FAQ About Articles and Bylaws Proposals

What are Articles of Incorporation?

Articles of incorporation are a document that establishes the existence of a corporation in the United States. Cooperatives are a form of corporation and in Minnesota have their unique statutes which are identified as 308(a) and 308(b). Seward Community Co-op is a 308(a). Articles of Incorporation must be filed with the Secretary of State in the state where the company is incorporated. They provide a corporation the legal recognition necessary to conduct business. Articles define the purpose and capital structure of the co-op.

What are Bylaws?

Bylaws are rules and regulations established by an association or corporation to provide a framework for its governance, operation and management once it is incorporated. In Minnesota, cooperative bylaws are regulated by the 308(a) and 308(b) statutes. Bylaws may be established by entities such as a business corporation, non-profit, a neighborhood association, a municipality, or a co-op. Bylaws define, control and set the basic principles and manner by which the co-op will operate and be governed.

Why do we have Articles and Bylaws?

Articles and bylaws provide the legal basis for the co-op’s existence. They allow the co-op to operate as a business. They identify how the co-op is structured, the business it is engaged in, and how that business is governed and managed. Both represent the first layer of definition for a co-op’s existence and structure. That definition is further clarified in board policy, and in operational policies and procedures.

Why are they important?

They allow the co-op to exist legally.

Why is it important that the Bylaws be current?

It is considered a best practice to operate with current Articles and Bylaws because it provides a clear definition of how the co-op is organized.

Why are proposals to change them on the ballot?

The proposals are on the ballot because changes to the Articles and Bylaws require a vote by co-op owners.

Who can change the Articles and Bylaws?

Seward Co-op bylaws may be amended, repealed, or altered in whole or in part by a majority vote of the owners, provided a quorum is achieved. The voting quorum (minimum), as per our bylaws, is 50 co-op owners.

How many owners does it take to approve changes the Articles and Bylaws?

Every vote that Seward Co-op owners take must have a quorum (minimum) of 50. This quorum is stated in the bylaws. Each proposal on the ballot needs to garner at least 50 votes. Or put another way, a quorum is required for each separate proposal. A majority of voting owners will determine whether the proposals are accepted.

How often are Seward Co-op’s Articles and Bylaws changed? When were the Articles and Bylaws last changed?

A general recommendation is to review Articles and Bylaws every five years. Suggesting changes every year is not advised. The most recent vote by Seward Co-op owners regarding Articles and Bylaws proposals was in 2012.

Why are there four separate proposals?

The recommendations are separated into four proposals to clearly communicate the proposed changes. The proposals are grouped by the type of change – grammar, gender neutral language, banking, and legal. When these changes are isolated by category, some may find it simpler to review. If all the changes were reflected in one document, it may not be as clear why individual changes are being proposed.

Is a vote required on all four proposals?

No, a vote is not required, though it is encouraged. A blank ballot on these proposals will not count towards approval or rejection. If you do not vote on these proposals, but only vote for board candidates, your ballot indicating selections for board candidates will be counted. You may choose to vote for one, some, or none of the articles and bylaws proposals.

Why am I being asked to vote on this?

Co-op owners are the foundation of Seward Co-op. Co-op ownership is a stock purchase in our cooperative business. Full owner equity at Seward Co-op is $75 of Class A stock. With this investment comes rights and responsibilities to vote on amending or altering these governing documents. The second international cooperative principle is Democratic Member Control, and voting on proposals such as these is democratic participation in decision-making for our co-op.

Who can I talk to if I have more in depth questions?

You are invited to first email your questions to Seward Co-op’s Board of Directors at board@seward.coop

Staff who may be a resource include:
Allison Meyer, Advocacy and Governance Specialist: ameyer@seward.coop
Sean Doyle, General Manager: sdoyle@seward.coop
Karah Barr, Marketing Manager: kbarr@seward.coop

Why is it important to correct grammar in the Articles and Bylaws (proposal 1)?

The co-op’s articles and bylaws are the backbone of our cooperative business and where important details are found (see above questions: What are Articles of Incorporation? and What are Bylaws?). Proper use of grammar and punctuation helps to avoid confusion in legal text. Grammar errors often distract the reader and confuse meaning.

Why is it important to change to gender neutral pronouns (proposal 2)?

Seward Co-op is committed to a culture of inclusion where everyone feels welcome and respected. As part of this commitment, we use gender-inclusive and affirming language. For some, this may be the most straightforward proposed change to the articles and bylaws.

What is a ‘real estate conveyance’ (proposal 3)?

The term conveyance refers to the act of transferring property from one party to another. The term is commonly used in real estate transactions when buyers and sellers transfer ownership of land, building, or home. Additionally, leases are considered real estate conveyances.

How often does the co-op make real estate conveyances (proposal 3)?

Real estate conveyances happen every few years. Seward Co-op currently has mortgage loans on the Franklin and Friendship stores. Most commercial real estate loans are either five or seven years in duration. Our ‘new market tax credit’ loan for the Friendship store matures in Oct. 2021. At that time, we will need to refinance which will involve a new mortgage. This past December, we changed banks and needed to refinance the mortgage at the Franklin store. In addition to the two mortgages on our stores, the co-op leases the Creamery. The lease has a purchase option that can be acted upon at any time now that we have occupied the Creamery for seven years. We don’t anticipate doing this in the next 12 months. Additionally the co-op has no intention in the foreseeable future of purchase any additional real estate.

Does proposal 3 give the General Manager extra power?

No, the Board of Directors continues to approve all transactions. It merely allows the board to delegate the signing of documents necessary for real estate conveyances.

Why is it difficult for directors to attend real estate closings (proposal 3)?

Most real estate transaction need to occur during business hours when directors are employed in their professions. Having the option to delegate signing to the General Manager simplifies the coordination necessary to ensure a timely closing.