Appendix E — Member Cooperatives AoA

Key clauses to be included in the Articles of Association for member cooperatives and associations.

Chapter 1 General Provisions

Article 1: Name and domicile

The cooperative shall be known as the [Insert Name] Cooperative (hereinafter referred to as the “cooperative”), established under the [insert relevant legal act]. The domicile of the cooperative is [Insert Municipality, country etc.].

Article 2: Purpose

This cooperative aims to create a life-sustaining world where we live together, based on a worldview of life. It does so by producers, consumers and workers jointly producing and supplying safe and healthy food and daily necessities, and by developing diverse urban-rural community movements and local life-sustaining movements in accordance with the values of reverence for the sanctity of life and the obligation to nurture life in all things.

Article 3 (Forms of activity)

To fulfil its purpose, the cooperative may conduct the following business activities: 1. Businesses involving the purchase, production, processing, and supply of materials necessary for members’ consumption. 2. Businesses involving the installation of shared facilities necessary for members’ consumption and the provision of services. 3. Businesses for the improvement of members’ living conditions and educational/cultural activities. 4. Health and medical services to improve members’ wellbeing 5. Projects commissioned by the state, local authorities, or Foundations. 6. Ancillary activities related to items 1 to 5 7. Joint projects with producers, producer organisations, and cultural groups concerning items 1 to 5 8. Businesses jointly pursued with the government, local authorities, and public institutions. 9. Welfare, environmental, and cultural projects for the sustainable development of the local community. 10. Specific alcoholic beverage sales business

Article 4: Prohibition on involvement in public office elections

The cooperative shall not engage in any act to support or oppose a specific political party, or to secure the election or prevent the election of a specific individual, in public office elections.
No person shall use the cooperative to engage in any act described in Paragraph 1.

Article 5: Contribution to the Local Community

The cooperative shall endeavour to promote the sustainable economic, social, and cultural development of the local community and to preserve the environment and natural ecology.

Article 6: Infrastructure & Lease Conditionality

The cooperative’s right to access, utilize, or lease the shared movement infrastructure (including logistics hubs, brand assets, and proprietary software) is strictly conditional upon remaining a member in good standing with the Federation and maintaining total compliance with the Ethical Charter. A breach of the Ethical Charter shall result in the immediate forfeiture of all leaseholds and software access keys.

Chapter 2 Membership

Article 7: Members and member classes

Any individual or legal entity who accepts the purpose of the cooperative may be accepted as a member.
The Board decides on the acceptance of members.
Members are divided into the following classes:
1. Consumer Members: private individuals who use the goods and services provided by the cooperative for personal consumption.
2. Producer Members: farms, agricultural smallholders, or processing cooperatives supplying food to the cooperative.
3. Employee Members: individuals employed by the cooperative.
4. Supporting Members: individuals or organizations wishing to aid the cooperative financially. Supporting members have the right to speak at meetings but do not possess voting rights.
While members may combine producer, worker and consumer roles, they shall chose one type of membership only which best matches their interpretation of their main role in the cooperative and for which they qualify by performing the role described for each type of membership (i.e. a worker member must be employed by the cooperative).
Producer, worker and consumer members shall have the same speaking and voting rights in the General Assembly and the economic right to dividends and interest on their shares
Supporting members will have speaking rights in the General Assembly but no voting rights and shall have economic rights to interest on their shares but no right to dividends.
When a member ceases to perform the role matching their type of membership (e.g. they leave employment or stop producing) they shall chose another type of membership for which they do qualify.
The cooperative shall not refuse membership to a person who meets the membership requirements without justifiable grounds, nor shall it impose conditions for membership that are less favourable than those applied to other members.

Article 8: Expulsion

The cooperative may, upon resolution of the general assembly, expel a member or suspend their membership if the member falls under the following cases:
1. When the member has not used the cooperative’s facilities or services for a continuous period of one year or more.
2. When the member has neglected to pay their capital contribution, expenses, or the cost of supplied goods or services, or has failed to fulfil such obligations despite receiving a formal demand.
3. When the member has engaged in conduct that obstructs the cooperative’s business or causes it to lose credit.
4. When violating the Articles of Association or other regulations.

