Coop rules/16 Directors/Change to Rule 85

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This special resolution has been agreed among the members and investors by unanimous consent on 20090804.
Since it has been agreed, the page is locked.
Contact WikiSysop to make small corrections (spelling, grammar, etc.) or add an agenda item to re-visit this agreement at an appropriate meeting.

Contents

Proposed change to EcoReality rules

Replace the EcoReality Co-op rules, Rule 85 in its entirety, to read:


Rule 85: Replace entirely with the following three paragraphs, and re-number paragraph 2 to be paragraph 4
  • Before:
    1. Each member of EcoReality Sustainable Land Use and Education Cooperative is also a director of EcoReality Sustainable Land Use and Education Cooperative.
    2. Upon special resolution, one or more non-members may be named as a director of EcoReality Sustainable Land Use and Education Cooperative, but the number of directors who are also members must be no less than 90% of the total number of directors.
  • After:
    1. Any member who has resided on the EcoReality property for six months, cumulative, can be elected by the directors to serve as a director of the co-op.
    2. A director who is non-resident for 30 days or more, will have their directorship suspended until they return to resident status for an amount of time equal to the time they were away, cumulative, up to a maximum of six months.
    3. Any exception to this rule requires the consent of the directors.
    4. Upon special resolution, one or more non-members may be named as a director of EcoReality Sustainable Land Use and Education Cooperative, but the number of directors who are also members must be no less than 90% of the total number of directors.

Ancillary changes include:


Rule 1, 3rd bullet: Remove ": normally, each member will also be a director and an officer"
  • Before:
    • "board" or "the directors" or "officers" or "stewards" mean those elected from among the members of EcoReality Sustainable Land Use and Education Cooperative for the purpose of fulfilling some responsibility: normally, each member will also be a director and an officer;
  • After:
    • "board" or "the directors" or "officers" or "stewards" mean those elected from among the members of EcoReality Sustainable Land Use and Education Cooperative for the purpose of fulfilling some responsibility;


Rule 90: Remove the entire rule.
  • Before:
    All members shall be considered to have been nominated for election. In addition, additional non-member nominations may be taken from the floor or from a committee previously formed for the purpose.
  • After:
    (Delete the entire Rule 90.)


Rule 91: Remove the entire rule.
  • Before:
    Nominated members are declared elected and no election is required.
  • After:
    (Delete the entire Rule 91.)


Rule 109: Add one word: directors.
  • Before:
    Questions arising at any meeting of the directors are to be decided by the consent of all of those present and entitled to vote, unless The Cooperative Association Act or these coop rules require otherwise.
  • After:
    Questions arising at any meeting of the directors are to be decided by the consent of all of those directors present and entitled to vote, unless The Cooperative Association Act or these coop rules require otherwise.


Problem statement

We have twice agreed (November 2006 and March 2008) that "As part of our application procedure, we have a long "dating period" so that we can get to know each other better, typically, six months. This should be a significant period of involvement, not merely attending six monthly meetings!" And yet, this has not happened; half of the new members had not even attended six monthly meetings upon "aging into" full membership.

Were this simply a matter of following some silly rule, there would be no need to address it. However, non-resident members have expressed displeasure with necessary "power imbalances" and have requested intimate involvement with day-to-day operations of the co-op that they judge as "major decisions." I thank those members for the gift of bringing this problem to our attention, and hold nothing except gratitude for bringing this flaw in our governance to everyone's attention.

We have agreed that "The person with the most knowledge about a situation should be empowered to make decisions about that situation." It is simply not possible for people who are here less than once each month (on average) to have the same level of involvement in co-op business as those living here. This is indeed an imbalance of power, and it should be made explicit so we don't (in all innocence) create any impression that those not living on-site have such influence in the day-to-day operation of the co-op.

This is a "Type I Error" (assuming something is true when it is actually false), and if it is not corrected, it will continue to create strife as we add new members and explore the possibility of part-time residents.

This is a specific problem that I wish EcoReality to address. It is not intended to be a group consensus problem statement, although I am certainly open to individual feedback on specific points. — Jan Steinman

What this means

For clarity, the following uses the vocabulary of The Cooperative Association Act, rather than our "improved" vocabulary. For example, "vote" instead of "consent," "decision" instead of "agreement," "directors" instead of "stewards."

  • No more provisional members.
  • No changes in the full membership status of current members, no matter where they reside.
  • No changes in the decision-making rights of non-resident members who do not currently have a formally-agreed stewardship.
  • Anyone who resides here less than half-time is essentially excluded from holding a directorship.
  • Anyone residing here on a part-time basis will have a buffer period upon their return while they re-acquaint themselves with EcoReality's customs and practices.
  • Non-member directors are still allowed to be non-resident directors, according to Rule 85 of our coop rules, up to 10% of the total number of directors.

