The New Mexico Cooperative Association Act, specifically NMSA 1978, § 53-4-1 et seq., governs the formation, operation, and dissolution of cooperative associations. A key aspect of cooperative governance is the ability of members to influence the direction of the association. This influence is typically exercised through voting rights. The Act generally grants one vote per member, regardless of the amount of capital contributed or the number of shares held, to uphold the cooperative principle of democratic control. This is a fundamental distinction from traditional corporate structures where voting power is often proportional to share ownership. Therefore, in the absence of specific provisions within the cooperative’s articles of incorporation or bylaws that deviate from this general rule and are permissible under the Act, each member is entitled to a single vote on matters presented to the membership. The Act aims to ensure that control remains with the membership as a whole, rather than being concentrated among those with greater financial investment. This principle is central to the definition and purpose of a cooperative entity.

In New Mexico, a cooperative association formed under the New Mexico Limited Liability Cooperative Act (NMSA 1978, Chapter 53, Article 16) can issue various classes of membership interests. These interests can be structured with different rights, privileges, and limitations. The Act permits the creation of non-voting membership interests, which are often used for patron members who utilize the cooperative’s services but do not wish to participate in governance. The Act also allows for the issuance of membership interests with varying distributions of profits and losses, as well as different rights upon dissolution. When a cooperative determines to issue membership interests that confer rights or obligations different from those of existing members, or to create new categories of membership, it must do so in accordance with its articles of incorporation or bylaws, and typically requires a formal resolution by the board of directors or, in some cases, approval by the existing membership. The core principle is that the terms of issuance must be clearly defined and legally permissible under the governing cooperative statutes of New Mexico. The Act emphasizes flexibility in structuring membership to meet the diverse needs of cooperative enterprises, while ensuring that all members receive adequate notice of their rights and responsibilities.

The New Mexico Limited Liability Company Act, specifically referencing the provisions concerning member withdrawal and the buy-out of a withdrawing member’s interest, dictates the process and valuation methods. When a member of a New Mexico LLC proposes to withdraw, the operating agreement typically outlines the procedure. If the operating agreement is silent or does not fully address the situation, the Act provides default provisions. A key aspect is the valuation of the withdrawn member’s interest. New Mexico law, like many states, generally favors a fair market value approach for such buyouts. This valuation is often determined by mutual agreement between the LLC and the withdrawing member. If an agreement cannot be reached, the Act may provide for an appraisal process, often involving independent third-party appraisers, to ascertain the fair value of the interest at the time of withdrawal. The payment terms for this buyout are also subject to negotiation or the provisions within the operating agreement, which might stipulate a lump sum payment or installment payments over a defined period, contingent upon the LLC’s financial health and operational capacity to avoid undue hardship. The Act aims to balance the rights of the withdrawing member to receive fair compensation with the need for the continued operational stability of the LLC.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, § 53-19-34, addresses the transfer of a member’s interest in an LLC. This statute distinguishes between a “transfer” and a “legal representative.” A transfer of a membership interest generally requires the consent of all other members unless the operating agreement specifies otherwise. However, a member’s death or dissolution does not automatically dissolve the LLC. Instead, the deceased or dissolved member’s “legal representative” (such as an executor or administrator) gains the right to receive distributions and exercise other economic rights of the deceased member, but not the management rights, unless the operating agreement permits it. This preserves the continuity of the LLC while providing for the disposition of the former member’s economic stake. The key distinction is between the transfer of the economic rights (which may be permissible under certain conditions) and the transfer of full membership rights, including management control, which typically requires broader consent.

