AB 432 — Establishes provisions governing worker cooperative corporations. (BDR 7-1026)

(ReprintedAssembly withBill amendmentsNo. adopted on April 22, 2019) FIRST REPRINT A.B.

432432–Assemblymen ASSEMBLYFrierson; BILL NO .

432–ASSEMBLYMENand FRIERSONAssefa ;CHAPTER..........

AND A SSEFA M ARCH 25, 2019 ____________ Referred to Committee on Commerce and Labor SUMMARY—Establishes provisions governing worker cooperative corporations.

(BDR 7-1026) FISCAL NOTE:

Effect on Local Government:

No.

Effect on the State:

Yes.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

Existing law establishes various provisions relating to nonprofit cooperative corporations and cooperative associations.

(Chapter 81 of NRS) Sections 2-31 ofofve thiSection 11 of this bill authorizesestablish aprovisions privaterelating corporation to elect to be governed as a worker cooperative corporation.corporations.

Section 11 of this bill authorizes a private corporation to elect to be governed as a worker cooperative corporation.

Section 12 of this bill sets forth various requirements for the articles of incorporation or bylaws of a worker cooperative corporation with regards to membership in a worker cooperative corporation, and sections 15 and 16 of this bill establish requirements for the expulsion, termination or suspension of a member as well as remedies for a member whose membership was expelled,onexpelled, of a terminated or suspended.

Sections 17-24 of this bill establish requirements relating to meetings of the worker cooperative corporation and notice requirements for such meetings.

Section 25 of this bill authorizes the board of directors to distribute ballots for the purpose of member voting and prescribes the requirements governing such voting procedures.

Sections 26-28 of this bill authorize a worker cooperative corporation to declare patronage dividends from net earnings and authorize a worker cooperative - *AB432_R1* – 2 – corporation to set up a series of internal capital accounts, divisible reserve accounts and indivisible reserve accounts.

Section 30 of this bill authorizes a corporation to revoke its election to be governed as a worker cooperative corporation and provides the procedure for such a revocation.

THEEXPLANATION PEOPLE– OFMatter THEin STATEbolded OFitalics NEVADA,is REPRESENTEDnew; IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

matter between brackets [omitted material] is material to be omitted.

80th Session (2019) – 2 – THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

- *AB432_R1* – 3 – Sec.

A corporation formed pursuant to chapter 78 of NRS may elect to be governed as a worker cooperative under the provisions of sections 2 to 31, inclusive, of this act and such an election must be stated in the articles of incorporation of the 80th Session (2019) – 3 – corporation or in an amendment to the articles of incorporation of the corporation filed pursuant to chapter 78 of NRS.

worker3. cooperative by a member of the worker cooperative must not revoke the membership status of the member.

stockholderAn authorized and voluntary leave of absence from a corporationworker pursuantcooperative toby chaptera 78member of NRS.iesthe worker cooperative must not revoke the membership status of athe Sec.member.

4.

Members shall have all the rights and responsibilities of a stockholder of a corporation pursuant to chapter 78 of NRS.

Sec.

- *AB432_R1* – 4 – (1) The interests of the members, employees, suppliers, creditors and customers of the worker cooperative;

(5) The long-term and short-term interests of the worker cooperative, including, without limitation, the possibility that such 80th Session (2019) – 4 – interests may be best served by control of the worker cooperative remaining unchanged;

cooperative(b) mayThe onlypower beto givenamend toor repeal the members.sbylaws of a worker 4.cooperative may only be given to the members.

An4. amendment that adversely affects the rights of the not be adopted without the vote of such shareholders pursuant to chapter 78 of NRS.

An amendment that adversely affects the rights of the holders of corporate shares other than membership shares may not be adopted without the vote of such shareholders pursuant to chapter 78 of NRS.

and (b) Gives the member an opportunity to be heard, orally or in writing, before a person or body authorized to make such a decision regarding the expulsion, termination or suspension not - *AB432_R1* – 5 – less than 5 days before the effective date of the expulsion, termination or suspension.

80th Session (2019) – 5 – 5.

Unless a court finds that the member was expelled, terminated or suspended in bad faith in order to effect the outcome of a vote, a decision made by a vote of the members or the board of directors of a workers cooperative must not be set aside subsectionbecause 1.bera member was successful in his or her claim pursuant to Sec.subsection 1.

Sec.

- *AB432_R1* – 6 – 4.

80th Session (2019) – 6 – (a) The member requesting the special meeting pursuant to subsection 3 may provide notice to the members in accordance with the requirements of subsection 3;