CHAPTER 47-15
COOPERATIVES--FORMATION AND GENERAL POWERS
47-15-1 Definitions.
47-15-2 Purposes--Banking and insurance prohibited.
47-15-3 Requisites for formation.
47-15-4 Articles of incorporation--Contents.
47-15-5 Particular provisions in articles or bylaws.
47-15-6 Filing articles with secretary of state--Beginning of corporate existence.
47-15-7 Issuance of certificate of incorporation--Certificate as conclusive evidence of proper incorporation.
47-15-8 Amendment of articles--Majority vote required.
47-15-9 Procedure for amending articles.
47-15-10 Filing with secretary of state--Certificate of amendment.
47-15-11 Effect of amendment.
47-15-12 Articles and bylaws--Action to invalidate amendment--Limitations.
47-15-13 Bankruptcy proceeding as amendment.
47-15-14 Amendment converting corporation to cooperative.
47-15-15 Adoption of restated articles.
47-15-15.1 Restated articles effective when restated certificate issued--Original articles superseded.
47-15-16 Bylaws--Adoption and amendment.
47-15-17 Bylaws--Majority vote.
47-15-18.1 47-15-18.1. Repealed by SL 2008, ch 275, § 56.
47-15-20 Offices and agents of preexisting cooperatives.
47-15-21 47-15-21 to 47-15-26. Repealed by SL 2008, ch 275, § 56.
47-15-27 Powers of cooperatives--Existence.
47-15-28 Powers of cooperatives--Actions.
47-15-29 Powers of cooperatives--Seals.
47-15-30 Powers of cooperatives--Contracts--Encumbrances.
47-15-31 Powers of cooperatives--Securities holdings.
47-15-32 Powers of cooperatives--Investments and lending.
47-15-33 Powers of cooperatives--Territorial.
47-15-34 Powers of cooperatives--Officers and agents.
47-15-35 Powers of cooperatives--Bylaws.
47-15-36 Powers of cooperatives--Donations.
47-15-37 Powers of cooperatives--Indemnification of agents.
47-15-38 Powers of cooperatives--Cessation of activities.
47-15-39 Powers of cooperatives--Effectuation of purpose.
47-15-40 Promotion expenses--Commissions on stock sales--Limitations.
47-15-41 Use of term "cooperative".
47-15-42 Unauthorized use of term "cooperative" as petty offense.
47-15-43 Injunction against unauthorized use of term "cooperative".
47-15-44 Cooperatives governed by chapter--Preexisting cooperatives.
47-15-45 Continuation of preexisting cooperatives.
47-15-46 Duration of existence of preexisting cooperatives.
47-15-47 Method of giving notice--Waiver of notice.
47-15-48 Cooperatives governed by other laws.
47-15-49 Severability and saving clause.
47-15-50 Citation of cooperative provisions.
47-15-51 Filing false document as felony.
47-15-1. Definitions.
Terms used in chapters 47-15 to 47-20, inclusive, mean:
(1) "Articles," articles of incorporation;
(2) "Cooperative," a cooperative corporation which is subject to the provisions of chapters 47-15 to 47-20, inclusive;
(3) "Corporation," a corporation which is not a cooperative;
(4) "Electronic transmission" or "electronically transmitted," any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient;
(5) "Entity," a domestic and foreign corporation, limited liability company, partnership, cooperative or other legal entity, trust, domestic and foreign unincorporated entity or association, and bodies politic;
(6) "Foreign cooperative," a cooperative association organized and operated on a cooperative basis under the laws of any other state, territory, or possession of the United States, or of the District of Columbia or any foreign state, province, or country;
(7) "Individual," any natural person;
(8) "Member," a person who has been qualified and accepted for membership in a cooperative;
(9) "Patron," any person who purchases products or services provided in the normal course of the business of a cooperative. The term "patron" does not include a telecommunications company which purchases any products or services from a telecommunications cooperative or pays any fees or settlements to a telecommunications cooperative, other than local telecommunications services; and
(10) "Person," an entity or individual entity.
Source: SDC 1939 § 11.1101; SL 1949, ch 23; SL 1965, ch 23, § 1; SL 1987, ch 342; SL 1994, ch 351, § 120; SL 2018, ch 260, § 1.
47-15-2. Purposes--Banking and insurance prohibited.
