Connecticut Seal

General Assembly

File No. 373

    February Session, 2018

House Bill No. 5442

House of Representatives, April 10, 2018

The Committee on Commerce reported through REP. SIMMONS of the 144th Dist., Chairperson of the Committee on the part of the House, that the bill ought to pass.

AN ACT CONCERNING THE PARTICIPATION OF NONPROFIT ENTITIES IN WORKER COOPERATIVES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 33-418g of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

As used in this chapter, unless the context otherwise requires:

[(a)] (1) "Worker cooperative" means a corporation which has elected to be governed by the provisions of this chapter.

[(b)] (2) "Member" means a natural person who or nonprofit organization that has been accepted for membership in, and owns a membership share issued by a worker cooperative.

[(c)] (3) "Patronage" means the amount of work performed as a member of a worker cooperative, measured in accordance with the articles of organization and bylaws of that cooperative.

[(d)] (4) "Written notice of allocation" means a written instrument which discloses to a member the stated dollar amount of such member's patronage allocation and the terms for payment of that amount by the worker cooperative.

(5) "Nonprofit organization" means any organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.

Sec. 2. Section 33-418i of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) The certificate of incorporation or bylaws of a worker cooperative shall establish qualifications and the method of acceptance and termination of members. No person may be accepted as a member unless such person is (1) employed by the worker cooperative on a full-time or part-time basis, or (2) a nonprofit organization, provided no less than fifty per cent of all employees shall be members.

(b) A worker cooperative shall issue a class of voting stock designated as "membership shares". Each member shall own only one such membership share, and only members may own such shares.

(c) Membership shares shall be issued for a fee as shall be determined from time to time by the board of directors. Section 33-671 and subdivision (6) of subsection (b) of section 33-683 shall not apply to such membership shares. Sections 33-855 to 33-872, inclusive, shall not apply to membership shares whose redemption price is determined by reference to internal capital accounts, as defined in section 33-418m.

(d) Members of a worker cooperative shall have all the rights and responsibilities of stockholders of a corporation formed under chapter 601, except as otherwise provided in this chapter.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2018

33-418g

Sec. 2

October 1, 2018

33-418i

CE

Joint Favorable

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill, which permits the participation of nonprofit organizations in worker cooperatives, has no fiscal impact.

The Out Years

State Impact: None

Municipal Impact: None

OLR Bill Analysis

HB 5442

AN ACT CONCERNING THE PARTICIPATION OF NONPROFIT ENTITIES IN WORKER COOPERATIVES.

SUMMARY

This bill allows a nonprofit corporation to become a member of a worker cooperative and own ownership shares in this business entity, which, by law, must be owned and controlled by its employees. Current law allows only a cooperative's full- and part-time employees to become members and own ownership shares.

By becoming a member of a worker cooperative, a nonprofit organization can serve on its board and receive a portion of the cooperative's net earnings (i.e., patronage allocations), which, by law, the cooperative must apportion to each member in proportion to his or her share of the work performed by all members during a specified period.

EFFECTIVE DATE: October 1, 2018

COMMITTEE ACTION

Commerce Committee

Joint Favorable

Yea

17

Nay

3

(03/22/2018)

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