62 BULLETIN 547, U. S. DEPARTMENT OF AGRICULTURE. 



minimum and maximum amounts of capital stock, share values, the 

 limit on individual ownership of shares, the issuance of shares, and 

 the transfer of stock. Most of the laws recognize the importance of 

 regulating the voting power, and the majority state that each mem- 

 ber is to have one vote regardless of the amount of stock owned. 

 Regulations concerning proxy voting and voting by mail are some- 

 times included. 



The method of distributing earnings, if any, is, or should be, an 

 important feature of cooperative laws. Some States leave this to 

 each association to decide, while other States provide in detail the 

 method to be followed. Laws of the latter kind usually limit the 

 dividends on stock to a fair rate of interest, provide for a reserve fund 

 and sometimes an educational fund as well, and for the division of the 

 remainder of the earnings in the form of a patronage dividend. Some 

 laws specify that patronage dividends are to be paid only to members, 

 others include all patrons or leave it to be decided by the association 

 whether or not patrons who are not members shall receive patronage 

 dividends. Several States provide that patronage dividends to non- 

 members shall be at a lower rate than to members. In a few instances 

 the laws provide in detail the method of apportioning the earnings, 

 but make it possible for the associations formed thereunder to revise 

 this, if desired. Because of the fact that many people fail to recog- 

 nize the desirability of a truly cooperative method of distributing the 

 earnings of an association, it seems advisable that cooperative laws 

 should make such a method obligatory. In this manner noncooper- 

 ative organizations can be prevented from masquerading as cooper- 

 ative, for, while some of the laws forbid organizations not formed 

 under the cooperative law to use the word " cooperative" as part of 

 their corporate name, if the method of distributing earnings is left 

 to the association it may comply with the law and still be far from 

 cooperative. 



The points to be covered in the by-laws of cooperative organiza- 

 tions are sometimes outlined fully in the cooperative laws. In some 

 cases provisions are made for the investment of the reserve fund and 

 for the purchase of the business of other associations. Provisions are 

 frequently made whereby existing organizations are permitted to 

 reorganize under the cooperative law by complying with the require- 

 ments of the law. Other regulations often included are for dissolu- 

 tion of an organization, the requiring of annual reports, and the 

 limiting of the use of the word "cooperative." 



COOPERATIVE LAW SUMMATIONS. 



The condensed summary of the State laws relating to the formation 

 of cooperative organizations (pp. 66, 67) shows the main points of the 

 State cooperative laws concerning which information has been 



