The Washington Cooperative Associations Act, specifically RCW 24.06.065, addresses the requirements for notice of meetings. For an annual meeting of a cooperative association, the Act mandates that notice must be given to all members not less than ten nor more than fifty days prior to the date of the meeting. This notice must be provided in writing or by electronic transmission, as specified in the association’s bylaws. The purpose of this statutory requirement is to ensure that all members have adequate time to prepare for and attend the annual meeting, where significant decisions regarding the cooperative’s operations, governance, and leadership are typically made. Failure to provide proper notice can invalidate actions taken at the meeting and may lead to legal challenges. The Act also allows for alternative methods of notice if specified in the bylaws, such as publication in a widely circulated newspaper within the cooperative’s service area or direct mail to the last known address of each member. The specific content of the notice, including the date, time, and location of the meeting, as well as any proposed agenda items, is also crucial for informing members.

The Washington Cooperative Associations Act, specifically RCW 24.06.150, outlines the requirements for the distribution of net earnings. When a cooperative association operates on a non-profit basis, the distribution of net earnings is subject to specific limitations. These limitations are designed to ensure that the cooperative’s primary purpose of serving its members is maintained, rather than operating as a profit-maximizing entity in the traditional sense. While a non-profit cooperative can distribute net earnings, these distributions are typically restricted to patronage refunds to members based on their use of the cooperative’s services. Dividends on capital stock, if any, are generally limited to a statutory or bylaw-specified rate, and these are paid on the capital contributed by members, not on their patronage. Furthermore, any remaining net earnings after patronage refunds and limited dividends may be allocated to unallocated reserves or used for other purposes consistent with the cooperative’s non-profit mission. The question asks about the distribution of net earnings in a non-profit cooperative in Washington. Option a) correctly identifies that distributions are primarily limited to patronage refunds to members and dividends on capital stock, subject to statutory or bylaw limitations. Option b) is incorrect because while reserves can be established, it is not the primary or sole method of distribution. Option c) is incorrect as distributions are not unlimited and are governed by specific rules. Option d) is incorrect because while educational purposes are a valid use of funds, they are not the sole or primary mechanism for distributing net earnings to members.

In Washington State, the Revised Code of Washington (RCW) governs cooperative associations. Specifically, RCW 24.06, the Washington Nonprofit Corporation Act, often applies to cooperatives unless a specific cooperative statute dictates otherwise. For a cooperative seeking to amend its articles of incorporation, the process typically requires a resolution approved by a specified percentage of the voting membership, not just the board of directors. The articles of incorporation represent the foundational document of the cooperative, and significant changes to its structure or purpose necessitate member approval to uphold democratic principles. While the board of directors manages the day-to-day operations and can approve certain internal policies, amendments to the articles of incorporation, which define the cooperative’s existence and fundamental powers, require a broader consensus from the membership. This ensures that the cooperative remains responsive to the will of its members, reflecting the core cooperative principle of democratic member control. The exact percentage for such an amendment is usually detailed in the cooperative’s bylaws, but a supermajority of the voting membership is a common requirement for amending fundamental governing documents like articles of incorporation.

Washington’s Cooperative Associations Act, specifically RCW 24.06.045, addresses the filing of annual reports and the potential consequences of non-compliance. When a cooperative association fails to file its annual report for two consecutive years, the Secretary of State is authorized to administratively dissolve the association. This dissolution is a formal process that terminates the legal existence of the cooperative. Following dissolution, the cooperative’s assets are typically subject to distribution according to the cooperative’s bylaws and applicable law, often involving distribution to members based on their patronage or capital contributions. The dissolution process itself does not automatically vest ownership of assets in the state or its officials, nor does it automatically transfer assets to a successor cooperative unless specifically provided for in the bylaws or through a merger agreement. The primary consequence of failing to file the annual report is the loss of the cooperative’s legal standing and its eventual dissolution.