Chapter 3 Capital contributions, expense burden and reserve funds

Article 9: Share Classes and Capital Contributions

The cooperative’s shares are divided into two classes: Series M (Membership), Series T (Tradable).
Series M Shares: Every member of the cooperative is obligated to subscribe to two (2) Series M share upon admission.
1. The subscription price for a Series M share is [e.g. €20].
2. Series M shares entitle the holder to one (1) vote at the General Assembly, subject to the ‘One Member, One Vote’ principle.
3. Series M shares are withdraw-able and non-transferable.
4. Each member can purchase any number of Series M shares up to a maximum of [e.g. 20].
Series T Shares: Every member of the cooperative has the right to purchase at any time any number of Series T shares up to a maximum set by the General Assembly at the start of the financial year.
1. The subscription price for a Series T share is set by the General Assembly each time Series T shares are issued.
2. If Series T shares are over subscribed they shall be allocated by lottery.
3. Series T shares are tradable but non withdraw-able and may be traded at the nominal price to other members of the cooperative.
4. Series T shares shall be converted to Series M shares at a time decided by the General Assembly up to a maximum of 5 years after issue.
Capital contributions payable to the cooperative shall not be set off against claims against the cooperative.
Capital contributions may also be made in kind. In the case of contributions in kind, the contribution amount shall be calculated as stipulated in the Articles of Association. In such cases, the contributor in kind shall deliver the entirety of the property constituting the contribution to the cooperative or to a location designated by the cooperative by the contribution payment deadline.
Special capital contributions may be raised for specific purposes necessary for the smooth operation of the cooperative, such as purchasing, promotion, facility investment, welfare, cultural, and environmental projects for the local community. In such cases, the number of capital shares held by any one member shall not exceed the limits set out in paragraph 2.4 or in accordance with paragraph 3.

Article 10: Issuance of share certificates

The chairperson of the cooperative shall, when a member makes their initial contribution payment pursuant to the provisions of Article 9, and when a member so requests, issue to the member a share certificate or other document confirming the contribution, bearing the chairperson’s signature and seal, which shall include the following details. Depending on the circumstances, the cooperative may provide guidance enabling members to directly query and print the following details:
1. Name of the cooperative
2. Member’s name or designation
3. Date of joining the cooperative
4. Date of payment of capital contribution
5. Amount of capital contribution or number of shares
6. Date of issue
The Chairperson of the cooperative shall notify members of any changes in their capital contribution amounts by no later than seven days prior to the annual General Assembly. Such notification may be made by post, email, facsimile, mobile phone text message, or similar means.

Article 11: Expenses, usage fees and charges

The cooperative may collect the following expenses for business operations:
1. Event participation fees
2. Supply commissions
3. Membership fees
4. Other expenses deemed necessary for the operation of the cooperative, as determined by the Board of Directors
The amount and method of collection for the expenses, usage fees, and commissions under Paragraph 1 shall be stipulated in the Bylaws.
When paying the expenses, etc., under Paragraph 1, a member may not set off any claim against the cooperative.

Article 12: Statutory reserve fund

This cooperative shall set aside as a statutory reserve fund at least 10 per cent of the surplus for each financial year until the reserve reaches 50% of the total amount of members’ capital contributions.
The statutory reserve fund under paragraph 1 shall not be used except to cover losses or in the event of dissolution.

Article 13: Voluntary reserve fund

The cooperative may, from the surplus of each financial year, after deducting the statutory reserve fund pursuant to Article 12, set aside up to 10% of the remaining surplus as a discretionary reserve fund, as determined by the General Assembly.
Discretionary reserves may be expended for special purposes as determined by the General Assembly, including business development costs necessary to realise the objectives of the cooperative, pioneering activities, education, welfare, fostering organic farming, contributions to support rural communities and funds to support the formation of other cooperatives.

Chapter 4 General assembly and board of directors

Article 14: General assembly

The General Assembly shall be the highest decision-making body of the cooperative.
The General Assembly shall be divided into regular and extraordinary meetings.
The General Assembly shall consist of members or delegates, with the Chairperson acting as its chair.

Article 15: Delegates meeting

Where the number of members exceeds 300, a Delegates’ Meeting may be established in lieu of the General Assembly.
Delegates shall be elected from among the members.
The voting rights and electoral rights of delegates may not be exercised by proxy.
The number of delegates shall be determined annually by the Board of Directors within a range of 100 or more, and their term of office shall be two years.
The term of office of a delegate elected to fill a vacancy shall be the remaining period of the predecessor’s term.
Delegates shall be elected by the members, with the election method stipulated in the bylaws.
Provisions concerning the General Assembly shall apply mutatis mutandis to the General Assembly of Delegates, in which case “members” shall be deemed to mean “delegates”. The General Assembly of Delegates may not resolve matters concerning the merger, division, or dissolution of the Association. (Note) A term of two years is recommended to reduce the administrative burden and budgetary costs associated with delegate elections.

Article 16: Matters requiring general assembly resolution

The following matters shall require resolution by the General Assembly:

Opening of the meeting.
Election of meeting officials: chairperson, secretary, two scrutinizers of the minutes, and two vote counters.
Verification of legality and quorum.
Approval of the meeting agenda.
Presentation of financial statements, annual report, and the auditors’ report.
Discharge from liability for the Board.
Confirmation of the action plan, budget, and membership fees.
Election of the Chairperson and the other Board members adhering to structural stakeholder balances.
Election of one ordinary Auditor and one Deputy Auditor.
Amendment of the Articles of Association.
Enactment, amendment, or abolition of regulations.
Merger, division, dissolution, or suspension of operations of the cooperative.
Expulsion of members
Determination of the maximum borrowing limit
Matters concerning the establishment of subsidiaries and investments
Other matters specified in the meeting notice.

