24 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 



CHANGING FORM OF ORGANIZATION. 



It will be highly desirable for those farmers' elevator companies 

 which are cooperative in purpose but for reasons already stated are 

 not cooperative in form or effect to change to the cooperative plan 

 before too many of their members have retired from active farm 

 life and while the interests of producing members are still para- 

 mount. The change may be effected in several ways, but only two 

 methods are of special interest to farmers' elevator companies: 



(1) In some States the change may be brought about by a formal 

 declaration of intent on the part of the stockholders holding a major- 

 ity of the voting shares, to come under and be governed by the par- 

 ticular legislative act or statute providing for the incorporation of 

 cooperative companies, and by a certification of the fact to certain 

 State and county officials. 



(2) The old corporation may be dissolved and a new one formed 

 to carry on the business on the cooperative plan. In this case the 

 affairs of the old organization should be closed as if reorganization 

 were not intended, but in the distribution of the corporation assets the 

 interests of the individual stockholders in the old organization who de- 

 sire to be members of the new organization may be assigned in payment 

 for stock in the new organization, unless, of course, capital stock sub- 

 scriptions are by State law required to be paid in cash. The assets 

 of the old organization thus would be transferred to the new organi- 

 zation and the claims of stockholders in the old organization who 

 are unwilling to become associated with the new one may be settled 

 by cash payment. Under this method new members may be ad- 

 mitted by means of stock subscriptions and the stock interests of old 

 members may be limited or apportioned to the same extent as if 

 they were new members, differences being adjusted by cash payment. 



Any method is easily applied when the stockholders of the old 

 organization are unanimously agreed to it. All methods offer diffi- 

 culties when there are dissenting stockholders. The first method 

 seems to be the one generally used in States in which it is authorized. 

 The following language is typical of State statutes defining the kinds 

 of companies which may take advantage of this method : 



All cooperative corporations, companies, or associations heretofore organized 

 and doing business under prior statutes or which have attempted to so or- 

 ganize and do husiness shall have the benefit of all the provisions of this act 

 and be bound thereby on filing with the Secretary of State a written declaration, 

 signed and sworn to by tin- president and secretary, to the effect that said 

 cooperative company or association has, by a majority vote of its stockholders, 

 decided to accept the benefits of and be bgund by tin- provisions of this act. 



Whether or not an ordinary capital stock corporation, owned and 

 controlled by farmers, but which operates strictly as a profit corpora- 

 tion, and not having recognized or attempted to incorporate into its 