In Washington State, the Cooperative Corporations Act, specifically Revised Code of Washington (RCW) Chapter 24.06, governs the formation and operation of cooperative associations. When a cooperative association seeks to amend its articles of incorporation, the process requires adherence to specific statutory provisions to ensure the amendment is legally valid and binding. The Act mandates that any amendment must be adopted by a vote of the members or directors, depending on the cooperative’s bylaws and the nature of the amendment. Following adoption, the amended articles must be filed with the Washington Secretary of State. RCW 24.06.230 outlines the requirements for filing amendments, stating that “amended articles shall be delivered to the Secretary of State for filing.” This delivery constitutes the formal legal act of amendment. The question asks about the *effective date* of an amendment. Unless the articles of incorporation or the resolution adopting the amendment specify a different date, the amendment becomes effective upon filing with the Secretary of State. This is a common principle in corporate law, where filing with the designated state authority typically marks the legal effectiveness of changes to foundational documents. Therefore, the critical action for the amendment’s legal recognition is its submission and acceptance by the Secretary of State.

Washington’s Cooperative Associations Act, specifically Revised Code of Washington (RCW) Chapter 24.06, governs the formation and operation of cooperatives. A key aspect of this act pertains to the rights and responsibilities of members, particularly concerning withdrawal and the distribution of equity. When a member of a cooperative association organized under RCW 24.06 withdraws, the association must, in accordance with its articles of incorporation, bylaws, or a written agreement, pay the withdrawing member the value of their membership or stock. This value is typically determined based on the member’s capital contributions, often adjusted for any accumulated losses or retained earnings allocated to that member. The act emphasizes that such distributions are subject to the cooperative’s financial condition and the terms outlined in its governing documents. It is crucial to note that the act does not mandate immediate payment upon withdrawal; rather, it requires payment within a reasonable period or as specified by the association’s rules, ensuring the cooperative’s ongoing financial stability. The distribution is considered a return of equity, not a profit distribution in the traditional sense, and its timing and valuation are critical operational considerations for cooperative management.

The scenario presented involves a cooperative association in Washington State that has issued non-voting preferred stock to raise capital. The question probes the cooperative’s ability to repurchase this stock, specifically considering the implications of Washington’s Revised Code of Washington (RCW) 24.06.220, which governs the repurchase of membership interests or shares in a cooperative. This statute generally allows a cooperative to repurchase its own stock or membership interests, provided it is done in accordance with the cooperative’s articles of incorporation, bylaws, and any separate agreements. Crucially, the repurchase must not impair the cooperative’s ability to meet its obligations to its members or creditors. In the context of non-voting preferred stock, the cooperative can repurchase it if its articles of incorporation or bylaws permit such repurchases and if the cooperative maintains sufficient assets and financial stability to do so without jeopardizing its operational capacity or its commitments to its voting membership. The key consideration is the absence of any statutory prohibition against repurchasing preferred stock, coupled with the cooperative’s internal governance documents and financial health. The question is designed to test the understanding of the flexibility cooperatives have in managing their capital structure, balanced against the fiduciary duties owed to the membership and creditors, as outlined in Washington cooperative statutes.

In Washington State, cooperative associations are governed by specific statutes, primarily the Revised Code of Washington (RCW) Title 24, Chapter 24.06, the “Nonprofit Corporation Act,” and potentially specific chapters related to agricultural cooperatives or other specialized forms. When a cooperative faces dissolution, the distribution of assets is a critical process. The RCW outlines a hierarchical order for asset distribution to ensure fairness and adherence to legal requirements. The first priority is always to satisfy any outstanding debts and liabilities of the cooperative. This includes obligations to creditors, suppliers, and any other parties to whom the cooperative owes money. Following the settlement of all debts, the remaining assets are then distributed to the members. The method of distribution to members is typically dictated by the cooperative’s articles of incorporation, bylaws, or a specific dissolution plan approved by the membership. Common methods include distribution based on patronage, capital contributions, or an equal distribution. However, the statute generally prioritizes the return of any remaining capital contributions made by members before any patronage-based distributions, unless the governing documents specify otherwise. Any residual assets after these distributions, if any, are then typically distributed to a designated non-profit organization or for a public purpose, as stipulated in the articles of incorporation or bylaws, or as determined by the members or a court in the absence of such provisions. The key principle is to wind up the affairs of the cooperative in an orderly manner, fulfilling all obligations and distributing remaining value equitably among those with a claim.

