§ 501A.1001 — Authorization, form, and acceptance of contributions

Iowa § 501A.1001

• Jurisdiction: Iowa
• Title XII: BUSINESS ENTITIES
• Ch. 501A: COOPERATIVE ASSOCIATIONS ACT

Text

1. Board to authorize. Subject to any restrictions in this chapter regarding patron and
nonpatron membership interests or in the articles or bylaws, and only when authorized
by the board, a cooperative may accept contributions, which may be patron or nonpatron
membership contributions as determined by the board under subsections 2 and 3, make
contribution agreements under section 501A.1003, and make contribution rights agreements
under section 501A.1004.
2. Permissible forms. A person may make a contribution to a cooperative by any of the
following:
a. Payingmoneyortransferringtheownershipofaninterestinpropertytothecooperative
or rendering services to or for the benefit of the cooperative.
b. Executingawrittenobligationsignedbythepersontopaymoneyortransferownership
of an interest in property to the cooperative or to perform services to or for the benefit of the
cooperative.
3. Acceptance. A purported contribution shall not be treated or considered as a
contribution, unless all of the following apply:
a. The board accepts the contribution on behalf of the cooperative and in that acceptance
describes the contribution, including terms of future performance, if any, and states the value
being accorded to the contribution.
b. The fact of contribution and the contribution’s accorded value are both reflected in the
required records of the cooperative.
4. Valuation by directors. The determinations of the board as to the amount or fair
value or the fairness to the cooperative of the contribution accepted or to be accepted by
the cooperative or the terms of payment or performance, including under a contribution
agreement in section 501A.1003, and a contribution rights agreement in section 501A.1004,
are presumed to be proper if they are made in good faith and on the basis of accounting
methods, or a fair valuation or other method, reasonable in the circumstances. Directors who
are present and entitled to vote, and who, intentionally or without reasonable investigation,
fail to vote against approving a consideration that is unfair to the cooperative, or overvalue
property or services received or to be received by the cooperative as a contribution, are
jointly and severally liable to the cooperative for the benefit of the then members who did not
consent to and are damaged by the action to the extent of the damages of those members. A
director against whom a claim is asserted under this subsection, except in case of knowing
participation in a deliberate fraud, is entitled to contribution on an equitable basis from
other directors who are liable under this subsection.