§ 7-58-1101 — Member's dissociation

(1) A member has the power to dissociate
at any time, rightfully or wrongfully, by notice in a record.

(2) Unless the articles or bylaws otherwise provide, a member's dissociation
from a limited cooperative association is wrongful only if the dissociation:

(a) Breaches an express provision of the articles or bylaws; or

(b) Occurs before the termination of the limited cooperative association and:

(I) The person is expelled as a member under paragraph (c) or (d) of
subsection (4) of this section; or

(II) In the case of a person that is not an individual, trust other than a
business trust, or estate, the person is expelled or otherwise dissociated as a
member because it dissolved or terminated in bad faith.

(3) Unless the articles or bylaws otherwise provide, a person that wrongfully
dissociates as a member is liable to the limited cooperative association for
damages caused by the dissociation. The liability is in addition to any other debt,
obligation, or liability of the person to the association.

(4) A member is dissociated from the limited cooperative association as a
member when:

(a) The association receives notice from the member in a record of
dissociation as a member or, if the member specifies in the notice an effective date
later than the date the association received notice, on that later date;

(b) An event stated in the articles or bylaws as causing the member's
dissociation as a member occurs;

(c) The member is expelled as a member under the articles or bylaws;

(d) The member is expelled as a member by the board of directors because:

(I) It is unlawful to carry on the association's activities with the member as a
member;

(II) There has been a transfer of all the member's financial rights in the
association, other than:

(A) A creation or perfection of a security interest; or

(B) A charging order in effect under section 7-58-605 that has not been
foreclosed;

(III) The member is a limited liability company or partnership that has been
dissolved and its business is being wound up;

(IV) The member is a corporation or cooperative and:

(A) The member filed a statement of dissolution or the equivalent, or the
jurisdiction of formation revoked the member's charter or right to conduct business;

(B) The association sends a notice to the member that it will be expelled as a
member for a reason described in sub-subparagraph (A) of this subparagraph (IV);
and

(C) Not later than ninety days after the notice was sent under sub-subparagraph (B) of this subparagraph (IV), the member did not reinstate or the
jurisdiction of formation did not reinstate the member's charter or right to conduct
business; or

(V) The member is an individual and is adjudged incompetent;

(e) In the case of a member who is an individual, the individual dies;

(f) In the case of a member that is a trust or is acting as a member by virtue
of being a trustee of a trust, all the trust's financial rights in the association are
distributed;

(g) In the case of a member that is an estate, the estate's entire financial
interest in the association is distributed;

(h) In the case of a member that is not an individual, partnership, limited
liability company, cooperative, corporation, trust, or estate, the member is
terminated; or

(i) The association's participation in a merger if, under the plan of merger as
approved under part 16 of this article, the member ceases to be a member.

Legislative History

Source: L. 2011: Entire article added, (SB 11-191), ch. 197, p. 802, � 1, effective April 2, 2012.