The Washington State Business Corporation Act, specifically Revised Code of Washington (RCW) 24.03A.425, governs the procedure for a cooperative to dissolve. For a voluntary dissolution initiated by the members, the process requires a resolution approved by a majority of the votes cast at a members’ meeting, provided a quorum is present. This is distinct from a judicial dissolution or dissolution initiated by the board of directors. The key element is the member vote, reflecting the democratic nature of cooperatives. The filing of articles of dissolution with the Secretary of State is the final administrative step to effectuate the dissolution, but the underlying legal authority stems from the member approval. Therefore, the member vote is the foundational requirement for voluntary dissolution.

In Washington State, the Cooperative Corporations Act, specifically Revised Code of Washington (RCW) 24.06, governs the formation and operation of cooperative associations. A critical aspect of this act pertains to the dissolution of a cooperative. When a cooperative dissolves, its assets are distributed in a specific order of priority to ensure that all claims are addressed appropriately. The RCW 24.06.300 outlines this distribution hierarchy. First, all liabilities and obligations of the corporation must be paid. This includes secured and unsecured debts, as well as any accrued expenses and taxes. Following the satisfaction of all debts and liabilities, any remaining assets are distributed to the members of the cooperative. The distribution to members is typically made in accordance with the cooperative’s articles of incorporation or bylaws, which often specify whether distribution is based on patronage, capital contributions, or a combination thereof. If the articles or bylaws do not specify a method, or if there are remaining assets after member distribution, any residual property can be distributed to other non-profit organizations or entities as designated by the board of directors or members, provided such a provision is included in the dissolution plan and is consistent with the cooperative’s purpose and applicable law. The key principle is to settle all external claims before distributing any remaining value to the membership.

The scenario involves a cooperative that has elected to distribute patronage dividends. In Washington State, under the Cooperative Association Act (RCW Chapter 24.06), a cooperative may distribute patronage dividends to its members based on their patronage. The determination of whether these dividends are taxable as ordinary income or as capital gains to the member depends on the nature of the cooperative and the specific provisions of the Internal Revenue Code (IRC) and Washington State tax law. For most agricultural cooperatives, patronage dividends are generally considered a reduction of the cost of goods or services for the member, or additional income, and are taxed as ordinary income. However, if the cooperative is structured in a way that the dividends are paid on capital contributions rather than patronage, or if the cooperative’s bylaws specify otherwise for certain classes of dividends, the tax treatment might differ. In this case, the cooperative’s bylaws clearly state that patronage dividends are to be distributed based on the volume of business conducted by each member. This direct link to patronage, rather than investment, strongly suggests that the dividends are intended to reflect the member’s participation in the cooperative’s activities. Therefore, for tax purposes, these distributions are typically treated as ordinary income to the recipient members in the year received, reflecting the economic benefit derived from their business dealings with the cooperative. This treatment aligns with the principle that patronage dividends are a return on business activity, not an investment return.

The Washington State Business Corporation Act, which governs many aspects of cooperative formation and operation, requires that a cooperative’s articles of incorporation specify the manner in which members are admitted or qualified. While the Act provides a framework, the specific details of membership qualifications and admission procedures are typically elaborated within the cooperative’s bylaws. Bylaws are internal rules adopted by the members of a cooperative to govern its operations, including membership criteria, voting rights, and the distribution of patronage dividends. The articles of incorporation, filed with the Washington Secretary of State, establish the cooperative’s legal existence and fundamental structure, but they often delegate more detailed operational rules to the bylaws. Member admission is a core governance function that is best detailed in the bylaws to allow for flexibility as the cooperative evolves, provided these provisions align with the articles and state law. The board of directors is responsible for overseeing the implementation of these bylaws, including the admission of new members according to the established procedures. The cooperative’s membership agreement, if one exists, would then operationalize the bylaws’ requirements for individual applicants.