New Mexico’s Cooperative Marketing Act, NMSA 1978, Chapter 54, Article 8, governs the formation and operation of agricultural cooperatives. A key aspect of cooperative law involves the rights and responsibilities of members and the cooperative itself, particularly concerning patronage and distributions. When a cooperative realizes net earnings, these earnings can be distributed to members based on their patronage, or retained by the cooperative. The Act permits cooperatives to set forth in their articles of incorporation or bylaws how net earnings will be handled, including the allocation of patronage dividends. These dividends are typically distributed in proportion to the amount of business each member has done with the cooperative during the fiscal year. For instance, if a cooperative generates a net earning of $100,000 and Member A conducted $20,000 worth of business while Member B conducted $30,000 worth of business, and the cooperative decides to distribute 50% of its net earnings as patronage dividends, then Member A would receive $10,000 * 0.50 * ($20,000 / $50,000) = $2,000, and Member B would receive $10,000 * 0.50 * ($30,000 / $50,000) = $3,000. The remaining earnings can be retained for capital improvements, reserves, or other corporate purposes as determined by the board of directors and membership, in accordance with the cooperative’s governing documents and applicable statutes. The Act emphasizes that distributions must be made in a manner that is fair and equitable to all members, reflecting their contribution through patronage. The specific mechanism for distribution, including whether it is in cash or certificates of equity, is usually detailed within the cooperative’s bylaws.

The New Mexico Cooperative Associations Act, specifically referencing provisions related to member rights and dissolution, outlines the procedures for winding up a cooperative. When a cooperative association is dissolved, its assets are first applied to pay off its debts and liabilities. Following the satisfaction of all outstanding obligations, any remaining assets are distributed among the members in proportion to their respective interests or patronage, as defined by the cooperative’s articles of incorporation or bylaws. This principle ensures that members, who are the owners and users of the cooperative, receive the residual value after all external claims are settled. The Act emphasizes a member-centric approach to asset distribution upon dissolution, reflecting the cooperative’s fundamental structure. This process is governed by the specific dissolution clauses within the association’s governing documents and the broader statutory framework of New Mexico.

The New Mexico Cooperative Associations Act, specifically referencing provisions concerning the rights of members in relation to patronage dividends, dictates the framework for distributing surplus earnings. When a cooperative association determines that a portion of its net earnings should be distributed as patronage dividends, the Act outlines the permissible methods for such distribution. These methods are typically based on the member’s participation in the cooperative’s activities, often measured by their patronage. The Act generally allows for distribution in cash, credits to the member’s account, or in the form of equity certificates. It also specifies that if the articles of incorporation or bylaws permit, a portion of patronage dividends may be distributed to non-member patrons based on their patronage, but this is secondary to member distributions and subject to specific limitations. The core principle is that patronage dividends are a return of excess contributions by members, reflecting their business with the association. Therefore, a distribution that directly reflects a member’s proportional contribution to the surplus earnings, regardless of the specific form of that contribution (e.g., cash sales, services rendered), aligns with the cooperative’s foundational principles and the statutory intent in New Mexico. The Act emphasizes equitable distribution based on patronage, ensuring that those who contribute most to the cooperative’s success benefit proportionally from its earnings.

The New Mexico Cooperative Associations Act, specifically referencing the requirements for the distribution of patronage dividends, dictates how profits are allocated. When a cooperative association operates at a profit, the Act outlines a hierarchy of distributions. First, a portion may be allocated to reserves as determined by the bylaws or a resolution of the members. Following this, patronage dividends can be distributed to members based on their patronage, as defined by the cooperative’s operating agreements. Any remaining profits, if not allocated to reserves or patronage dividends, can be distributed to members on a pro-rata basis according to their investment in the cooperative, or retained by the association as surplus. The question specifies that the cooperative has already made allocations to reserves and distributed patronage dividends based on patronage. Therefore, the remaining profit distribution would be subject to the next permissible allocation, which is typically based on the members’ investment or retained as surplus, as per the governing statutes and the cooperative’s own governing documents. The statute does not mandate a specific percentage for reserves or patronage dividends but allows for their determination by the cooperative’s internal governance. The key is that after these primary distributions, any residual profit can be distributed on an investment basis or retained.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, § 53-19-27, addresses the rights of members to inspect and copy records. This statute grants members broad access to the LLC’s records, provided the request is for a purpose reasonably related to the member’s interest as a member. The scope of “records” is extensive and includes all information necessary to exercise rights and perform duties. A member’s right to access is not contingent on a majority vote or the approval of other members, nor is it limited to financial records. The purpose must be related to their membership, not for personal gain unrelated to the LLC’s operations or their role within it. For instance, investigating potential mismanagement or understanding the financial health of the LLC to make informed decisions about their investment would be considered a reasonably related purpose. Conversely, using the information to solicit business for a competing venture would likely not meet this standard. The Act does not mandate a specific waiting period for record inspection beyond what is reasonable for the LLC to compile the requested information.