Cooperatives may be organized under this chapter for any lawful purpose except banking and insurance.
Source: SDC 1939, § 11.1102 as enacted by SL 1965, ch 23, § 1; SL 1978, ch 337.
47-15-3. Requisites for formation.
Three or more individuals of legal age, one of whom must be a resident, may form a cooperative by signing, acknowledging, filing, and recording articles of incorporation.
Source: SDC 1939, § 11.1104 as enacted by SL 1965, ch 23, § 1; SL 2018, ch 260, § 2.
47-15-4. Articles of incorporation--Contents.
The articles of incorporation shall set forth that they are executed pursuant to the provisions of this chapter and shall state:
(1) The name of the cooperative;
(2) The period of existence, unless perpetual;
(3) The purposes for which organized. It is sufficient to state that the cooperative may engage in any activity within the purposes for which cooperatives may be organized, and all such activities shall then be deemed within its purposes, subject to express limitations;
(4) Whether the cooperative is organized with or without capital stock;
(5) The designation of classes of members, if more than one;
(6) The number and par value of shares of each authorized class of stock; if more than one class is authorized, the designation, preferences, limitations, and relative rights of each class shall also be set forth;
(7) Which classes of stock are membership stock;
(8) As to each class of stock, the rate of dividend, or that the rate of dividend may be fixed by the board, or that no dividend will be paid;
(9) Any reservation of a right to acquire or recall any stock;
(10) The basis of distribution of assets in the event of liquidation;
(11) The municipality in this state in which the cooperative's principal office is to be located and the information required by § 59-11-6;
(12) The number of directors, or that the number of directors shall be as stated in the bylaws;
(13) The name and address of each incorporator; and
(14) The names and addresses of at least three incorporators who will act as the temporary board and will serve until the first annual meeting of members or stockholders.
Source: SDC 1939, § 11.1105 as enacted by SL 1965, ch 23, § 1; SL 1966, ch 16, § 1; SL 1989, ch 390, § 1; SL 1990, ch 367, § 10; SL 1992, ch 60, § 2; SL 2008, ch 275, § 55.
47-15-5. Particular provisions in articles or bylaws.
It is not necessary to set forth in the articles of incorporation any of the powers granted by chapters 47-15 to 47-20, inclusive. The articles may include additional provisions, consistent with law, including provisions which are required or permitted to be set forth in the bylaws. Any provision required or permitted in the bylaws has equal force and effect if stated in the articles. Whenever a provision of the articles is inconsistent with a bylaw, the articles control. The bylaws of a cooperative may contain any provisions for the regulation and maintenance of the affairs of the cooperative not inconsistent with law or the articles of incorporation.
Source: SDC 1939, § 11.1106 as enacted by SL 1965, ch 23, § 1; SL 2000, ch 220, § 3.
47-15-6. Filing articles with secretary of state--Beginning of corporate existence.
The original articles of incorporation, duly signed, shall be delivered to the secretary of state for filing and recording. The legal corporate existence of a cooperative begins when the articles are so delivered.
Source: SDC 1939, § 11.1107 as enacted by SL 1965, ch 23, § 1; SL 1989, ch 390, § 2; SL 2012, ch 222, § 2.
47-15-7. Issuance of certificate of incorporation--Certificate as conclusive evidence of proper incorporation.
Upon receipt of the articles of incorporation and payment of the required fees the secretary of state shall issue a certificate of incorporation. The certificate of incorporation shall be conclusive evidence, except as against the state in a proceeding to cancel or revoke such certificate, that all conditions precedent to corporate existence have been met.
Source: SDC 1939, § 11.1108 as enacted by SL 1965, ch 23, § 1.
47-15-8. Amendment of articles--Majority vote required.
At any member meeting, a cooperative may adopt any amendment to its articles which is lawful under §§ 47-15-4 and 47-15-5, if a statement of the proposed amendment was contained in the notice of the meeting.
An amendment is adopted if approved by a majority of any quorum of members voting thereon at the meeting.
Source: SDC 1939, § 11.1135 as enacted by SL 1965, ch 23, § 1; SL 1986, ch 387.
47-15-9. Procedure for amending articles.