The scenario involves a cooperative in Washington State that has elected to operate under the Washington Business Corporation Act (WBCA), specifically Chapter 24.06 RCW, which governs nonprofit corporations, rather than the specific cooperative statutes like the Cooperative Association Act (RCW 24.04). This choice of statutory framework is critical. The question probes the implications of this choice on the cooperative’s governance and member rights, particularly concerning the distribution of patronage dividends. Under the WBCA, particularly the provisions applicable to nonprofit corporations which may be adopted by reference or as a framework for certain cooperative structures, the distribution of surplus earnings or patronage dividends is governed by the cooperative’s articles of incorporation, bylaws, and the specific provisions of the WBCA that allow for such distributions to members based on their patronage, provided it is not for the primary purpose of profit in the traditional sense but rather to serve the mutual benefit of the members. Washington law, including RCW 24.04 (Cooperative Associations Act) and the WBCA (Title 24 RCW), generally permits cooperatives to distribute net earnings to members in proportion to their patronage. However, the specific mechanism and limitations are defined by the cooperative’s governing documents and the chosen statutory framework. If a cooperative chooses to operate under the general nonprofit corporation provisions (Chapter 24.06 RCW), its ability to distribute patronage dividends is still permissible, but the legal basis and any restrictions would stem from those provisions and its own organizational documents. The WBCA, while primarily for business corporations, can be adapted for entities with cooperative principles. The key is that the articles and bylaws must clearly outline the patronage dividend policy. The question implicitly tests the understanding that while the WBCA might not have explicit cooperative sections like RCW 24.04, it provides a sufficient framework for nonprofit entities, including those with cooperative aims, to establish and operate patronage dividend systems as long as their governing documents are properly drafted. The ability to distribute patronage dividends is a fundamental characteristic of cooperatives, and the WBCA, when chosen as the governing statute, does not inherently prohibit this practice if provided for in the cooperative’s charter and bylaws. Therefore, the cooperative can legally distribute patronage dividends if its articles of incorporation and bylaws permit such distributions, aligning with the principles of cooperative enterprise even under the general nonprofit corporation framework.

The Washington Cooperative Associations Act, specifically RCW 24.06.045, addresses the dissolution of a cooperative. When a cooperative is dissolved, its assets are distributed after all liabilities have been satisfied. The distribution of remaining assets to members is typically governed by the cooperative’s articles of incorporation, bylaws, or a specific dissolution plan. In the absence of such provisions, or if the provisions are silent on the matter, the distribution is often made on the basis of the members’ contributions to the cooperative, which could include patronage dividends or capital contributions. However, the Act also allows for distribution to be made in proportion to the value of the members’ equity interests, which is a common approach in cooperative structures. This ensures that members who have contributed more capital or engaged more in patronage receive a share commensurate with their investment and participation. The principle is to return capital and accumulated surplus equitably among those who built the cooperative.

The Washington State Consumer Protection Act (CPA), specifically RCW 19.86, prohibits unfair or deceptive acts or practices in the conduct of any trade or commerce. For a cooperative, a misrepresentation regarding the nature of its services or the benefits of membership could be considered a deceptive practice. The Cooperative Association Act, found in RCW 24.06, governs the formation and operation of cooperatives in Washington. While this act focuses on the internal governance and structure, it does not shield a cooperative from general consumer protection laws. A cooperative is still considered to be engaged in trade or commerce when it markets its services or products to members or potential members. Therefore, if a cooperative in Washington makes false or misleading statements about the guaranteed annual patronage dividends it will distribute, it is engaging in a deceptive practice under the CPA. The CPA allows for private rights of action, meaning an individual consumer or a class of consumers who have been harmed by such deceptive practices can sue. Remedies can include actual damages, statutory damages, and attorney fees. The existence of a cooperative structure does not exempt it from the fundamental requirement of honesty in its dealings with its members, especially when those dealings involve representations about financial returns or benefits. The key is whether the representation was likely to mislead a reasonable consumer and whether that misrepresentation caused damage.