The Cooperative Association Act says (in part) that "directors must manage or supervise the management of the business of the association and may exercise all the powers of the association." This means the directors are the managers of co-op business.

All decisions requiring a vote of members will still require the agreement of all members. Day-to-day business operations of the co-op will typically be made by directors, and may or may not be brought before the entire membership. Such decisions may be brought before the entire membership if:

  1. the directors seek the approval of the members, or
  2. any member seeks consent of all members to overrule a decision made by the directors. (The Act, Approval of contracts and transactions.)

Advantages

  • Provisional membership, which some found distasteful, goes away.
    • Arguments that new members might be reluctant to join if there is a long provisional membership period are mitigated.
    • Discomfort about being a "special, less-than-real" member is mitigated — there is only one membership class.
    • No "limbo" state for non-resident members — they have all the rights and responsibilities of resident members.
    • Strictly speaking, provisional membership was probably not legal anyway, as it conflicted with our official co-op rules, which say nothing about restricting voting rights of members. To do provisional membership properly really requires a change in our co-op rules, just as this proposal does.
  • Certain power imbalances, necessary for the day-to-day operation of the co-op, which are currently un-stated, become explicit and well-defined.
  • We don't have to invent anything, the Cooperative Association Act has done all the hard work.
    • Decisions that require a vote of all members are clearly defined in The Act.
      • We can, at any time, augment this list to include other sorts of decisions that must be brought before all members present at a meeting (ordinary resolution) or all members (special resolution).
  • Non-director members can still challenge decisions made by directors.
  • Directors can still involve members in important decisions.
  • Membership issues are divorced from basic business management issues — the two are currently intertwined.
  • This seems to be the simplest possible solution.

Disadvantages

  • We have to change our coop rules and file them with a fee.
  • Some non-resident members may object to explicitly recognizing necessary power imbalances.
    • Some non-resident members may object to "giving up" power that they assumed they had.
  • It puts back a distinction that we originally hoped was unnecessary.
    • It is less egalitarian in its recognition of power imbalances necessary for proper day-to-day operation and management of the co-op.
  • May discourage some who wish to be part-time residents.
  • One non-resident member who currently holds a formally-agreed stewardship would either have to rescind it, be allowed as an exception, or we would have to create a special "non-director stewardship" for their role.
  • Two non-member residents who currently hold formally-agreed stewardships would either have to rescind them, be allowed as an exception, or we would have to create a special "non-director stewardship" for their roles.

Power of directors

  1. The coop rules define the following powers of directors:
    Rule 10 
    Directors set the number of investment shares that must be subscribed in order to reside at EcoReality.
    Rule 13 
    Directors receive written notice of withdrawal from the co-op.
    Rule 16, paragraph 3 
    Directors can expel a member for breach of agreement.
    Rule 21 
    Directors approve the purchase of Class A shares, set dividends, set maximum number of shares to be redeemed at one time, and issue Class B shares.
    Rule 23 
    Directors determine payment for shares, including any payment plan on borrowed shares needed to make the number of shares required in Rule 10, above.
    Rule 25 
    Directors can expel and revoke habitation rights of a member who does not pay for shares.
    Rule 29 
    Directors can change the form used to request transfer of shares.
    Rule 30, 34, 35 
    Directors authorize transfer of shares.
    Rule 38 
    Directors can suspend redemption of shares for up to 36 months.
    Rule 46 
    Directors can call special general meetings.
    Rule 47-48 
    Directors determine the location of general meetings.
    Rule 61 
    Directors appoint the secretary at a general meeting.
    Rule 64 
    Directors may expel non-members from any meeting.
    Rule 73 
    Directors determine rights of non-members to vote at meetings.
    Rule 82-84 
    Directors manage the business of EcoReality, and cannot be compensated for their duties.
    Rule 114-120 
    Directors can appoint and regulate committees.
    Rule 122-126 
    Directors appoint and regulate officers.
    Rule 129 
    Directors may invest EcoReality's funds.
    Rule 130 
    Directors appoint auditors.
    Rule 132 
    Directors determine the financial year.
    Rule 133, 135 
    Directors have limited ability to allocate surplus funds.
    Rule 151 
    Directors may provide a corporate seal.
  2. In addition to powers granted by EcoReality's coop rules, the Cooperative Association Act defines the following powers of directors:
    Part 1, Section 9 
    Directors determine patronage returns.
    Part 6, Division 1, Section 76 
    Directors are responsible for managing the business of the cooperative, and may exercise all legal powers of the cooperative.

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