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--- version:Public Act No. 26-59
+++ version:(document, no version)
@@ -1,206 +1,22 @@
-Substitute House Bill No. 5431
+OFFICE OF FISCAL ANALYSIS
+Legislative Office Building, Room 5200
+Hartford, CT 06106  (860) 240-0200
+http://www.cga.ct.gov/ofa
+sHB-5431
+AN ACT CONCERNING COOPERATIVE CORPORATIONS.
 
-Public Act No. 26-59
+Primary Analyst: TM 4/8/26
+Contributing Analyst(s):
+Reviewer: NB
 
-AN ACT CONCERNING COOPERATIVE CORPORATIONS.
-Be it enacted by the Senate and House of Representatives in General
-Assembly convened:
+OFA Fiscal Note
 
-Section 1. Section 33 -183 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-Three or more persons of lawful age [and inhabitants of this state,
-may, by written articles of association, associate themselves together ]
-may act as incorporators of a cooperative corporation by delivering a
-certificate of incorporation to the Secretary of the State for filing. A
-corporation may be formed under this chapter for the purposes of trade
-or for carrying on any lawful mercantile, mechanical, manufacturing or
-agricultural business . [within this state, and, when such articles of
-association have been executed and filed in the office of the Secretary of
-the State, the franchise tax provided by section 33-187 paid to, and such
-articles of association approved by, said secretary, such persons shall
-become a ] The corporation [and] shall enjoy all the powers and
-privileges and be subject to all the duties, restrictions and liabilities of
-other corporations, except so far as such duties, restrictions and
-liabilities may be limited or enlarged by this chapter.
-Sec. 2. Section 33 -184 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 2 of 7
-
-The objects for which such [association] corporation is established,
-and the place within which its business is to be carried on, shall be
-distinctly set forth in its [articles of association] certificate of
-incorporation or bylaws, and it shall not do business in any other place
-or places than those [mentioned in its articles] stated in its certificate of
-incorporation or bylaws.
-Sec. 3. Section 33 -185 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-[(a) Prior to October 1, 2019, the business of the association shall be
-managed by not fewer than seven members, who shall be styled a board
-of managers, shall be chosen annually by the stockholders  and shall
-hold their offices until others are chosen and have qualified in their
-stead, except that when the bylaws of such association so prescribe, the
-board of managers may be divided into not more than three classes, each
-class to hold office for not more than three years, one of which classes
-shall be elected annually. Such association shall have such other officers
-appointed as its bylaws prescribe. The terms of the members of the
-board serving on June 26, 2019, shall expire on September 30, 2019.]
-[(b) On and after October 1, 2019, the business of the association] The
-business of the corporation  shall be managed by a board of directors
-consisting of not fewer than three  members of the [association]
-corporation. The board of directors shall be elected annually by the
-[member shareholders] members and shall hold office for one year and
-until a successor has been elected, except [, when] that the bylaws of
-such [association so prescribe, the board of directors may be divided
-into not more than three cla sses, one of which classes shall be elected
-annually, with each class to hold office for not more than six years. Such
-association may adopt bylaws concerning the appointment of other
-officers of the association and to implement the provisions of this
-section] corporation may provide for staggering the terms of directors
-by dividing the total number of directors into not more than five groups,
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 3 of 7
-
-with each group containing approximately the same percentage of the
-total, as near as may be. In that event, the terms of directors in the first
-group expire at the first annual members' meeting after their election,
-the terms of the second group expire at  the second annual members'
-meeting after their election, the terms of the third group, if any, expire
-at the third annual members' meeting after their election, the terms of
-the fourth group, if any, expire at the fourth annual members' meeting
-after their election and the terms of the fifth group, if any, expire at the
-fifth annual members' meeting after their election. At each annual
-members' meeting held thereafter, directors shall be chosen for a term
-of two years, three years, four years or five years, as the case may be, to
-succeed those whose terms expire.
-Sec. 4. Section 33 -186 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-[Any two of the persons associated may call the first meeting of such
-association, at such time and place as they may appoint, by notice in any
-newspaper published in the county in which such association is to be
-established, at least fifteen days before th e time appointed; but such
-notice may be waived by a writing signed by all of the persons so
-associated, specifying the time and place for said meeting, and recorded
-at length upon the records of the association. Such association may make
-its own bylaws.] A majority of incorporators shall call an organizational
-meeting of the corporation at such time and place as they may appoint
-to (1) elect directors and complete the organization of the corporation,
-or (2) elect a board of directors who shall complete the  organization of
-the corporation. Any action required or permitted to be taken by
-incorporators at an organizational meeting under this chapter may be
-taken without a meeting if the action taken is evidenced by one or more
-written consents describing the action taken and signed by each
-incorporator.
-Sec. 5. Section 33 -190 of the general statutes is repealed and the
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 4 of 7
-
-following is substituted in lieu thereof (Effective October 1, 2026):
-(a) No member of any such cooperative [association] corporation
-shall be entitled to more than one vote upon any subject, at any meeting