The Washington State Consumer Protection Act (CPA), specifically Revised Code of Washington (RCW) 19.86, prohibits unfair or deceptive acts or practices in the conduct of any trade or commerce. When a cooperative, such as a housing cooperative governed by RCW 64.34 (Condominium Act) or similar statutes that may apply to cooperatives in Washington, engages in practices that mislead or deceive its members or potential members regarding the availability or terms of services, such as maintenance, repairs, or access to common amenities, it can fall under the purview of the CPA. The key is whether the act or practice is both unfair or deceptive and occurs in trade or commerce. While cooperatives are member-owned and often non-profit, their operations involving the provision of services to members for a fee, and their engagement with third-party vendors for maintenance and repairs, are generally considered to be within the scope of “trade or commerce” for the purposes of the CPA. A cooperative’s misrepresentation of a critical service’s availability, especially if it induces membership or continued participation, can be deemed deceptive. For instance, if a cooperative advertises guaranteed monthly landscaping services but consistently fails to provide them without disclosure, and this impacts the habitability or desirability of the units, it could be a violation. The CPA allows for private rights of action, enabling individuals harmed by such practices to seek damages, including treble damages and attorney fees. The scenario presented involves a misrepresentation about a material aspect of the cooperative’s service provision, directly impacting members’ use and enjoyment of their property, which aligns with the CPA’s prohibition against deceptive practices in commerce.

The scenario describes a cooperative seeking to amend its articles of incorporation in Washington State. Washington’s cooperative law, specifically the Cooperative Associations Act (RCW Chapter 24.06), governs such amendments. For a cooperative to amend its articles, the process typically requires a resolution adopted by the board of directors, followed by approval from a specified percentage of the membership. The exact percentage for membership approval is often detailed in the cooperative’s bylaws or the articles themselves, but a common statutory requirement, or a standard adopted by many cooperatives, is a two-thirds majority vote of the members present and voting at a duly called meeting, provided a quorum is met. This ensures significant member consensus for fundamental changes to the cooperative’s governing documents. Without this level of member approval, any amendment would be considered invalid and not in compliance with the cooperative’s governance structure and state law. The board’s unilateral decision without membership ratification would bypass a core principle of cooperative democracy.

Washington’s Cooperative Corporations Act, specifically Revised Code of Washington (RCW) Chapter 24.06, governs the formation and operation of cooperative associations. A critical aspect of this act pertains to the rights and responsibilities of members, particularly concerning patronage dividends. Patronage dividends represent distributions of net earnings of a cooperative to its members based on their use of the cooperative’s services, rather than on their capital investment. The Act allows for the distribution of patronage dividends to members in proportion to their patronage. For a cooperative to legally distribute patronage dividends, its articles of incorporation or bylaws must authorize such distributions. Furthermore, the Act emphasizes that these distributions are typically made to members who have patronized the cooperative during the fiscal period for which the dividends are declared. The calculation of patronage dividends is usually based on the volume or value of business conducted by each member with the cooperative. The Act also addresses the tax implications, often allowing for the deferral of corporate income tax on patronage dividends if they are distributed to members in accordance with the cooperative’s organizational documents and the Act’s provisions. This encourages the cooperative structure by allowing earnings to be taxed at the member level rather than at the corporate level.

The Washington State Legislature, through the Cooperative Associations Act (RCW Chapter 24.06), grants significant flexibility to cooperative associations in structuring their governance and operations. One key aspect of this flexibility relates to the amendment of articles of incorporation. While the Act requires a certain threshold for member approval of significant changes, the specific process and required vote percentage for amending articles of incorporation are primarily dictated by the cooperative’s own bylaws, provided those bylaws are not in conflict with the Act or other applicable state law. The Act generally mandates a two-thirds majority vote of members present and voting at a meeting, or by written consent, for amendments to the articles of incorporation. However, the bylaws can establish a different voting threshold, such as a simple majority, as long as it is clearly defined and consistently applied. Therefore, the most accurate determination of the required vote hinges on what the cooperative’s governing documents, specifically its bylaws, stipulate, assuming compliance with the minimum standards set forth in the Cooperative Associations Act. The Act’s provisions serve as a baseline, but internal governance documents often elaborate on or modify these requirements within legal bounds.