The New Mexico Cooperative Associations Act, specifically NMSA 1978, § 53-4-1 et seq., governs the formation, operation, and dissolution of cooperative associations in the state. When a cooperative association is formed, it establishes a contractual relationship among its members, creating a distinct legal entity. The Act outlines the rights and responsibilities of members, directors, and the association itself. A fundamental aspect of cooperative governance involves the distribution of patronage dividends, which are typically based on the amount of business a member has conducted with the association. The Act permits associations to establish their own bylaws, which can detail the specific methods for allocating and distributing these dividends. These bylaws are crucial as they provide the operational framework for the cooperative and are binding on all members. Therefore, understanding the provisions of the Cooperative Associations Act and the specific bylaws of a given association is paramount for members and management to ensure compliance and fair operation. The Act also addresses capital contributions, voting rights, and the process for amendments to articles of incorporation and bylaws, all of which contribute to the unique structure of cooperative enterprises in New Mexico.

The scenario describes a cooperative seeking to amend its articles of incorporation. New Mexico law, specifically the New Mexico Business Corporation Act (which often governs cooperatives unless specific cooperative statutes dictate otherwise or are incorporated by reference), requires that amendments to articles of incorporation be approved by the board of directors and then by the members. The required member approval threshold for fundamental corporate changes, such as amending articles, is typically a supermajority of the voting power. For a cooperative, this often translates to two-thirds of the votes cast by members present and voting at a meeting where a quorum is present, or a similar majority if voting by mail or other approved methods. The question hinges on understanding this statutory requirement for member approval of fundamental changes. Therefore, securing approval from two-thirds of the voting members present and voting at a duly called meeting where a quorum is established is the legally mandated step for the cooperative to effectuate the amendment to its articles of incorporation. This process ensures that significant changes receive broad member consensus, a cornerstone of cooperative governance.

The New Mexico Limited Cooperative Association Act, specifically NMSA 1978 § 53-11-10, addresses the procedures for amending articles of incorporation. For a limited cooperative association, amendments require approval by a majority of the voting power of the members present at a meeting where a quorum is present, or by a greater percentage if specified in the articles. The act also outlines procedures for filing the amended articles with the New Mexico Public Regulation Commission. The question asks about the required approval for amending the articles of incorporation of a limited cooperative association in New Mexico. The statute mandates that amendments must be adopted by the members. Specifically, NMSA 1978 § 53-11-10 states that amendments to articles of incorporation shall be adopted by the members by the affirmative vote of a majority of the voting power of the members present at a meeting of the members if a quorum is present. The articles themselves may require a higher percentage. Therefore, the fundamental requirement is member approval, specifically a majority of the voting power of members present at a meeting with a quorum.

The New Mexico Limited Liability Company Act, specifically concerning the rights of members to access records, is governed by provisions that balance a member’s need for information with the company’s legitimate interests in confidentiality and operational efficiency. Section 53-19-15 of the New Mexico Statutes Annotated (NMSA) outlines these rights. A member generally has the right to inspect and copy any of the company’s records, including its accounting records, if the member’s request is made in good faith and for a purpose reasonably related to the member’s interest as a member. This right is not absolute and can be subject to reasonable restrictions imposed by the operating agreement. However, the statute presumes good faith for a request made by a member. The company can only refuse access if it can demonstrate that the request is not made in good faith or is not for a reasonably related purpose. In this scenario, the request is for the company’s financial statements and a list of all members, which are fundamental records typically accessible to members. The company’s assertion that providing these records would be “inconvenient” or potentially reveal “competitive information” without further specific justification does not meet the statutory threshold for denying access. The Act emphasizes that members are entitled to information necessary to protect their investment and understand the company’s operations. Therefore, the member’s request, being for standard informational records and presumed to be in good faith, should be granted.

