Chapter 15 - § 15.15 • LIMITED COOPERATIVE ASSOCIATIONS

• Jurisdiction: Colorado

§ 15.15 • LIMITED COOPERATIVE ASSOCIATIONS

In 2001, Wyoming enacted a statute that provides for non-patron investors to join a cooperative as a member with voting rights.¹⁶⁷ More detailed statutes were subsequently enacted in Minnesota (2003),¹⁶⁸ Tennessee (2007),¹⁶⁹ Iowa (2005),¹⁷⁰ Wisconsin (2006),¹⁷¹ Utah (2008),¹⁷² Oklahoma (2009),¹⁷³ and the District of Columbia (2011).¹⁷⁴ As a result of the Wyoming and Minnesota statutes, the National Conference of Commissioners on Uniform State Laws (NCCUSL) produced the Uniform Limited Cooperative Association Act (ULCAA or the Act), which was approved for submission to the states for their consideration in 2007. Since then, ULCAA has been adopted or is under consideration in the District of Columbia, Kentucky, Nebraska (adopted a prior draft of ULCAA), Oklahoma, Utah, and Vermont. ULCAA was adopted by the Colorado legislature in 2011 and went into effect on April 2, 2012.¹⁷⁵

The organizations created under ULCAA and similar statutes are generally known as "limited cooperative associations."

In summary, ULCAA provides for a single entity built on the law of unincorporated entities but grounded in cooperative principles. It contains many provisions consistent with, and protective of, cooperative principles. It also allows for investor members and provides statutory mechanisms necessary to facilitate non-patron member investment. In doing so it may compromise, but not eliminate, some cooperative principles. In large part those compromises explain why the name of the entity is "limited cooperative association." ULCAA may provide an excellent alternative entity choice in a selected range of situations even though it is not an entity panacea that can be used "universally." It provides an "off-the-rack" starting point for planning an entity that will have strong cooperative characteristics under a governing law that specifically recognizes the uniqueness of patron members but whose activity requires "outside" equity investment.¹⁷⁶

ULCAA has both mandatory and optional provisions. Limited cooperative associations being unincorporated entities, it is thought drafters of the organizations' governing documents are permitted great leeway in altering many of the default terms provided by the Act. In some cases, it is clear what statutory provisions can be altered; in others, there may be a lack of clarity. In some places where alterations can clearly be made, there are statutory limits on ranges within which alterations can...