such corporations, which said liability may be enforced against any stockholder by action founded on this statute, at any time after an execu tion shall be returned unsatisfied, in whole or in part, against the corporation, or at any time after an adjudication in bankruptcy against said corporation, and the amount due on such execution shall be prima facie evidence of the amount recoverable, with costs against any such stockholder; and if any stockholder shall be compelled by any such action to pay the debts of any creditor, or any part thereof, he shall have the right to call upon all the responsible stockholders to contribute their equal part of the sum so paid by him as aforesaid, and may sue them, jointly or severally, or any number of them, and recover in such action the amount due from the stockholder or stockholders so sued. Nothing in this section contained shall be construed as taking away any of the remedies provided by the judicature act, so-called.

CHAPTER 4.

Co-operative Corporations.

SECTION 1. Corporations organized to conduct any lawful Co-operative business upon a co-operative plan shall be governed by the how governed.

corporations,

Co-operative plan.

Proviso.

Shares of stock, what printed upon.

Provisions not applicable.

Power of stockholders.

provisions of this chapter as to the mode of corporate management, manner of distribution of earnings and profits, their powers and optional principles of doing business, and as to any other matters, and things prescribed herein where the provisions of this chapter are inconsistent with or prescribe regulations or features differing wholly or to any extent from those provisions of this act in other chapters hereof governing corporations generally. Otherwise, such cooperative corporations shall be subject to the provisions of this act governing corporations generally, and excepting as provided in section one of chapter one of part three of this act, shall be deemed to be corporations for pecuniary profit.

Subdivision 1.

SEC. 2. Such corporations may engage in any lawful business within this state upon any co-operative plan adopted by the incorporators, or by the stockholders at any annual or special meeting. For the purpose of this chapter, the term "co-operative plan" shall be deemed to mean a mode of operation whereby the earnings of the corporation are distributed, in whole or in part, on the basis of, or in proportion to, the value of property bought from or sold to stockholders or members or other persons, or labor performed for or services rendered to the corporation: Provided, That the foregoing definition shall not be construed as prohibiting any such corporation from paying limited dividends to stockholders based upon stock investment, or from reserving a certain proportion of earnings for future operations or for future distribution, before general distribution of net earnings shall have been authorized and made.

SEC. 3. (a) (a) There shall be printed upon each share of stock issued by such corporations a condensed statement of every article of by-law which in any wise limits the stockholders' right to assign or transfer such shares or to vote the total number of shares held at meetings of the corporation, or which forbids voting by proxy;

(b) The provisions of the uniform stock transfer law of this state shall not be held to apply to the shares of stock of such co-operative corporations in any manner or to any extent inconsistent with the provisions of this chapter.

SEC. 4. The stockholders of any such corporation shall have power: To adopt by-laws for the government and regulation of its business management, and to amend such bylaws; to determine the manner of distributing the earnings of the company upon a co-operative plan; to limit and define the powers and duties and the number of directors and officers; to delegate to the directors any particular power or authority which the stockholders themselves possess, excepting the right to elect or dismiss directors and to amend the articles of incorporation; to fix the time for holding the

elections of its directors, which shall be annual unless a longer term is prescribed in the articles or by-laws; to provide. the manner in which directors and officers may be removed and their successors elected at any time by vote of the stockholders or members; to determine the manner in which stockholders may vote at stockholders' meetings by mail, and whether or not proxies may be employed, and if so when and how; to determine whether or not stockholders shall be limited to one vote each, regardless of the number of shares held; to determine the number of stockholders or directors attend ing any meeting, or the number of shares represented at any meeting of stockholders shall constitute a quorum, which shall not be less than a majority of the stock outstanding in the case of meetings of the shareholders; and to provide a limitation upon the amount of capital stock which may be owned by any one stockholder therein; all of which shall be included in the by-laws or in the articles.

qualifications,

SEC. 5. The stockholders of every such corporation may Membership, also provide in their articles or by-laws, the necessary quali etc. fications of stockholders or members, together with provisions limiting, prescribing or regulating the transfer of such membership, and the terms and conditions under which, if at all, certificates of stock may be transferred. No sale, transfer, or assignment of membership rights or of any stock in any such corporation shall be valid unless made in accordance with the articles or the by-laws of the corporation; nor shall any purchase and sale of any such stockholder's stock or privileges in such corporation made under execution, or in the course of bankruptcy proceedings, or by any legal process or by operation of law, give any person any stockholder's or membership right, title or interest in and to such corporation, unless in accordance with the articles or the by-laws of such corporation.

to articles.

SEC. 6. The by-laws of every such corporation shall pro- Amendment vide a practical method and plan whereby one-tenth of the entire number of members or stockholders may propose any desired amendment to the articles or to the by-laws of the corporation, and whereby any amendment so proposed shall be voted upon at the next annual meeting by the members or stockholders. Such by-laws shall also provide a practical method and plan whereby stockholders or members who are unable to be present at meetings of the corporation may vote by mail for directors or upon any amendment or proposition to be voted on at any regular or special meeting of stockholders or members.

reserve fund.

SEC. 7. At any regular meeting, or any regularly called Investment of special meeting, at which the quorum fixed by the by-laws shall be present, the stockholders of any such corporation may by a majority vote of such stockholders present or represented (if proxies be permitted) subscribe for shares and invest a portion of the reserve fund of such corporation not

Business of

pany, pur

chase of.

to exceed, at any time, twenty per cent in the aggregate of its capital in the capital stock of any other similar co-operative company or companies with which it desires to co-operate or affiliate.

SEC. 8. Whenever such corporation shall purchase the another com- business of another company, person or persons, it may pay for the same in whole or in part by issuing to the selling association, person or persons, shares of its capital stock to an amount which, at par value, would equal the fair market value of the business so purchased, and in such case the transfer to the association of such business of such valuation shall be equivalent to payment in cash for the shares of stock so issued: Provided, That suitable provision be made in the by-laws of such corporation for admitting the vendors to such membership.

Proviso.

Earnings, distribution of.

Surplus earnings.

Contracts and agreements.

Subdivision 2.-Distribution of Earnings.

SEC. 9. The stockholders of every such corporation shall provide in the by-laws what per cent upon the paid-up capital stock of such corporation, not exceeding seven per cent per annum, shall be first paid and distributed to the holders of such paid-up capital stock as dividends before dividing the surplus earnings or profits, as herein provided, and whether or not such dividends shall be cumulative. Said by-laws shall further provide what amount or percentage of the annual profit and earnings of the business, over and above such dividends to stockholders, shall be retained and kept in the treasury of the corporation as a reserve fund, and in what manner, method and proportion the surplus annual earnings and profits of the business of such corporation, in excess of such dividends and reserve fund, shall be divided up and distributed as a co-operative dividend, under the co-operative plan or principle adopted by such corporation among members doing business with the corporation; and may also provide for co-operative dividends to non-members.

SEC. 10. The surplus earnings and profits of every such corporation shall be distributed to those entitled thereto at such times as the by-laws may provide, which shall be as often as once in each year. If any such corporation shall fail for five consecutive years to pay the dividend upon its paid-up capital stock in accordance with the provisions of its by-laws, a majority of the stockholders may petition the circuit court in chancery, in the county in which the principal office of such corporation is located, for the dissolution. of the corporation; and if, upon the hearing, the court finds the allegations of the petition are substantially true, the corporation may be dissolved, its business wound up and its property distributed as the court may order and decree.

SEC. 11. Every such corporation engaged in buying, handling, selling or dealing in farm produce or other agricultural

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