When any amendment to the articles is adopted, the president and secretary of the cooperative shall prepare and sign in duplicate, a certificate sealed with the seal of the cooperative, if it has a seal, stating:
(1) The name of the cooperative;
(2) The amendment and date of adoption;
(3) The number of members voting for and against the amendment;
(4) The number of members attending the meeting and a statement that such number constituted a quorum of members;
(5) That the notice of the meeting of members was given as required by law.
Source: SDC 1939, § 11.1136 (1) as enacted by SL 1965, ch 23, § 1.
47-15-10. Filing with secretary of state--Certificate of amendment.
One copy of the certificate required by § 47-15-9 shall be retained in the records of the cooperative and one copy shall be filed and recorded in the Office of the Secretary of State, who shall issue a certificate of amendment thereon.
Source: SDC 1939, § 11.1136 (2) as enacted by SL 1965, ch 23, § 1.
47-15-11. Effect of amendment.
No amendment to the articles may affect any existing cause of action or proceeding to which the cooperative is a party or existing rights of persons other than members or stockholders.
Source: SDC 1939, § 11.1136 (3) as enacted by SL 1965, ch 23, § 1.
47-15-12. Articles and bylaws--Action to invalidate amendment--Limitations.
No action may be maintained to invalidate any amendment to the articles or bylaws because of the manner of its adoption unless commenced within two years after its adoption.
Source: SDC 1939, § 11.1136 (4) as enacted by SL 1965, ch 23, § 1; SL 2021, ch 194, § 1.
47-15-13. Bankruptcy proceeding as amendment.
Certified copies of any order of a court of the United States, in proceedings under the bankruptcy laws, shall be filed and recorded as an amendment if the order effects an amendment to the articles. The principal officers of a cooperative shall cause each order to be promptly filed and recorded after it becomes final.
Source: SDC 1939, § 11.1138 as enacted by SL 1965, ch 23, § 1.
47-15-14. Amendment converting corporation to cooperative.
Any corporation may convert itself into a cooperative by adopting an amendment to its articles by which it elects to become subject to chapters 47-15 to 47-20, inclusive, together with changes in its articles required by said chapters and other desirable changes permitted by said chapters. Such amendment shall be adopted, filed, and recorded in the manner provided by the law then applicable to the corporation and the conversion shall be effective upon issuance of the certificate of amendment by the secretary of state.
Source: SDC 1939, § 11.1142 as enacted by SL 1965, ch 23, § 1; SL 1976, ch 287, § 2.
47-15-15. Adoption of restated articles.
A cooperative may, by action taken in the manner required for an amendment, adopt restated articles which shall state that they supersede existing articles and amendments. Restated articles shall meet all requirements of original articles.
Source: SDC 1939, § 11.1137 as enacted by SL 1965, ch 23, § 1; SL 1977, ch 381, § 9.
47-15-15.1. Restated articles effective when restated certificate issued--Original articles superseded.
Upon the issuance of the restated certificate of incorporation by the secretary of state, the restated articles of incorporation shall become effective and shall supersede the original articles of incorporation and all amendments thereto.
Source: SL 1977, ch 381, § 1.
47-15-16. Bylaws--Adoption and amendment.
Bylaws may be adopted and amended only by the members, unless the members adopt a bylaw which permits the board to make and amend specified bylaws. Any bylaw adopted or amended by the board shall be reported at the next regular member meeting. Any such bylaw shall be at any time subject to amendment or repeal by the members.
Source: SDC 1939, § 11.1109 as enacted by SL 1965, ch 23, § 1.
47-15-17. Bylaws--Majority vote.
Unless the bylaws provide otherwise, any bylaw may be adopted, amended, or repealed by a majority of the members present at a meeting, provided that the members voting must be sufficient in number to constitute a quorum as provided in chapter 47-16 or by bylaws.
Source: SDC 1939, § 11.1109 as enacted by SL 1965, ch 23, § 1.
47-15-20. Offices and agents of preexisting cooperatives.
For the purposes of chapters 47-15 to 47-20, inclusive, the street address, or the statement concerning the address, of a cooperative existing on July 1, 1965, becoming subject to said chapters, as set forth in the articles for its business office, shall be considered its registered office and the secretary of the cooperative shall be considered its registered agent unless either is amended pursuant to § 47-20-17.
Source: SDC 1939, § 11.1110 as enacted by SL 1965, ch 23, § 1; SL 1989, ch 390, § 3; SL 1990, ch 367, § 11.