-of [such association ] the members. The rights and qualifications of
-members of the corporation shall be set forth in the bylaws, which
-qualifications shall include holdings or subscribing for at least one share
-of capital stock. If the bylaws of the  corporation do not provide for
-members, the shareholders shall be the members. Except as may be
-provided in the certificate of i ncorporation with respect to classes or
-series of stock, all rights of shareholders shall be exercised by the
-members.
-(b) Members entitled to vote on a matter may take action on the
-matter at a meeting only if a quorum of those members exists with
-respect to that matter. If there are no members entitled to vote as a
-separate voting group, unless the certificate of incorpo ration or bylaws
-provide otherwise, the members entitled to vote on the matter who are
-present at the meeting, either in person or by proxy, constitute a quorum
-for action on the matter. If there are members entitled to vote on a matter
-as a separate votin g group, the members entitled to vote as a separate
-voting group may take action on the matter at a meeting only if a
-quorum of that voting group exists with respect to that matter. Unless
-the provisions of this chapter, the certificate of incorporation or  the
-bylaws provide otherwise, the members of a voting group entitled to
-vote on the matter who are present at the meeting, either in person or
-by proxy, constitute a quorum of that voting group for action on that
-matter.
-(c) Unless otherwise provided in the certificate of incorporation or
-bylaws, directors are elected by a plurality of the votes cast by the
-members in the election at a meeting at which a quorum is present.
-(d) Any action which, under any provision of this chapter or chapter
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 5 of 7
-
-601 may be taken at a meeting of members, may be taken without a
-meeting if one or more consents in writing, setting forth the action so
-taken or to be taken, signed by all of the persons who would be entitled
-to vote upon such action at a meeting, or by t heir duly authorized
-attorneys, which action for purposes of this subsection shall be referred
-to as "unanimous written consent". The secretary shall file such consent
-or consents, or certify the tabulation of such consents and file such
-certificate, with the minutes of the meetings of the members. A
-unanimous written consent shall have the same force and effect as a vote
-of the members at a meeting duly held and may be stated as such in any
-certificate or document filed under this chapter or chapter 601.
-(e) The certificate of incorporation or bylaws may provide that any
-action that may be taken at any meeting of members may be taken
-without a meeting if the corporation delivers notice that includes a
-ballot to every member entitled to vote on the matter. A ballot shall: (1)
-Be in writing; (2) set forth each proposed action; (3) provide an
-opportunity to vote for, or withhold a vote for, each candidate for
-election as a director, if any; and (4) provide an opportunity to vote for
-or against each other proposed action.
-(f) Approval by ballot pursuant to this section of action other than
-election of directors is valid only when the number of votes cast by
-ballot equals or exceeds the quorum required to be present at a meeting
-authorizing the action, and the number of appr ovals equals or exceeds
-the number of votes that would be required to approve the matter at a
-meeting at which the total number of votes cast was the same as the
-number of votes cast by ballot. A ballot signed under this section shall
-have the same force and effect as a vote of the member who signed it at
-a meeting duly held and may be stated as such in any certificate or
-document filed under this chapter or chapter 601.
-(g) Any solicitation for votes by ballot shall: (1) Indicate the number
-of responses needed to meet the quorum requirements, (2) state the
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 6 of 7
-
-percentage of approvals necessary to approve each matter other than
-election of directors, and (3) specify the time by which a ballot must be
-received by the corporation in order to be counted.
-(h) Except as otherwise provided in the certificate of incorporation or
-bylaws, a ballot may not be revoked.
-(i) If not otherwise fixed under sections 33 -665 to 33 -727, inclusive,
-the record date for determining members entitled to take action without
-a meeting is: (1) The date the first member signs the consent under
-subsection (d) of this section, or (2) the date the corporation delivers the
-notice under subsection (e) of this section.
-Sec. 6. Section 33 -191 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-No certificate of shares shall be issued to any person until the full
-amount thereof has been paid in cash, and no shareholder shall receive
-less than the par value of any share when disposing of the same to the
-[board of directors] corporation. No person shall be allowed to become
-a shareholder in such [association] corporation except by the consent of
-the directors.
-Sec. 7. Section 33 -193 of the general statutes is repealed and the
-following is substituted in lieu thereof (Effective October 1, 2026):
-There shall be a distribution of the profits or surplus of [an
-association] the corporation  among the [member shareholders ]
-members as is prescribed by the [association's] corporation's bylaws.
-The board of directors of [an association] a corporation may declare a
-sum of not more than forty per cent of the net profits or surplus to be
-appropriated for a contingent or sinking fund, an unallocated reserve
-fund or a collective account as may be prescribed in the [association's]
-bylaws.
-Substitute House Bill No. 5431
-
-Public Act No. 26-59 7 of 7
-
-Sec. 8. Sections 33 -187, 33-188 and 33 -192 of the general statutes are
-repealed. (Effective October 1, 2026)
-
-Governor's Action:
-Approved May 26, 2026
+State Impact: None
+Municipal Impact: None
+Explanation
+The bill replaces the ability to form cooperative associations with the
+ability to form cooperative corporations, resulting in no fiscal impact to
+the state or municipalities.
+The Out Years
+State Impact: None
+Municipal Impact: None