In New Mexico, a cooperative, when seeking to dissolve and distribute its assets, must adhere to specific statutory requirements to ensure a fair and orderly winding up of its affairs. The New Mexico Cooperative Associations Act, specifically NMSA 1978, § 53-4-30, outlines the process for dissolution. This statute mandates that after all debts and liabilities have been paid or adequately provided for, the remaining assets shall be distributed to the members according to their respective interests. For non-profit cooperatives, the Act further specifies that any remaining assets after member distribution shall be distributed to another cooperative or a non-profit organization dedicated to similar purposes, as determined by the members or the board of directors, or as specified in the articles of incorporation or bylaws. This provision prevents the arbitrary appropriation of assets and ensures they continue to serve a public or cooperative benefit. The key is that distribution must follow the established order: first to creditors, then to members based on their contributions or patronage, and finally, any residual to a designated non-profit entity if applicable.

In New Mexico, the rights and responsibilities of members in a cooperative are primarily governed by the New Mexico Cooperative Associations Act. When a cooperative association is formed, its articles of incorporation and bylaws establish the operational framework. A critical aspect of cooperative governance involves member participation in decision-making, particularly concerning the amendment of articles of incorporation or bylaws. Typically, such significant changes require a supermajority vote of the membership, often two-thirds or three-fourths, to ensure broad consensus and protect minority interests. This requirement is designed to prevent a simple majority from making drastic alterations that could fundamentally change the nature or purpose of the cooperative, thereby safeguarding the foundational principles upon which the cooperative was established and the members joined. The specific percentage for amending articles of incorporation or bylaws is usually detailed within the cooperative’s own governing documents, which must comply with the minimum standards set by the state’s cooperative law. For instance, if the articles of incorporation require a three-fourths vote for amendment, and a proposal to change the cooperative’s primary business focus is put forth, it must secure affirmative votes from at least 75% of the voting members present and voting, assuming a quorum is met. This is to ensure that substantial changes reflect the will of a significant portion of the membership, not just a narrow majority.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, § 53-19-34, addresses the rights of members to inspect and copy records. This section grants members the right to inspect and copy, during reasonable times and for a proper purpose, any of the records of the limited liability company. A proper purpose is generally understood to be related to the member’s interest as a member in the company. This includes obtaining information necessary to understand the financial condition and operations of the LLC, to evaluate the performance of management, or to enforce the member’s rights. For instance, a member seeking to understand the distribution of profits, the incurrence of expenses, or the overall financial health of the entity would typically have a proper purpose. The act emphasizes that the right to inspection is not absolute and can be subject to reasonable limitations to protect the legitimate business interests of the LLC, such as confidentiality of trade secrets or proprietary information, provided these limitations are not used to obstruct a member’s legitimate inquiry. The burden is generally on the LLC to demonstrate why access should be denied if a proper purpose is asserted.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, Section 53-19-15, addresses the rights of a member to access records. This section grants members the right to inspect and copy, during reasonable times, any of the records of the limited liability company that are material to the proper exercise of the member’s rights and duties. The key phrase here is “material to the proper exercise of the member’s rights and duties.” This implies that the access is not unfettered but is tied to the member’s role and responsibilities within the LLC. The Act does not require a member to demonstrate a specific cause or a malicious intent to gain access. Instead, the standard is relevance to their position as a member. Therefore, a member’s right to inspect and copy records is contingent upon the records being material to their rights and duties as a member of the LLC.

The New Mexico Cooperative Associations Act, specifically addressing the dissolution of a cooperative association, outlines a process that prioritizes member rights and orderly winding up of affairs. When a cooperative association votes to dissolve, the first step after adopting a dissolution resolution is to notify all members of the dissolution. Following this, the association must cease conducting its business except as necessary for winding up. Assets are then liquidated, and debts and liabilities are paid or provided for. Remaining assets, after all obligations are satisfied, are distributed to members. The Act specifies that such distributions are made in proportion to the members’ participation in or patronage of the association, or in another equitable manner as determined by the association’s articles or bylaws, provided it aligns with the cooperative principles. This ensures that the benefits of the cooperative’s remaining assets are shared among those who contributed to its success. The distribution of remaining assets to members, after settling all debts and liabilities, is the final substantive step in the dissolution process before the association is officially terminated.