The Washington Cooperative Associations Act, specifically Revised Code of Washington (RCW) 24.06.055, outlines the requirements for amending articles of incorporation. For a cooperative association, amendments generally require a resolution approved by the board of directors and then a vote by the membership. The statute mandates that such amendments must be approved by a majority of the members voting on the proposed amendment at a meeting where a quorum is present, or by a greater percentage if specified in the articles or bylaws. Furthermore, RCW 24.06.055(3) states that the amendment becomes effective upon filing with the Secretary of State. The question asks about the process for amending the articles to change the name and purpose of a cooperative. This necessitates a formal amendment procedure. The board of directors would typically initiate the process by proposing the changes. These proposed changes must then be presented to the membership for approval. The approval threshold is crucial; while a simple majority of those voting is often sufficient, the articles or bylaws might stipulate a higher requirement. Once approved by the membership, the amended articles must be filed with the Washington Secretary of State to become legally effective. Therefore, the correct sequence involves board proposal, membership approval, and subsequent filing.

In Washington State, a cooperative association, when seeking to amend its articles of incorporation to change its purpose, must adhere to specific statutory procedures. The Revised Code of Washington (RCW) governs these changes. Specifically, RCW 24.06.220 outlines the process for amending articles of incorporation for non-profit corporations, which often serve as the framework for many types of cooperatives unless a specific chapter for agricultural or other types of cooperatives dictates otherwise. The general rule requires that amendments be adopted by the board of directors and then submitted to the members for approval. The required vote for member approval of fundamental changes, such as altering the corporate purpose, is typically a supermajority, often two-thirds of the votes cast by members entitled to vote thereon at a meeting of members duly called for that purpose, or by written assent if permitted by the bylaws and statutes. A simple majority of the board of directors can propose the amendment, but member ratification is crucial for such a significant change. Therefore, the correct procedure involves both board proposal and member approval by the specified voting threshold.

The Washington State Cooperative Corporations Act, specifically Revised Code of Washington (RCW) 24.06, governs the formation and operation of cooperative associations. When a cooperative corporation is dissolved, the distribution of its assets is a crucial step. The Act prioritizes certain claims over others. Generally, after all debts and liabilities of the corporation have been paid or adequately provided for, remaining assets are distributed to members. The specific method of distribution to members is typically outlined in the cooperative’s articles of incorporation or bylaws. However, if the articles or bylaws are silent on this matter, or if they provide for a distribution that is not in accordance with the cooperative’s purposes, the distribution is made to the members in proportion to their respective patronage or contributions. This ensures that the benefits of the cooperative’s residual assets are shared among those who actively participated in its operations, reflecting the cooperative principle of member economic participation. It is important to note that any remaining assets after member distribution, if any, are typically handled according to the articles of incorporation or bylaws, which might direct them to another cooperative, a non-profit organization, or other specified entities, but member distribution takes precedence after liabilities.

Washington’s Cooperative Corporations Act, specifically RCW 24.06.305, outlines the procedures for a cooperative to amend its articles of incorporation. The process requires a resolution by the board of trustees, followed by a vote of the members. For an amendment to be adopted, it must receive the affirmative vote of a majority of the members present and voting at a meeting where a quorum is present, unless the articles of incorporation or bylaws specify a higher voting threshold. The question describes a scenario where an amendment to the articles of incorporation was proposed and voted upon. The results show 45% of the total membership voted in favor, 20% voted against, and 35% did not vote. A quorum for this meeting was established as 40% of the total membership. The amendment received a majority of the votes cast by members present and voting, as 45% (in favor) is greater than 20% (against). Since a quorum was present (40% of total membership), and the amendment received a majority of the votes cast by those present and voting, the amendment is validly adopted according to Washington law, assuming no higher voting threshold was stipulated in the cooperative’s governing documents. The key is the majority of votes cast by members present and voting, not a majority of the total membership.