Article 17: The board and balanced governance

The cooperative shall have a Board of Directors, which shall decide on the execution of the Association’s business.
The Board of Directors shall consist of four types of director and be formed as follows:
1. Founder director: one directorship to be held by the named founder of the Association and limited to 5 years at which time it shall become an ‘Elder’s seat’ elected by the General Assembly from a pool of former board members with significant experience.
2. Organisational directors: up to three directors elected from among the delegates by the whole General Assembly through the election method stipulated in the bylaws.
  1. In the case of a delegate assembly each sub-division of the Association may select a candidate each to be nominated by that sub-division’s full delegation.
3. Stakeholder directors: three directors shared out among stakeholder groups elected through hybrid caucus model according to paragraph 6. With three stakeholder groups one director is allocated to each stakeholder group. With two stakeholder groups, the larger group is allocated two director seats and the smaller group is allocated one director seat. With one stakeholder group, the stakeholder seats convert to an additional 3 Organisational directorships.
4. Independent director: a seat for an independent trusted expert invited by the board of directors (this could be one of the directors of another member association of the Federation or a movement outsider with a shared interest).
Organisational directors shall serve staggered 3 year terms with no more than a third up for election each year with a maximum of two consecutive terms and a mandatory 3 year cooling off period.
Stakeholder directors shall serve staggered 3 year terms with no more than a third up for election each year with a maximum of two consecutive terms and a mandatory 3 year cooling off period.
Independent directors shall serve 3 year terms with a maximum of two consecutive terms and a mandatory 3 year cooling off period.
Election of stakeholder directors shall be through a hybrid caucus model as follows:
1. At the General Assembly, delegates break into their three stakeholder caucuses (producers, consumers, workers) to discuss their priorities and nominate 2-3 candidates for each seat.
2. Once all candidates have been nominated they are presented on a single ballot for election by the entire General Assembly through the election method stipulated in the bylaws.
The Founder director shall hold the role of chairperson for 3 years from the date of the Association’s establishment after which time the Chairperson shall be elected from among the board of directors by majority vote of the board. The chairperson may only be re-elected once.
The Chairperson shall convene the Board of Directors and preside over its meetings.
Notice of a Board meeting shall be given to each director at least seven days prior to the meeting date, stating the purpose, time, and place of the meeting, via text message, email, or in writing. However, where urgency requires and a majority of the Board members agree, the convening procedure may be omitted.
One-third or more of the directors or all auditors may request a meeting by submitting a document stating the purpose of the meeting and the reason for its convening.
Upon receiving a request under Paragraph 10, the Chairperson shall convene the Board of Directors within seven days.

Article 18: Voting rights and election rights

Each delegate of the cooperative shall have one (1) vote in the General Assembly regardless of the number of shares held.
A resolution by the Cooperative General Assembly regarding the following matters shall require a two thirds majority to pass:
1. Amendments to the rules pertaining to any change to the cooperative’s mission (Article 2) membership structure (Article 7), voting rights (Article 18), removal of the asset lock (Article), or changes to the core operational definitions (Article 3).
2. Structural changes including merger, demerger, transformation into a limited company.
3. Asset disposal including the sale or pledge of the cooperative’s core operational assets or intellectual property.
4. Changes to the criteria for admitting new members if such changes impact the purpose.

Chapter 5 Dissolution and disposal of assets

Article 19: Dissolution and allocation of assets

The decision to dissolve the cooperative requires a three-quarters majority of the votes cast at a general meeting.
Should residual assets remain after the cooperative has settled its debts following dissolution, these shall be distributed to the members in proportion to their shareholdings up to the amount of their invested share capital including series M and T shares plus any remaining interest up to the prevailing market interest rate.
If on the winding up or dissolution of the cooperative there remains, after the satisfaction of all its debts and liabilities and the repayment of the paid-up share capital according to paragraph 1, any assets whatsoever, such assets shall not be paid to or distributed among the members or shareholders of the cooperative but shall be transferred to the [insert name] foundation or, if the [insert name] foundation is unable to receive them, to another non-profit entity pursuing a similar purpose in [insert country].

Article 20: Covering losses

Should the cooperative have a loss carried forward from the previous year or incur a loss at the end of the accounting period, it shall cover such loss in the following order: undistributed retained earnings, discretionary reserves, and statutory reserves. Any shortfall remaining after such coverage shall be carried forward to the next accounting period.

Article 21: Distribution and carry-forward of surplus

Where surplus remains after covering losses pursuant to Article 20 and setting aside reserves under Articles 12 to 13, the cooperative shall distribute at least [e.g. fifty] percent of such surplus to members by resolution of the General Assembly.
When distributing surplus under Paragraph 1, the calculation of each member’s dividend shall be based on the proportion of business utilisation or the number of shares subscribed by the member. In such cases, surplus dividends shall comply with the following principles:
1. Dividends based on business utilisation shall constitute at least [e.g. fifty per cent] of the total dividend amount.
2. The dividend ratio based on paid-up capital shall not exceed the prevailing market interest rate level.
The method and procedures for surplus dividend distribution shall be stipulated in the bylaws.
Where a surplus remains after implementing the reserves under Article 20(1), the accruals under Articles 12 to 13, and the dividends under paragraph (1), the cooperative may, by resolution of the General Assembly, carry forward the surplus to the next financial year.