The New Mexico Limited Cooperative Association Act, specifically NMSA 1978 § 53-4-1 et seq., governs the formation and operation of limited cooperative associations in New Mexico. A key aspect of this act pertains to the rights of members to inspect and copy records. Section 53-4-30 outlines these rights, stating that a member has the right to inspect and copy, during business hours at the association’s principal office, any of the association’s records, if the member has a proper purpose related to their interest as a member. The “proper purpose” requirement is crucial; it means the request must be related to the member’s role and stake in the cooperative, not for extraneous or malicious reasons. The act does not mandate a specific waiting period before a member can exercise this right, nor does it require the member to state their purpose in writing in all circumstances, although providing a written statement of purpose is often good practice and may be requested by the association to verify the proper purpose. The right to inspect is not unlimited and can be subject to reasonable restrictions to protect the association’s legitimate business interests, but the fundamental right exists for any member in good standing.

The New Mexico Limited Liability Company Act, specifically in relation to the rights of members and the concept of dissociation, outlines the procedures and consequences when a member leaves a cooperative LLC. When a member of a New Mexico cooperative LLC, organized under the Limited Liability Company Act, dissociates from the company, the Act governs the process of winding up the dissociated member’s interest. The dissociation itself does not automatically trigger a dissolution of the entire LLC. Instead, the LLC must generally purchase the dissociated member’s interest. The value of this interest is determined as of the date of dissociation. If the LLC and the dissociated member cannot agree on the fair value of the interest within 120 days after the dissociation, the Act provides a mechanism for judicial determination of the fair value. This judicial process, often referred to as a buyout or appraisal proceeding, ensures that the departing member receives just compensation for their stake in the cooperative. The Act also specifies that the LLC may be obligated to pay interest on the fair value from the date of dissociation until payment. The crucial point is that the LLC’s continuation is generally not contingent on the dissociated member’s departure, but rather on the proper valuation and purchase of their interest.

The New Mexico Cooperative Associations Act, specifically concerning member withdrawal and distribution of assets, outlines procedures for members leaving an association. When a member withdraws from a cooperative association in New Mexico, the association is generally obligated to pay the withdrawing member the value of their interest. This value is typically determined by the association’s bylaws or articles of incorporation, often based on the member’s capital contribution, potentially adjusted for any outstanding debts or obligations to the association. The Act mandates that such payments be made within a reasonable time, as specified by the association’s governing documents, and in accordance with any applicable state regulations. The distribution is usually in cash, unless the bylaws permit or require distribution in another form, such as patronage refunds or other equitable means. The specific timing and method of distribution are crucial to ensure fair treatment of withdrawing members and the financial stability of the cooperative. This process is designed to balance the rights of departing members with the ongoing operational needs of the cooperative association.

In New Mexico, the concept of “patronage” is central to the definition and operation of cooperatives. Patronage refers to the business done by members with their cooperative. For a business entity to qualify as a cooperative under New Mexico law, a significant portion of its business must be conducted with its members. Specifically, New Mexico Statutes Annotated (NMSA) § 53-4-2(F) defines a cooperative as an association organized for the purpose of and engaged in the marketing of agricultural products or the purchasing of supplies, equipment, or services for its members, or in any one or more of such purposes. The key element here is the business conducted with members. While cooperatives can engage in business with non-members, the primary focus and the legal definition hinge on the member-patronage. Therefore, the business conducted with members is the defining characteristic for a cooperative’s legal status and operational framework in New Mexico. The percentage of business with members is often a critical factor in determining eligibility for certain tax treatments or legal protections afforded to cooperatives.