The scenario involves a cooperative’s bylaws and a member’s attempt to amend them. In Washington State, cooperative law, particularly as it relates to member rights and governance, is primarily governed by the Revised Code of Washington (RCW) Title 24, specifically Chapter 24.06 for nonprofit corporations, which often serves as a framework for cooperatives unless otherwise specified. While cooperatives can adopt their own bylaws, these bylaws must be consistent with state law. A key principle in cooperative governance is the democratic control by members. Amendments to bylaws typically require a specific voting threshold, often a supermajority, as outlined in the cooperative’s own governing documents. However, the question implies a situation where a member unilaterally proposes an amendment without following the established procedures for member-initiated proposals or for the board’s consideration. The RCW outlines the general requirements for corporate governance, including how bylaws are adopted and amended, and these procedures are designed to ensure fair representation and prevent arbitrary changes. For a member to propose an amendment that is then considered by the membership, there is usually a process that involves either a petition signed by a certain percentage of members or submission to the board for inclusion on the agenda. Without such a procedural step, the proposed amendment, as described, would not be formally placed for a vote. The concept of member-driven change is central to cooperatives, but it operates within a structured framework to maintain order and fairness. The ability of a single member to bypass established procedural rules for bylaw amendments is not a recognized mechanism under typical cooperative governance statutes or common practice, as it undermines the collective decision-making process and the authority of the established governance structure. Therefore, the member’s action, as presented, is procedurally invalid for initiating a bylaw amendment vote.

Washington’s Cooperative Corporations Act, specifically RCW 24.06.130, addresses the filing requirements for amendments to articles of incorporation. When a cooperative corporation in Washington files an amendment to its articles of incorporation, it must submit a document to the Secretary of State. This document, often referred to as an amendment certificate or articles of amendment, must contain specific information to be legally effective. According to the statute, this includes the name of the cooperative corporation, the text of the amendment being adopted, and the date of adoption. Furthermore, it must be accompanied by a statement that the amendment was adopted in accordance with the provisions of the articles of incorporation and the Cooperative Corporations Act. The act mandates that such amendments become effective upon filing with the Secretary of State, unless a different effective date is specified in the amendment itself and the amendment is filed on or before the specified date. This ensures that changes to the fundamental governing documents of a cooperative are properly recorded and publicly accessible, maintaining transparency and legal compliance within the state of Washington.

The scenario describes a situation where a cooperative has experienced a significant decline in its membership base and faces substantial operating losses. The cooperative is chartered under Washington state law. In such circumstances, Washington’s cooperative statutes, specifically the Revised Code of Washington (RCW) Title 24, Chapter 24.06, address the dissolution of cooperatives. While the cooperative’s articles of incorporation and bylaws are paramount, RCW 24.06.210 outlines the general procedure for dissolution when a cooperative becomes inactive or unable to meet its obligations. This typically involves a resolution by the board of directors, followed by a vote of the members. However, if the cooperative is insolvent or ceases to operate, a court-supervised dissolution might be necessary to ensure fair distribution of assets and settlement of debts. The RCW emphasizes that upon dissolution, after paying all debts and liabilities, any remaining assets shall be distributed among members in proportion to their patronage or according to provisions in the articles of incorporation or bylaws. If the cooperative has no provisions for asset distribution upon dissolution, and if it was formed for profit, the remaining assets are distributed to members according to their respective interests. If it was a non-profit cooperative, the distribution might go to another non-profit organization or as otherwise provided by law or the cooperative’s governing documents. Given the significant losses and membership decline, the cooperative is likely facing insolvency, making a formal dissolution process essential. The board must act diligently to protect the interests of members and creditors, adhering strictly to the procedures mandated by Washington law. The most appropriate initial step for the board of directors, especially in a situation of severe financial distress and potential insolvency, is to convene a special meeting to formally consider and initiate the dissolution process, ensuring all legal requirements are met.