47-15-27. Powers of cooperatives--Existence.
Unless otherwise provided by its articles, a cooperative may exist perpetually.
Source: SDC 1939, § 11.1103 (1) as enacted by SL 1965, ch 23, § 1.
47-15-28. Powers of cooperatives--Actions.
Unless otherwise provided by its articles, a cooperative may sue and be sued.
Source: SDC 1939, § 11.1103 (2) as enacted by SL 1965, ch 23, § 1.
47-15-29. Powers of cooperatives--Seals.
Unless otherwise provided by its articles, a cooperative may have a seal.
Source: SDC 1939, § 11.1103 (3) as enacted by SL 1965, ch 23, § 1.
47-15-30. Powers of cooperatives--Contracts--Encumbrances.
Unless otherwise provided by its articles, a cooperative may
(1) Make contracts, incur liabilities, and borrow money;
(2) Issue certificates representing indebtedness, or representing equity interests in its assets;
(3) Acquire property;
(4) Dispose of, mortgage, pledge, lease, or otherwise use in any manner any of its property, or any interest therein, wherever situated.
Source: SDC 1939, § 11.1103 (4) as enacted by SL 1965, ch 23, § 1.
47-15-31. Powers of cooperatives--Securities holdings.
Unless otherwise provided by its articles, a cooperative may purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign cooperatives and corporations, partnerships or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, governmental district, or municipality or of any instrumentality thereof.
Source: SDC 1939, § 11.1103 (5) as enacted by SL 1965, ch 23, § 1.
47-15-32. Powers of cooperatives--Investments and lending.
Unless otherwise provided by its articles, a cooperative may invest its funds, lend money for its purposes, and hold any property as security for repayment.
Source: SDC 1939, § 11.1103 (6) as enacted by SL 1965, ch 23, § 1.
47-15-33. Powers of cooperatives--Territorial.
Unless otherwise provided by its articles, a cooperative may conduct its business and affairs and have offices and exercise its powers in the United States or in any foreign country.
Source: SDC 1939, § 11.1103 (7) as enacted by SL 1965, ch 23, § 1.
47-15-34. Powers of cooperatives--Officers and agents.
Unless otherwise provided by its articles, a cooperative may elect officers and appoint agents, define their duties, and fix their compensation.
Source: SDC 1939, § 11.1103 (8) as enacted by SL 1965, ch 23, § 1.
47-15-35. Powers of cooperatives--Bylaws.
Unless otherwise provided by its articles, a cooperative may make and alter bylaws, consistent with its articles and the laws of this state, for the administration and regulation of its affairs.
Source: SDC 1939, § 11.1103 (9) as enacted by SL 1965, ch 23, § 1.
47-15-36. Powers of cooperatives--Donations.
Unless otherwise provided by its articles, a cooperative may make donations for charitable, scientific, educational, or religious purposes.
Source: SDC 1939, § 11.1103 (10) as enacted by SL 1965, ch 23, § 1.
47-15-37. Powers of cooperatives--Indemnification of agents.
Unless otherwise provided by its articles, a cooperative may indemnify any present or former director, officer, or agent against actual expenses necessarily incurred in defense of any proceeding in which he is a party because he is or was such director, officer, or agent. This section does not apply to those proceedings in which he is adjudged liable for negligence or misconduct in the performance of duty. Such indemnification shall not be exclusive of other rights to which he may be entitled.
Source: SDC 1939, § 11.1103 (11) as enacted by SL 1965, ch 23, § 1.
47-15-38. Powers of cooperatives--Cessation of activities.
Unless otherwise provided by its articles, a cooperative may cease its activities and surrender its franchise.
Source: SDC 1939, § 11.1103 (12) as enacted by SL 1965, ch 23, § 1.
47-15-39. Powers of cooperatives--Effectuation of purpose.
Unless otherwise provided by its articles, a cooperative may exercise all powers necessary or convenient to effect its purposes.
Source: SDC 1939, § 11.1103 (13) as enacted by SL 1965, ch 23, § 1.
47-15-40. Promotion expenses--Commissions on stock sales--Limitations.
No cooperative funds may be used, nor any stock issued, in payment of any promotion expenses in excess of ten percent of the paid-up capital stock or membership fees. No commission or expenses shall be paid on the sale of stock in excess of ten percent of the par value thereof.