The New Mexico Cooperative Associations Act, specifically NMSA 1978, § 53-4-1 et seq., governs the formation and operation of cooperative associations. A key aspect of this act pertains to the distribution of patronage dividends, which are payments made by a cooperative to its members based on their patronage, or use of the cooperative’s services. Section 53-4-21 addresses the distribution of earnings. It states that a cooperative may distribute earnings to its members in proportion to their patronage. This distribution can be in the form of cash, credits, or capital stock. The Act also allows for reserves to be set aside for specific purposes, such as depreciation, sinking funds, or other corporate needs, before or after patronage dividends are declared. Furthermore, the Act permits the association to accumulate undistributed earnings to create a reserve fund, provided that the articles of incorporation or bylaws do not prohibit it and that such accumulation does not exceed a reasonable amount. When a cooperative association distributes patronage dividends, it is a return of excess earnings generated from member transactions, not a profit distribution in the traditional corporate sense. The proportion of patronage is typically determined by the volume or value of business a member transacted with the cooperative during a specific period. This mechanism ensures that the economic benefits of the cooperative are shared among those who utilize its services, aligning with the cooperative principle of member economic participation.

The New Mexico Cooperative Marketing Act, specifically referencing the provisions related to the formation and operation of agricultural cooperatives, dictates the requirements for a cooperative to be legally recognized and to conduct its business. When considering the dissolution of a cooperative, the Act outlines a specific process that must be followed to ensure that the cooperative’s affairs are wound up in an orderly manner, protecting the interests of its members and creditors. This process typically involves a resolution by the members or the board of directors, followed by the appointment of a liquidator or trustee. The liquidator’s role is crucial in marshaling the cooperative’s assets, paying off its debts and liabilities, and then distributing any remaining surplus to the members according to the cooperative’s bylaws or the Act’s provisions. The Act emphasizes that any distribution of assets upon dissolution must adhere to the membership interests and capital contributions, rather than being treated as ordinary corporate profits. Therefore, for a cooperative to properly dissolve and cease its legal existence, it must follow the statutory procedures for winding up its business affairs, which includes the equitable distribution of remaining assets after all obligations are met. This ensures that the cooperative’s unique member-centric structure is respected even in its dissolution.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, § 53-19-21, addresses the rights of members to inspect and copy records. This statute grants members broad access to the LLC’s books and records, provided the inspection and copying is for a “proper purpose” related to the member’s interest in the company. The concept of “proper purpose” is crucial; it means the request must be reasonably related to the member’s role and stake in the LLC, not for harassment, competitive advantage for an outside business, or other extraneous reasons. The Act does not require a member to demonstrate a specific legal claim or cause of action to inspect records, but rather a legitimate interest tied to their membership. For instance, reviewing financial statements to understand profitability or assessing management performance would generally be considered proper purposes. Conversely, demanding all internal communications to find fault with a specific manager without a broader business reason might not qualify. The statute also allows for reasonable restrictions on the time, place, and manner of inspection to protect the company’s operations. The core principle is balancing the member’s right to information with the company’s need for operational security and efficiency.

The New Mexico Limited Liability Company Act, specifically NMSA 1978, § 53-19-31, addresses the dissolution of a limited liability company. Upon dissolution, the LLC must cease carrying on its business, except as necessary to wind up its affairs. The process of winding up involves collecting assets, paying debts and liabilities, and distributing any remaining assets to the members. The order of distribution is crucial. First, creditors and claimants are paid. This includes secured creditors, unsecured creditors, and any other liabilities. After all debts and liabilities are satisfied, any remaining assets are distributed to the members. The distribution to members is typically made in accordance with the operating agreement. If the operating agreement does not specify the allocation of remaining assets, or if it is silent on this matter, the distribution is generally made based on the value of contributions made by each member to the LLC. This means that if one member contributed more capital or assets than another, they would receive a proportionally larger share of the remaining assets. The Act does not mandate a specific percentage or formula for distribution beyond satisfying obligations to third parties first and then distributing to members according to their agreement or contributions.