The Washington Cooperative Associations Act, specifically Revised Code of Washington (RCW) 24.06.070, outlines the requirements for amending articles of incorporation. For a cooperative association to amend its articles, the proposed amendment must be adopted by a vote of at least two-thirds of the members present and voting at a meeting of the members, provided a quorum is present. The notice of the meeting must include the proposed amendment. Alternatively, if the articles permit, amendments can be adopted by the written assent of two-thirds of the members. This requirement ensures that significant changes to the cooperative’s fundamental governing document receive substantial member approval, reflecting the democratic principles of cooperative governance. The act emphasizes member participation and informed consent in such critical decisions. The options provided test the understanding of the specific voting thresholds and procedural requirements for amending articles of incorporation under Washington state law for cooperatives.

Washington’s Cooperative Corporations Act, specifically Revised Code of Washington (RCW) Chapter 24.06, governs the formation and operation of cooperative associations. A key aspect of this act relates to the distribution of net retained earnings, often referred to as patronage dividends or refunds. When a cooperative distributes these earnings to its members based on their patronage, the distribution must be made in accordance with the cooperative’s articles of incorporation and bylaws. RCW 24.06.100 outlines that net retained earnings may be distributed to members in proportion to their patronage, or in other equitable ways as determined by the board and set forth in the bylaws. Importantly, these distributions are typically made to members who were members during the period the earnings were generated. The question concerns a scenario where a cooperative, after the fiscal year end and after the annual meeting where patronage distributions were approved, discovers an error in its patronage calculations for a former member who had ceased membership before the end of that fiscal year. The cooperative cannot retroactively allocate earnings to an individual who was not a member during the period the earnings were earned, as this would violate the principle of patronage-based distribution and potentially the cooperative’s own governing documents which must align with state law. Therefore, the erroneous distribution to the former member must be reversed. The correct action is to void the erroneous distribution, which means the cooperative must reclaim the funds improperly allocated. This ensures that patronage distributions are made only to current members based on their actual patronage during the relevant period, adhering to the principles of cooperative law in Washington.

The Washington State Business Corporation Act, which governs many cooperative structures, including those operating under the cooperative principles, outlines specific requirements for the distribution of net earnings. When a cooperative incurs a net loss for a fiscal year, Washington law generally prohibits the distribution of dividends or patronage refunds to members. This prohibition is designed to protect the cooperative’s capital base and ensure its solvency. Instead, any net loss is typically carried forward and offset against future profits. Patronage refunds are distributions of net earnings that are directly related to the business done by the member with the cooperative. Dividends, on the other hand, are typically based on the capital contributed by the member, though the specific distinction can vary based on the cooperative’s articles of incorporation and bylaws. In the scenario presented, the cooperative experienced a net loss. Therefore, it cannot legally distribute patronage refunds or dividends from that year’s operations. The loss must be accounted for and carried forward. The concept of a “reserve for losses” might be relevant in internal accounting, but it does not permit a distribution of losses to members. The legal framework in Washington emphasizes the preservation of capital and the proper accounting for losses before any distributions can be made from subsequent profits.

The Washington State Business Corporation Act, which governs many cooperative structures, particularly those operating as corporations, outlines specific requirements for the distribution of patronage dividends. In Washington, a cooperative can distribute patronage dividends in cash, in the form of equity, or a combination of both. The decision on how to distribute these dividends is typically made by the board of directors, subject to the cooperative’s bylaws and any applicable statutory limitations. RCW 24.03A.455 addresses the distribution of net earnings, stating that a cooperative may distribute earnings to its members based on their patronage. There is no statutory mandate in Washington that requires patronage dividends to be distributed solely in cash. Furthermore, the Internal Revenue Code, specifically Subchapter T, governs the tax treatment of cooperatives and their patronage dividends, often allowing for deferral of tax liability for the member if the dividend is issued in the form of non-qualified written notices of allocation (which represent equity) and certain conditions are met. Therefore, a cooperative in Washington is not restricted to cash-only distributions for patronage dividends.