Source: SDC 1939, § 11.1112 as enacted by SL 1965, ch 23, § 1.
47-15-41. Use of term "cooperative".
The term "cooperative" or any variation thereof, may be used either by any cooperative organized under this chapter or under other laws of this state relating to cooperative corporations, or by any foreign cooperative licensed to do business in this state or by any association of cooperatives, or corporations, whose members are cooperatives.
Source: SDC 1939, § 11.1155 (1) as enacted by SL 1965, ch 23, § 1.
47-15-42. Unauthorized use of term "cooperative" as petty offense.
No person other than a cooperative described in § 47-15-41 may use the term "cooperative," or any variation thereof, as part of his corporate or other business name or title. No person may in any other manner represent himself to be a cooperative. A violation of this section is a petty offense. Each day of improper use constitutes a separate offense.
Source: SDC 1939, § 11.1155 (2) as enacted by SL 1965, ch 23, § 1; SL 1983, ch 15, § 37.
47-15-43. Injunction against unauthorized use of term "cooperative".
Any cooperative may obtain an injunction against acts prohibited by § 47-15-42 without showing any damage to itself.
Source: SDC 1939, § 11.1155 (3) as enacted by SL 1965, ch 23, § 1.
47-15-44. Cooperatives governed by chapter--Preexisting cooperatives.
All foreign and domestic cooperatives are governed by the provisions of chapters 47-15 to 47-20, inclusive, except that application of said chapters to cooperative corporations existing before March 18, 1965, does not affect property rights of stockholders or members in such cooperatives which were accrued or established on March 18, 1965, nor does it affect any liability enforceable at such time, nor does it affect the validity or enforceability of contracts existing before March 18, 1965.
Source: SDC 1939, § 11.1156 as enacted by SL 1965, ch 23, § 1.
47-15-45. Continuation of preexisting cooperatives.
Corporations organized before July 1, 1965, under the provisions of chapters 4.16 and 11.10 of the South Dakota Code of 1939 shall continue in existence, but no new corporations may be formed thereunder.
Source: SL 1965, ch 23, § 2; SL 1966, ch 16, § 5.
47-15-46. Duration of existence of preexisting cooperatives.
Cooperatives organized prior to July 1, 1965 under the provisions of chapter 4.16 or 11.10 or 11.11 of the South Dakota Code of 1939 or amendments thereof are granted perpetual existence irrespective of the period of existence set forth in the articles of incorporation. Any such cooperative may nevertheless amend its articles to provide for a limited period of existence.
Source: SDC 1939, § 11.1105 (2) as enacted by SL 1965, ch 23, § 1; SL 1966, ch 16, § 1.
47-15-47. Method of giving notice--Waiver of notice.
If notice is required by chapters 47-15 to 47-20, inclusive, to be given to any person, the notice shall be given either personally, by mail, or electronic transmission. If mailed, the notice is given when deposited in the United States mail, with postage prepaid, addressed to the person's address as it appears on the records of the cooperative. If electronically transmitted, the notice is given when sent.
A signed waiver is equivalent to personal notice to the person so signing.
Source: SDC 1939, § 11.1117 as enacted by SL 1965, ch 23, § 1; SL 2018, ch 260, § 3.
47-15-48. Cooperatives governed by other laws.
The provisions of chapters 47-15 to 47-20, inclusive, shall not apply to cooperatives governed by chapter 40-23 or chapter 47-21.
Source: SDC 1939, § 11.1156 as enacted by SL 1965, ch 23, § 1.
47-15-49. Severability and saving clause.
If any provision of chapters 47-15 to 47-20, inclusive, or the application thereof to any person or circumstance is held invalid, the remainder of said chapters and the application of such provision to other persons or circumstances shall not be held invalid.
Source: SL 1965, ch 23, § 3.
47-15-50. Citation of cooperative provisions.
Chapters 47-15 to 47-20, inclusive, as amended from time to time may be cited as the "South Dakota Cooperative Association Act."
Source: SDC 1939, § 11.1157 as enacted by SL 1965, ch 23, § 1.
47-15-51. Filing false document as felony.
A person who files, or causes to be filed, a document required to be filed by this chapter, which he knows to be materially false in any respect, is guilty of a Class 6 felony.
Source: SL 1983, ch 15, § 36.