In New Mexico, a cooperative association, when operating as a patron-owned business, is generally subject to taxation at the entity level, similar to other corporations, unless specific exemptions apply. However, the distribution of net earnings or patronage dividends to its members, based on their patronage, is typically treated as a deductible expense for the cooperative. This means that the income distributed to members is taxed at the member level, not at the cooperative level, effectively avoiding double taxation on that portion of the income. The Cooperative Association Act of New Mexico, specifically NMSA 1978, § 53-4-26, addresses the distribution of earnings. It states that a cooperative may distribute earnings to members and non-members in proportion to their patronage. When these distributions are made in the form of cash or credits, they are generally considered deductible from the gross income of the cooperative, provided they are paid or allocated to the patrons during the taxable year. This deduction is crucial for the cooperative’s tax liability. Therefore, if a cooperative in New Mexico distributes its net earnings to its members as patronage dividends, those dividends are generally deductible by the cooperative, shifting the tax burden to the individual members. The question asks about the tax treatment of net earnings distributed as patronage dividends. The cooperative itself can deduct these distributions from its taxable income.

In New Mexico, the Cooperative Marketing Act, specifically NMSA 1978, § 53-4-1 et seq., governs the formation and operation of agricultural cooperatives. This act permits cooperatives to enter into contracts with their members, including marketing agreements that specify how members will deliver their produce. A critical aspect of these agreements is the treatment of members who breach these contracts. When a member fails to deliver their contracted product to the cooperative, the cooperative has legal recourse. The statute allows for liquidated damages, which are pre-agreed amounts specified in the contract to compensate the cooperative for losses incurred due to the breach. These liquidated damages must be a reasonable pre-estimate of the probable loss and not a penalty. In situations where a member breaches a marketing agreement by failing to deliver their product, the cooperative may seek to recover these liquidated damages as stipulated in the contract. The act also provides for injunctive relief, allowing a cooperative to seek a court order to prevent a member from selling their product to a third party in violation of the marketing agreement. This injunctive relief is particularly relevant when the cooperative can demonstrate that monetary damages alone would be insufficient to compensate for the harm, such as when the member’s product is unique or when the breach disrupts the cooperative’s established market channels. Therefore, a cooperative facing a member’s breach of a marketing agreement has the option to pursue either liquidated damages or injunctive relief, or potentially both, depending on the specific terms of the agreement and the nature of the breach. The choice of remedy is strategic, aiming to protect the cooperative’s economic interests and its ability to function effectively.

The New Mexico Cooperative Associations Act, specifically referencing provisions related to the distribution of net margins, outlines the hierarchy of how surplus earnings are to be allocated. When a cooperative association incurs net margins from its operations, the Act mandates a specific order for their distribution. First, a portion may be allocated to reserves, as determined by the association’s articles of incorporation or bylaws. Following this, a portion of the net margin can be distributed to members as patronage refunds, based on their participation in the cooperative’s activities. If any net margins remain after these allocations, the Act permits distribution to non-member patrons, again based on their patronage. Finally, any residual net margins, after all other distributions, can be allocated to the cooperative’s surplus or retained earnings, which enhances the association’s financial stability and future operational capacity. This tiered approach ensures that members are rewarded for their patronage, reserves are maintained for stability, and the cooperative can reinvest in its growth and services.

New Mexico law, specifically the New Mexico Limited Liability Company Act (NMSA 1978, Chapter 53, Article 19), governs the formation and operation of limited liability companies. When a member withdraws from a New Mexico LLC, the Act outlines the procedures and implications. A member’s dissociation, or withdrawal, can occur for various reasons, including voluntary action, expulsion, or death. Upon dissociation, the LLC may continue its business if the operating agreement or the remaining members agree to do so. If the LLC is not dissolved, the dissociated member is entitled to receive a buyout of their interest. The value of this interest is typically determined by the fair value of the LLC’s assets less its liabilities at the date of dissociation, prorated to the member’s ownership percentage. The Act provides a framework for this valuation and payment. If an agreement on the buyout price cannot be reached, the Act specifies a process for judicial determination of the fair value. The question focuses on the specific statutory provision in New Mexico that addresses the consequences of a member’s dissociation and the subsequent valuation of their interest when the LLC continues its business. This involves understanding the rights of the dissociated member and the obligations of the remaining entity under New Mexico statutes.